Laura Clarke speech on Serviced Emissions report from Race to Zero and Oxford Net Zero

This blog post is adapted from a keynote speech given by ClientEarth CEO Laura Clarke at the UK launch event for the Serviced Emissions report from Race to Zero and Oxford Net Zero on 29 October 2024. ClientEarth also participated actively in the working group that developed the report. While the content reflects the themes and insights shared during the speech, it has been lightly edited for readability.

I am an optimist both by temperament and by choice. I believe strongly in the art of the possible and how, when building understanding and common cause, you can work creatively with others to drive change for the better. And nowhere is this more true than in the imperative to address climate change.

But sometimes that optimism takes a hit.

Last week the UNEP emissions gap report told us that, despite the exponential rise in renewable energy, despite evidence of climate impacts everywhere, despite every effort from all those working flat out for a safer future, emissions have risen by a record 1.3% on 2022 levels. And that on current policies we are headed for a devastating 3.1 degrees warming.

So what to do? Of course it’s tempting to give up and stay in bed. But we know that change is still possible, and we know that we need to redouble our efforts to make climate action an all of society, all of economy effort.    

All of us need to think about how we can bring our expertise, experience, networks and influence to bear in what is the biggest challenge of our time.

And what excites me about my organisation, about ClientEarth – is that we use the law – which is often seen as a tool to defend the vested interests of the status quo - and we use it, at the right place and right time, in radically progressive ways, to leverage and catalyse the positive change we need.

The same opportunity is there for the whole of the professional services sector: the brilliant and talented people in law, consultancy, advertising, architecture, PR and accountancy.

You can use your expertise and influence to bolster and protect the status quo – or to accelerate the race to zero.

And today’s event, and the report that is launching today, really is about supporting professional services firms in being on the right side of that choice - vested interests versus positive change - and on the right side of history.

Opportunity and need for PSPs to take action

When most people think of climate action, they think of the role and responsibility of Governments, fossil fuel majors, industry. Very few think of services firms, despite the critical role they play in the global economy – in advising and enabling pratically all businesses, projects and transactions.

But you can’t do a fossil IPO without lawyers; or build a new oil pipeline without consultants. You can’t launch a new EV and win market share without advertising, and you can’t build low carbon housing without architects.

So while Scope 1-3 ‘operational’ emissions of services businesses are important, the most significant climate impact of any services business will be their “serviced emissions” – the impact of the client project that they support or enable. 

This gives rise to a unique opportunity. Through their client work and – just as importantly – by using their influence with their clients, services businesses can be “force multipliers” in driving the transition.

Those that do so will seize the advantage of ‘competitive sustainability’; from winning new business from clients focused on greening their operations at the one end, to attracting and retaining the best (purpose driven) talent at the other – and with much in between.

Best practice is already leading the way. You can see this from the fantastic initiatives represented in this Race to Zero report – and about which we’ll hear more, later. The risk of being left behind increases all the time.

But it’s not just about doing the right thing – it’s also about proper risk management, and long-term commercial viability.

Service business revenues are profoundly dependent on global value chains – and so at risk from high emissions pathways which erode the foundations of the global economy.

A service firm needs to ask itself: what does my business look like in a 2+ degree world? Taking time to understand those impacts, and taking concrete steps to drive the transition helps PSPs increase the resilience of their business model, and mitigate the worst risks posed to it by climate change.

The legal risks of inaction

That includes both the legal risk associated with: (a) contributing to climate related harms; and (b) greenwashing. Both are deeply relevant for services businesses.

Contribution to climate harm

How can you avoid contributing to – and being held liable for – climate-related harms?

As John Sherman, former in-house counsel of National Grid, said on human rights “a company should act on the prudent assumption that it may be legally liable if it causes or contributes to [human rights impacts], in some court somewhere in the world”.

This even more relevant for the human rights impacts of climate change. And climate litigation is gathering at pace – with 2,600 climate litigation cases at the last count, and with an increasing number of climate affected stakeholders and communities seeking redress.

Let’s consider some cautionary tales of advertising and PR firms defending high carbon interests, and delaying climate action:

In June this year, the government of California brought a case against oil and gas majors and the American Petroleum Institute, seeking to recover the escalating billions in climate damages facing the State, based on “A decades-long campaign of deception regarding…the connection between combustion of fossil fuels and climate change”.

In a similar case, McKinsey is now the subject of a claim for damages for climate harms brought by the government of Portland, Oregon for its alleged role in disinformation campaigns to downplay or deny the causal link between oil and gas companies and extreme weather disasters.

If we turn now to financial services, and what we often call ‘financed emissions’, the risk is clearer still:

In response to a 2021 complaint filed by ClientEarth, UN human rights experts have recently warned the financiers of Saudi Aramco – the world’s largest corporate emitter – that they could be responsible for climate-change related breaches of international human rights standards.

Dutch bank ING is facing climate litigation in the Netherlands over its financing support for polluting companies (including fossil fuel expanders).

And BNP Paribas is facing a similar case in France under the ‘duty of vigilance’ law.

So there’s an issue with what harms and impacts financial and services providers enable.

Risk of greenwashing

ClientEarth’s ‘Greenwashing Files’ have focused on those companies – fossil fuel majors, airlines – that are saying they’re doing the right thing in sustainability terms, but are actually pulling in the wrong direction. They’re misleading the consumer, building a false sense of complacency – and delaying the urgent climate action that’s needed.

Services firms need to guard against greenwashing claims at two levels: firstly, they need to engage in good faith to put their own house and operations in order, in terms of the net zero transition, so they can talk about it with credibility.

But secondly, they need to consider the impact of their client work. So if you’re making public climate or sustainability commitments but have significant “serviced emissions” or client impacts, that poses an acute legal risk. This risk needs to be well managed.

We know that trust arrives on foot and leaves on horseback – and that firms in multiple sectors are being rated, called out and even boycotted based on the impact of their client work.

That creates reputational risk alongside the legal one – not to mention the impact on client and talent retention. Telling a coherent and credible story will only get more important.

And this is where the Race to Zero guidance comes in: with a focus on understanding and recognising your serviced emissions, aligning client advice with 1.5 degrees pathways, and doing proper due diligence on client and project selection.

All this work is hard. But not as hard as the impacts of inaction.

Future trends: Where is the spotlight moving next?

I’ll end by considering where the ‘spotlight’ is moving on this crucial issue. As I said before, when we think of accountability for climate action, and targets for climate litigation, we traditionally think about the oil majors themselves, or other high polluting industries, or governments.

But the spotlight is increasingly shifting to what I call the “under the radar enablers of the status quo” – by which I mean professional service providers.

We’ve already seen an escalation of scrutiny and legal risk in relation to financial support for the world’s most polluting companies.

As that debate becomes more established, it is inevitable that the spotlight will sweep over to the other enablers and advisers – i.e. professional services businesses.

UN experts have stated that financing support for coal, oil and gas expansion must end. The UN Secretary-General has also called on the PR industry to step away from fossil fuel clients, pointing to this area as a clear risk for agencies. For services firms, it is the highest carbon companies which represent the greatest risk.

So when the spotlight falls on you, and your firm, what will you be doing? Will you have your house in order?

The challenge then is for all services firms to work out what this means for them: what is the impact of their client work; how can they use their influence with clients to address it; and how can they build their business in a way that truly supports transition.

The Race to Zero report is hugely valuable resource in this endeavour, and we at ClientEarth are delighted to have been part of the working group convened by Race to Zero and Oxford Net Zero.

Let me close by recalling that, in 2021, John Kerry told the American Bar Association: “you are all climate lawyers now, whether you want to be or not”.

The message you should take from today is that “you all provide climate services now, whether you want to or not”. That is both a heavy responsibility, but also great opportunity: to be part of the change that we need to see.