When it comes to climate change, the property sector has a big challenge. According to the World Green Building Council report “Bringing embodied carbon upfront”, 40% of global greenhouse gas emissions come from our buildings. Without serious interventions, this percentage is set to double by 2050.
A recent Landmark Information Group report highlights that most property clients in the UK (72%) are very concerned by the evolving impact of climate change, especially its impact on mortgage approvals and specific risks around flooding, energy efficiency, and local planning. Property professionals including lenders and estate agents are likewise concerned about how climate change is influencing decision-making in the market.
For lawyers working in the property sector, there are urgent questions to be answered about how much they need to be involved in considering climate change impacts and risks. As Sara de Gay postulated in an article published in August 2022:
Can England and Wales qualified solicitors risk not advising their clients on climate-related risks? My answer [is] a definite and resounding no.
— Sara de Gay, University College London, Faculty of Laws
The Law Society Alliance has issued climate guidance that helps clarify the duties of solicitors to their property clients. A membership organisation with 160,000 solicitors in private practice and in-house counsel in England and Wales, they were the first legal organisation in the world to do so when they published guidance on “The impact of climate change on solicitors“ in April 2023. (Full PDF at the bottom of this page.)
Endorsed by the Solicitors Regulation Authority (SRA), the importance and status of this guidance should not be underestimated. It is critical reading for managing partners, compliance officers, and, in particular, property lawyers given the value and types of assets that they deal with and the significant impact climate change may have on them.
Solicitors and licensed conveyancers owe a duty to clients to provide warning and advice as to risks which they are or should be aware of and which may adversely affect the property being purchased. This includes climate change. Those who chose to ignore this duty are at risk of professional negligence.
Guidance for solicitors
The guidance is organised in two parts.
Part A delves into how firms need to align with the transition to net zero and emphasisesunderstanding and reducing the climate impact of both clients and firms themselves. Key areas covered include greenhouse gas emissions, setting science-based targets, and the use of climate risk disclosure frameworks. It also highlights the importance of understanding and addressing the climate impact of client work, avoiding greenwashing, effectively communicating climate commitments, and the roles firms play as employers.
Part B offers guidance to solicitors on the relevance of risks associated with climate change when advising clients. These risks fall into three categories – physical, transition, and liability risks, as identified by the Bank of England – and the guidance includes an annex of example related legal issues.
Part B also considers the impact of climate change legal risks on solicitors’ professional duties including the duty of care, the duty to warn, the duty to disclose, and the obligation to uphold service and competence levels. It sets out professional obligations to take actions to address any gaps in competence and ensure adherance to the Solicitors Regulation Authority (SRA) Principles.
Part B concludes with practical guidance on the solicitor-client relationship in the context of climate change. This includes guidance on presentation to clients, handling new instructions, and decision-making around whether or not to provide advice. Other climate-risk relevant matters may include the scope of the retainer, professional indemnity insurance (PII) requirements, and the need for additional education materials and resources.
Checklist questions
Annex 3 of the guidance provides a checklist of issues for advice, addresses retainers, and, most importantly for solicitors involved in property advice and transactions, suggests questions for solicitors’ firms. These questions explore different aspects of climate change risk, such as the following:
“Have you reviewed the physical and transition risks associated with the transaction? For example, is the property on a floodplain or in an area at high risk of damage owing to climate change?
Will these risks affect the (i) finance available to purchase the asset (ii) refinancing in the future where refinancing is needed), (iii) insurance or (iv) value and marketability of the assets now or in the future?
Will these risks mean that the use of the property is restricted? For example, climate risk may prevent further development of a property on a flood plain or may mean that onerous planning conditions are imposed to make the development floodproof”.
Climate research resources
The only practical way to answer questions such as these for clients is to use climate analysis and searches to understand the impact of climate risks at specific individual sites.
Bigger firms and groups may have the resources to compile bespoke research, as mortgage lender Nationwide did in 2022 bringing together flood, coastal erosion, subsidence, tropical cyclone and other climate data from collaborators including Airbus, PRI (Property Risk Inspection), JBA Risk Management and Cranfield University in a project that used sophisticated modelling techniques to provide property risk information at the postcode level. An example of their mapping technique is below.
Other providers make tools and resources for assessing risks available to professionals in the property sector. Groundsure Climate Index, for example, assigns future-focused property-specific ratings including climate risks as part of their property reports. Landmark is another property report provider that includes specific data on climate-related risks. These resources, along with online professional guidance, specialsed webinars and training, and many other up-to-date resources are available to ensure legal professionals and other advisers in the property sector fulfill their duties and obligations related to climate change risks.
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