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‘Huge role’ for lawyers in green transition, carbon markets: Temasek CEO

‘Huge role’ for lawyers in green transition, carbon markets: Temasek CEO

Source: Business Times
Article Date: 18 Apr 2024
Author: Claudia Chong

Temasek’s chief executive Dilhan Pillay says lawyers will be integral in shaping governance standards and legal frameworks for ESG (environmental, social and governance).

As more companies and nations work towards their net-zero targets, the legal industry has a key role to play in policy formulation and fostering greater trust in carbon markets, Temasek’s chief executive Dilhan Pillay said on Wednesday (Apr 17).

Stakeholders will increasingly seek advice from lawyers on navigating complex regulatory landscapes, managing potential liabilities and addressing reputational risks, he noted.

Lawyers will be expected to guide clients, given that there are now neither global standards for ESG (environmental, social and governance) nor an international alignment on taxonomy.

“Many parts of the legal profession, since I started practising law about 34 years ago, might be said to be in decline,” said Pillay, who was managing partner at WongPartnership before starting his career at Temasek.

“But one area which is on the ascent is definitely the area of climate change,” he added in his opening address at the GenZero Climate Summit, organised as part of Temasek’s sustainability event, Ecosperity Week.

He added that lawyers who work at the intersection of law, business policy and reputation are uniquely placed to contribute to the green transition.

For example, an adviser on the carbon markets would need to have an understanding of international public law and standards (such as the Paris Agreement) and a good grasp of the trading environment and project development. Lawyers have these multidisciplinary skills, he noted.

Another area where lawyers can play a role is in minimising greenwashing.

They will need to exercise their judgment and counsel clients on what can be disclosed on ESG efforts – including information memorandum, advertising materials or claims on websites.

“Entities need to be careful of what they say, and avoid getting to the other extreme and be less ambitious in stating their ESG progress,” said Pillay.

Countries all over the world are developing legal frameworks to enable the green transition.

He highlighted that lawyers and people working in government bodies may soon play a larger role in supporting the development of climate-friendly policies, and tapping their knowledge and power to influence legislative changes.

Progress in Asia, in particular, has been slow because of the region’s heavy reliance on fossil fuels.

The world’s most populous continent accounts for half of global carbon emissions, and about 85 per cent of its energy comes from fossil fuels.

The region is also geographically dispersed, complicating efforts for energy transition.

Against the challenging backdrop, industry players have called for greater financing to grow the green economy and incentivise collaborations on a larger scale.

“Legal expertise will be required in the architecting, implementation and governance of capital solutions and transition projects such as blended financing, transition credits, joint ventures and even coal-fired power plant phase-outs,” explained Pillay.

Crucially, companies could be guided on incorporating climate-related clauses into their business contracts in order to work towards net-zero operations.

“All of us are on a journey – not just a journey to effect change, but a journey to learn,” added Pillay. “And for lawyers in particular, because we’re used to life-long learning, this should be like water off a duck’s back.”

Source: Business Times © SPH Media Limited. Permission required for reproduction.

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