Business representatives and lawyers convened at COP 27 to discuss what law in the net zero future would look like. At “reconfiguring the law for a net-zero future”, panellists emphasised the private sector’s reliance on their legal advisors for helping set and meet corporate net-zero targets, facilitating cooperation between governments and businesses for the creation of effective climate regulation, and developing an understanding of such regulation to ensure their investments and growth plans are productive, sustainable and net-zero compliant.

Panellists further emphasised that the private sector understood and recognised the need for change. However, businesses still require effective and appropriate climate laws and regulation to stabilise the risk inherent in such change. Indeed, businesses reported that they were often unable to make climate-positive changes without the government action, such as amendments to anti-trust laws, that would permit them to do so.

Businesses and their lawyers also voiced their awareness of the transformative effect of climate litigation. Long recognised as posing a threat to the companies targeted by such litigation, it is now increasingly understood as playing an important role in defining the parameters and details of existing and future climate law and regulation through the creation of legal precedent and establishing consistent legal interpretation. Panellists recognised that should elements of the private sector refuse to engage with the move to net-zero, and consequently expose themselves to climate litigation, they may not only be faced with legal action but also with the prospect of being forced to operate in a legal and regulatory environment created by cases directly aimed at halting or radically altering their day-to-day business operations.

Climate litigation is now established in the legal environment. However, panellists at an event on resolving climate change disputes outside of state courts highlighted the potential for private climate arbitration. While climate change inspired treaty arbitrations have already taken place, lawyers on the panel noted that any contracts containing arbitration clauses and encompassing climate commitments could inspire such disputes. This was especially true when parties to such contracts have made wider commitments that rely on third parties, such as within their supply chains, meeting certain standards too.

In such cases, international arbitration could have significant advantages for private parties, with the privacy, industry expertise and ease of global enforcement of the arbitral process better suited to complex climate disputes and international contracts than state litigation.

In all cases, private businesses are entering a world of rapidly changing laws and regulations, as well as an uncertain business and dispute resolution environment. As trusted advisers, lawyers must not only change with the times but anticipate the changes that will shape law in the net zero future.