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March 16, 2013

Law Professor Anticipates Future of Climate Adaptation Law
    by Robert Kropp

In an academic paper, J.B. Ruhl of the Vanderbilt University Law School summarizes the piecemeal efforts undertaken thus far to address climate adaptation from a legal standpoint, and outlines legal issues that are likely to emerge.

SocialFunds.com -- ExxonMobil uses the entirety of its massive fossil fuel subsidy to purchase companies in the renewable energy fields, declaring that the era of fossil fuels is rapidly coming to an end and its new business model will focus entirely upon renewable energy. After engaging with As You Sow over a shareowner resolution addressing stranded fossil fuel assets, CONSOL Energy agrees to leave the entirety of its 4.5 billion tons of coal reserves in the ground, citing concerns over the health and well-being of future generations.

Decades have passed since sustainable investors and environmental advocates began calling on corporations to take climate change seriously and retool themselves for a low-carbon economy, but it seems that the scenario described above is every bit as much a fantasy today. Greenhouse gas (GHG) emissions continue to set annual records. Companies in the fossil fuel industries continue to present their booked reserves to investors as proof of future growth, when 80% of those reserves will have to stay in the ground if climate change is to be addressed with any measure of success.

Viewed through the specific lens of the financial markets, sustainable investors have accomplished much in bringing their concerns to the boardrooms of corporations. To cite but two prominent examples, the United Nations' Principles for Responsible Investment (PRI) and the Carbon Disclosure Project (CDP), investor organizations whose members represent many trillions of dollars in assets under management, have encouraged greater corporate social responsibility (CSR) and reporting on GHG emissions.

But sustainable investors will surely agree that their efforts alone are insufficient for addressing climate change and global overconsumption. Speaking in 2011 of the challenges investors face, Lisa Woll, CEO of US SIF: The Forum for Sustainable and Responsible Investment, noted, "We could spend the next 40 years getting companies to have better carbon footprints and doing less damage to the climate, or we could get a bill that addresses it."

A recently published academic paper, authored by J.B. Ruhl of the Vanderbilt University Law School and entitled A Summary of Present and Future Climate Adaptation Law, assesses the paucity of current law in place to address climate change, and outlines some of the directions such laws are likely to take in the near future. "It is difficult to envision a world in which adapting to climate change does not in some significant ways require the attention of legal institutions and adjustments to legislation, regulations, and common law doctrine," the author writes.

"The overarching policy objective of climate change adaptation incorporates two broad themes," the paper states, "reducing vulnerability to harms and increasing resilience to harms that are felt." Thus far, there have been "isolated bits of law" addressing the issues of coastal land use controls, environmental impact assessment programs, corporate disclosure requirements, and endangered species protection.

However, "No legislature has enacted comprehensive adaptation legislation; no agency has promulgated comprehensive adaptation regulations; and no court has had to grapple in any meaningful way with claims based on adaptation," the author observes. Indeed, in North Carolina the state legislature was at one point considering a bill outlawing "any rule, policy, or planning guideline addressing sea-level rise," presumably so as not to scare away the tourists.

The author predicts that future developments in climate adaptation law will address a number of issues relating to land and natural resources, as well as public infrastructure and health and safety.

Additionally, the author expects that issues relating to business, such as insurance coverage and corporate disclosure, will increasingly be subject to legal oversight. "The SEC’s 2010 corporate disclosure guidance"—the publication of which owed a significant debt to the efforts of sustainable investors—"is likely only the first example of legally imposed disclosure duties encompassing climate change impacts and adaptation," he writes. "Businesses that fail to disclose risks, costs, and liabilities associated with climate change impacts in connection with stock or asset purchase transactions could face liability for failure to disclose."

"It is inevitable that law will have to adapt to changing conditions," the author concludes. "The time is ripe for an active dialog to open regarding how climate change adaptation will shape law, and vice versa."

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