The Climate Change Challenge

While designing a 400-unit residential development on the booming Boston waterfront, the architects and civil engineer came up with a unique way to protect it from rising water levels caused by increasingly severe coastal storms. 

“A portion of the building, the part that sits lowest to the ground and closest to the water, is designed to be floodable without affecting the occupancy of the units in the rest of the building,” says Matthew Kiefer, a land use attorney at Goulston & Storrs who counseled the developer. “The result is a really distinctive site plan and a really interesting open space. This project is now built and occupied and very successful.”

Not all climate change adaptations are this unique, nor do they need to be. But more businesses of all sizes are addressing the consequences of shifting climate—from structural damage and higher insurance rates to power outages and lost revenue—while working to reduce their carbon footprint and boost their resiliency. Some are switching to energy-efficient power sources, minimizing water consumption, or pinpointing environmentally sound ways to ship goods. Others, like the Boston developers, are taking steps to protect their offices, shops and production facilities against natural disasters. 

“I’ve seen it evolve from, ‘I’m only going to do what the regulators make me do,’” Kiefer says, “to a proactive mode and an attitude that says, ‘I see what’s happening out there. I see how it affects my business. I want to understand it and address it in a way that makes business sense.’”

Tackling these issues is even more critical for companies that are particularly vulnerable to droughts, floods and high winds. The same goes for energy-hungry enterprises like restaurants that not only need electricity to keep the doors open but risk losing refrigerated food during blackouts. And businesses that rely on agriculture or tourism should brace for weather-related interruptions, too.

“From a practical point of view, it’s important for them to understand that it is something that is going to have real effects, and in many areas, profound effects on water availability, on snowpack, on the availability of products in their pipelines, the availability of labor in various parts of the world,” says Kevin Healy, an environmental attorney with Bryan Cave Leighton Paisner who served on the New York State Climate Change Task Force.

“There are going to be impacts from climate change,” he adds. “And it’s not the kind of thing that you can just pretend doesn’t exist if you’re in business.”

The Bottom Line

Some entrepreneurs fear that installing solar panels or shifting to electric delivery cars will drain company coffers. But according to environmental attorneys, such changes might actually do the opposite—from reducing insurance risk to providing better access to loans and, of course, lowering expenses.

“Let’s say you do a super-green LEED Platinum building and it costs you a little bit extra to do that,” says Kiefer, who co-chairs his firm’s Climate Change Resilience Task Force. “Your asset is going to perform better. You’re going to have lower energy costs. It’s more climate resilient. You’re going to have fewer shutdowns when there are extreme weather events.”

LEED is the rating system used by the U.S. Green Building Council to measure sustainability and efficiency. While it’s “a great way to signal to others that you’ve done green building, there are measures that make business sense whether you get a high LEED rating or not,” Kiefer adds. 

Since energy accounts for a great percentage of a company’s expenses, finding ways to be more power-efficient benefits the bottom line, as does eliminating shipping methods that produce excess emissions and waste. 

Even better, funding for such transitions is available at both the federal and state levels. The Inflation Reduction Act of 2022 offers business credits and deductions for a long list of projects, from electric vehicle purchases to wind energy production. In addition, says Jennifer Hernandez, of Holland & Knight in San Francisco, “There are companies that are taking advantage of tax credits or rebates or grant funding to upgrade their transitional infrastructure, adding car chargers for employees or customers.”

To those who say, “These changes will cost too much,” don’t be so sure.

The state of New York, for instance, is poised to offer incentives as part of its Scoping Plan to reduce greenhouse gas emissions and increase renewable energy use. “The big news is what’s going on at the federal level in terms of clean energy,” Healy says. “Clean energy is not as expensive as it used to be. There’s a lot of energy savings with wind and solar, and there’s a lot of payback in terms of measures to make buildings more energy-efficient.”

Just Do It

As a business leader, your plate is probably already full just trying to keep up with taxes, compliance issues and employee turnover, not to mention day-to-day operations. Do you really need to 

add a comprehensive climate action plan to that already-overwhelming list? 

“I wouldn’t say that it’s necessary. I would say that it is helpful,” says Steve O’Day, head of the environmental, energy and sustainability practice groups at Smith, Gambrell & Russell in Atlanta. “Say it’s a company that purchases widgets to make other widgets and it’s a small operation of five employees. [They can] ask, ‘How can we identify suppliers that would reduce our carbon footprint?’ That may be all they do, and it’s important.”

It’s OK to start small, says Nancy Rich, a former environmental prosecutor who now practices at Chicago’s Katten Muchin Rosenman. “If you’re a local restaurant, do you really need all that plastic silverware? Do you need those plastic straws? It can be that simple to start out with.”

No matter the size of your company, you should assess its vulnerability to climate change and what you can do to minimize the potential impact. If, for example, your processes require a lot of water and you’re planning to expand, you’ll need to know if drought is likely to affect the supply at the new site. If your business sits near the coast, you’ll want to take steps to protect it from storm surges. 

“A large storm can wipe out a small business and may never recover from it,” says O’Day. “So the focus on risk helps to broaden a company’s outlook, from not just the bottom line on an annual basis, but how this business can be sustainable over 10, 20, 30 years.”

Before you implement a lengthy and far-reaching climate change plan, identify and pluck the low-hanging fruit, O’Day suggests. “It may be, ‘Hey, we have a flat roof. It’s easy to put a solar project on top of this roof and use renewable energy.’ Or it may be, ‘We use a lot of water as a car dealer, washing cars. We could reduce our impact and also save money by using less water. How can we accomplish that?’”

Other suggestions include: Change out your water heater and other energy-zapping appliances. Install battery backups that can be used not only in brownouts but during peak electrical demand to save money and lessen the strain on the power grid. Donate a tax-deductible solar energy kit to a nonprofit that can’t afford one—you’ll both benefit. 

“Giving people the option to work off-hour shifts so that they’re not caught in the worst of the traffic and they shorten their commute time is another way of reducing the carbon footprint of the company’s operation,” says Hernandez. “Or give people the option of working hybrid or remote.”

Take time to analyze the ways in which your company might be polluting the environment. What emissions-intensive operations can you eliminate? If your old production equipment is nearing the end of its lifespan, replace it with a zero-emissions version. Or swap that diesel truck you’ve held onto for decades for an electric or natural gas model.

“If you can avoid, for example, having to dig ore out of the ground and transport it by freighter across the lake and empty it into a pile and then run it through a blast furnace, instead use steel products that already exist that can be recycled,” says George Curran, an insurance and environmental attorney at Kotz Sangster in Detroit. “You are cutting out all of that cost and all of the energy consumption and all of the emissions that go along with the mining, the shipping, the transport. And those raw material costs have now significantly dropped.” 

Another strategy, Curran says, is to learn a lesson from the pandemic-induced supply shortage and source your commodities from closer locations, thereby improving reliability and reducing shipping costs.

The payoff can be great, says Rich. For example, she once counseled a fashion company’s executives who didn’t want to buy fuel from coal-fired power plants to install solar panels. They consumed 75% less energy from the plant. “It was huge,” she says. “Upfront, it cost them more money, but in the long term, there was a cost benefit as well.”

Kiefer suggests making climate change adaptations, including those mandated by law, sooner rather than later. With his Boston clients, for instance, he advises they do more than the bare minimum stipulated in the city’s rigorous ordinance requiring carbon neutrality for all buildings by 2050, with steps taken in five-year increments. “Since you’re going to be completely redoing your mechanical systems if you’re doing a substantial rehab, why don’t you just get as close as you can to zero and not have to worry about it?”

When to Seek Legal Advice

Environmental business regulations are only expected to increase as climate change takes its toll. A lawyer can help navigate, alert you to compliance strategies and help you buy time, if necessary, to meet the requirements. 

“When you need to install a charger in your parking lot or driveway, you need a permit,” says Hernandez. “When you want to put solar on the roof, you need a permit. Those permitting processes are notoriously complex, and lawyers can help get them done.”

And, says Curran, “If you’re going to be manufacturing a particular kind of product and releasing materials either into the air or into the water through a sewer system, all of those things are regulated, and knowing how to deal with that is very important. Attorneys stay up-to-speed and up-to-date and know what’s going on in the business community. They are keyed into what’s happening from the legislative and the court perspectives.”

State regulations can be particularly confusing, especially for companies with wide-ranging facilities. 

“In some ways, we’re sort of the quarterback when it comes to somebody who’s just wading into this for the first time,” says Rich, who often recommends sustainability advisers or data consultants to help clients with the details of implementing their climate change plans.  

Green, Not Greenwash

Publicizing your strategies to address climate change can help you attract customers who care about these issues. But if you cross that line into “greenwashing”—exaggerating what you’re doing to save the planet, or playing up steps most businesses already take anyway—smart consumers will see right through you.

“Greenwashing has really worn thin,” Kiefer says. “People will look a little deeper about what you’re really doing. You actually lose points sometimes by inflating your measures, your accomplishments.”

What might be next? A proposed Securities and Exchange Commission requirement that will force companies to disclose their carbon footprint details, including emissions from suppliers, when compiling annual reports and other statements. Regardless of when, or if, the new SEC rules go into effect, unsubstantiated claims can get you into hot water as more companies are being challenged about the accuracy of their assertions.

Companies that sit on the sidelines and ignore the effects of climate change are at a greater risk, attorneys say. The main thing is to get started.

“You don’t have to do everything all at once. You can do the things that make sense to you and that make economic sense and do them in priority order as you go along,” says Healy. “Maybe the first thing you do is put efficient windows into your building. Maybe the next thing you do is get a more efficient power source in your factory. People think of climate change as this paralyzingly gigantic problem that is so big and so scary and so amorphous and so global that they just put it aside. 

“Just break it down into bite-size pieces and think, ‘How is this going to affect me and my business from a physical point of view, from a regulatory point of view?’ And then turn the page.”