There is no doubt that the pandemic catapulted society and businesses into a new and different world, which saw old working practices replaced by new and which advanced the adoption of new technology at a rapid pace. However, one thing didn’t change at law firm Shoosmiths, and that was how Environmental, Social and Governance (ESG) considerations still firmly lay at the heart of the business strategy.

The firm’s ESG vision is to be the leading UK law firm, famous for its positive contribution to society. Our belief is that businesses need to play a leading role in protecting the climate through collective action. Our environmental objective is that Shoosmiths is committed to protecting the environment by demonstrating high standards of responsibility in all its operations and preventing or mitigating the environmental impacts associated with our activities, products and services – befitting of the aims of COP26. 

Continual improvement forms an important part of our approach, so we can achieve an overall positive environmental impact as a result of the way we do business. In the last 18 months, the firm has committed to a net zero future, with a target for our operations to achieve net zero emissions by 2025 and a commitment made to the Science Based Targets initiative to set science-based emissions reduction targets across the entire value chain that are consistent with keeping global warming to 1.5°C above pre-industrial levels.

We’re proud to be working to facilitate best practice discussions among clients too. Through roundtables led by our CEO Simon Boss and chairperson, Peter Duff, we are explaining how placing ESG matters on every boardroom agenda can bring about real change today and for future generations.

By working with clients closely every day and by having these discussions, we’re in a privileged position to learn about the real changes that are happening in different corners of the business world. One example is Edinburgh corporate partner, Alison Gilson’s ongoing work with Extreme E, a radical, new concept of electric car racing, in the most remote corners of the planet to highlight the impact of climate change.

There are countless other examples of businesses across corporate finance, employment, mobility, and energy and infrastructure that our lawyers see every day. In this piece, we will focus on specific progress on the sustainability agenda we have noticed as a firm in the banking and real estate sectors.


Unsurprisingly, finance is at the heart of COP26 because of the level of investment required to tackle climate change. As Fiona Cameron, banking partner for Shoosmiths in Glasgow explains, climate change has become a strategic focus for all of the big banks and financial institutions: “ESG (environmental, social and governance) is on the tip of everyone’s tongue.

‘Green loans’ (where loan proceeds are used for a ‘green’ purpose) and ‘sustainability-linked loans’ (which incentivise borrowers to meet agreed sustainability performance targets) are gaining popularity. “Shoosmiths’ experience is that the setting of the performance targets required for these loans is really the main impediment to their wider uptake. Organisations are required to set targets that work strategically for both the lenders and the organisations themselves but agreeing targets that are acceptable to both parties can require considerable time.

“Notably, the Loan Market Association has prepared guidance on the principles governing green and sustainable loans. However, they are wide-ranging and in my experience can be interpreted differently by various lenders, giving borrowers the question of which lender best fits its funding requirements. Of course, there is also the matter of the management time required to measure continued compliance and the cost of independent verification.

“It’s significant that the incentive of cheaper debt in return for meeting sustainability KPIs can be considered a win win for borrowers and for their funders. Both increasingly must answer to stakeholders scrutinising the sustainability of their investments.

“The constraints at play have meant that the borrowers we have seen taking up these types of loans have been larger corporates. In my opinion it would be good to see greater uptake in the mid corporate and SME markets but, in reality, this will likely only happen en masse once there is consensus on targets that are accepted as the market standard. In the interim, companies of any size should not hesitate to approach their bankers to explore green loans or sustainability linked loans (SLLs). Certainly, we find most of our bank contacts are only too happy to consider green or sustainable propositions.

“Interestingly, there are signs that the pandemic has influenced a marked shift in emphasis towards the ‘S’ (social) in ESG and this is reflected in the financial sector where there is notable enthusiasm on the part of lenders to support borrowers with social purpose. This is likely to be a growth area in the future.

“In summary, COP26 is the backdrop for what is an exciting time for both Shoosmiths’ lender and borrower clients and from a legal perspective we are delighted to be able to support them in using finance as a real driver for positive change.”

The built environment

Given the significant contribution the built environment makes to CO2 emissions (according to the UK Green Building Council it’s around 40 per cent of the UK’s carbon footprint) carbon reduction measures are no longer a ‘nice to have’ for new developments or in refurbishment projects for existing buildings. As Sheelagh Cooley, real estate partner at Shoosmiths in Edinburgh outlines, if ambitious net zero plans are to be achieved, all stakeholders must now put carbon reduction at the centre of their strategy for management of existing or future real estate requirements.

“The affordable housing sector has long embraced carbon reduction strategies so it’s helpful to consider how it has addressed challenges like funding and how ‘green’ technologies are being incorporated into designs. One of the ongoing issues faced by the affordable and wider residential and commercial sectors is how best to retrofit existing buildings and reconcile the challenge of cost v benefit. A detailed analysis of the options available in the funding market, in addition to the incorporation of carbon reduction technology will be required at the outset of any proposed refurbishment plan.

“It’s becoming clear that an increasing number of commercial developers are acknowledging the need to incorporate sustainable and low carbon measures within their developments. In part, this is influenced by the growing number of sustainability linked and green loans available and the tangible financial benefits these loans can deliver.

However, it’s significant too that developers who wish to achieve their long term goals can ill afford to ignore the growing demand from corporate occupiers (and their employees) for utilising buildings with strong sustainability credentials.

“The challenge for the built environment is to ensure the measures they are introducing to achieve carbon reduction are not construed as ‘greenwashing’. Fundamentally, designs must be future-proof and financially viable both for the developer and ultimate occupier.

“Undoubtedly, the pandemic has accelerated demand for change. With COP26 being hosted in Scotland, there is real momentum among many sectors of the real estate market to ensure net zero targets are both set and deliverable action plans put in place to achieve those targets.”