Legal aspects of sustainability

Green building and certification not only aim to reduce the consumption of energy and resources to a minimum, but also to reduce the burden on the environment and to improve the overall efficiency of the building. The property is considered over its entire life-cycle, from planning and construction to use, operation and maintenance all the way to demolition and renaturation. It is therefore particularly important to renovate or modernise existing buildings in a forward-looking way that fulfils the ESG requirements and maintains the properties’ saleability. 

Green leases are an important tool both for tenants and landlords as part of their sustainability strategy. Ideally, they not only offer potential to make savings but are increasingly a factor that increases value. Nevertheless, there is often a tension between the differing interests of the contracting parties, something that requires practical rules that take into account the ESG requirements that apply to the property and their economic effects.   

Green building and green leases are therefore two important building blocks for your individual sustainability strategy that become relevant in using, valuing and financing your real estate. With a view to the economic effects, we’ll give you assistance in implementing the regulatory ESG requirements in a contract.  

We’ll assist you with adapting your working environment to the relevant ESG criteria, e.g. complying with reporting requirements, implementing employee data protection and implementing the Whistleblower Protection Act (Hinweisgeberschutzgesetz – HinSchG). 

We’ll also help you draft agreements concerning employer’s contributions (e.g. linking variable pay to achieving ESG targets). 

Furthermore, we’ll assist you with legal disputes, such as if individual claims are made due to the infringement of labour standards or if rights to participation have not been observed or are observed inadequately.  

We’ll identify with you potential ESG liability risks in advance, both from the viewpoint of the company and as regards the liability of the executive directors/management. Appropriately accounting for and evaluating ESG factors is a major component of management and of limiting litigation risk.

We’ll adapt your contractual relations with suppliers and customers to match the legal requirements. We’ll give you assistance with disputes related to ESG in the supply chain, e.g. in separating from problematic partners or recourse in the case of liability.  

Aspects of sustainability are also becoming more important in advertising and in the annual financial statements. This brings with it the risk of (unintentional) misstatements. We’ll defend you in disputes against accusations of greenwashing and will naturally keep our eyes on the EU Green Claims Directive. Besides winning the case, we’ll also take care of your public reputation.

Strategic investors increasingly want to improve their ESG profile. Criteria include acquiring companies with low CO2 emissions, those with particularly environmentally friendly or low-resource manufacturing processes or those that make their own intermediate products in order to be able to effectively monitor compliance with human rights and environmental standards in manufacturing. 

As part of the due diligence process, we’ll go through a ESG checklist designed for the target and the sector.

We check whether the buyer (with any associated companies), by making the intended transaction, has reached or exceeded any thresholds and is thereby compelled to keep additional ESG duties of care or report. 

We allocate opportunities and risks of aspects of ESG or future developments in ESG in the sales and purchase agreement and draft specific ESG earn-out models to cover and/or initiate future company development.

We’ll assist you with structuring and implementing long-term investment strategies to achieve your financial goals and at the same time to take social and ecological responsibility. Our team is very familiar with the regulatory requirements and developments in the investment sector and will help you to minimise legal risks and to structure your investments in a future-proof way.

The Taxonomy Regulation

The Taxonomy Regulation is an important step on the way to a sustainable economy. We’ll assist you in understanding the strict criteria of the Taxonomy and integrating them into your investment decisions. We’re right at your side to ensure that your investment fund or financial instrument meets the requirements of the Taxonomy Regulation and can be classified as ecologically sustainable. With our assistance, you can aim your investments at forward-thinking and sustainable sectors and strengthen your credibility as a responsible company.

The Sustainable Finance Disclosure Regulation (SFDR)

Transparency and disclosure are crucial elements in sustainable investments. We’ll assist you with implementing the requirements of Arts. 6, 8 and 9 of the SFDR in particular to ensure that your investors and customers receive comprehensive information on the sustainability measures you have taken. We’ll help you identify the necessary ESG indicators and adapt your reporting to match the regulations of the SFDR. 

Green, social and sustainability-linked bonds

We’ll give you assistance with the emission of green, social and sustainability-linked bonds and with placing them on the proper exchange to strengthen your sustainable investment strategy. These bonds are a way to make targeted investments in projects and companies that have a positive effect on the environment and society. We make sure that these financial instruments meet the criteria of the European Green Bonds Standards (EUGBS) or the ICMA Principles and thereby fulfil the relevant requirements. 

Green securitisation and securitisation of green investment funds

Green securitisation is another innovative financial product that opens the way to sustainable investments. The securitisation of green investment funds in particular allows capital to be mobilised for environmentally friendly projects and offers investors broader opportunities to invest sustainably. We’ll assist you as one of the first to understand and successfully implement the legal conditions for green securitisation. We’ll make sure that your green securitisations can be acquired under the law governing financial regulation, and are structured to save equity.

Companies need solutions so that their technical infrastructure uses as little energy as possible. Decision makers are increasingly focusing on migrating to server centres that are run using green energy so that they contribute to making a “green footprint”. We assist companies along this path and ensure that the technical migration and outsourcing are legally successful. 

Cyber security

In connection with climate change, inadequate cyber security is one of the greatest risks to companies. Attacks on critical infrastructure and networks as well as climate change threaten the material and immaterial values of businesses. Since ESG lays the foundations for how investors and companies consider the impact their investments and activities will have on the environment, society, ethics and governance, a cyber security strategy that is embedded in ESG is needed, taking into account the relevant legal framework, so that sustainable innovation is not jeopardised by cyber-attacks.

Data protection

We help companies to combine data protection with the ethical requirements of the ESG objectives in terms of legal compliance and technology, and thereby to lead their companies to success, whether by using sustainable smart products, artificial intelligence or data analysis at the company. The requirements of data protection are high and parts of it are complex. Particularly in ESG, the principles of data protection (e.g. non-discrimination, handling sensitive data such as health information, sexual orientation, worldview, etc.) must be implemented thoroughly within the company and lived out in the corporate culture. 

The Whistleblower Protection Act (Hinweisgeberschutzgesetz – HinSchG)

When it comes to the “Whistleblower Act”, all employees should be able to make anonymous reports via a reporting point if they notice untoward circumstances at the company. Setting up a “reporting point”, complying with the other legal requirements, process-based management and consolidating the ethical principles at the company are all items that our interdisciplinary team of experts can help with. 

Digital innovation

For a successful ESG strategy at your company, digital innovation is indispensable. Deploying staff in a way that saves on resources, energy and transport as well as developing new products and services lead to artificial intelligence being applied in many different ways. In preparing for imminent Europe-wide regulation, companies are required to develop governance structures so that they are prepared early on for the legal requirements on using AI systems. This is the only way that the use of AI systems can be managed in business in a way that is legal and ethical.

Supply Chain Due Diligence Act (LkSG):

The Supply Chain Due Diligence Act is a classic example of ESG regulation. We’ll help you implement the mandatory requirements of the Supply Chain Due Diligence Act to observe human rights along global supply chains and draft contractual clauses for direct suppliers. A prime example is whether a supply chain has become obsolete due to additive manufacturing (3D printing) or can at least be reduced because transportation can be shortened through on-site production. We provide legal advice on all the aspects of setting up platforms or decentralised dispatch hubs to shorten supply chains, contract drafting, licencing and protecting IP rights and know-how.

Criminal legislation

In relation to greenwashing, there are a list of legal pitfalls that companies need to avoid.  Alongside civil liability risks, criminal allegations also play their part. If incorrect sustainability disclosures are made, this can lead to criminal accusations being made, such as fraud, or subsidy or investment fraud. We’ll provide preventive advice and defence in the case of criminal allegations.

Marketing and competition law

Marketing and competition law must also be considered from the standpoint of ESG, e.g. the content of marketing and advertising claims. We’ll assist you with identifying risks to ESG compliance and avoiding formal warnings (Abmahnungen).