Articles in this report: Reflections on New Zealand; Climate change - more than hot air; The viability of IP; Financial advisors under the spotlight; Duncan Cotterill on international stage (firm profile); Chris Heilbronn Kensington Swan
Ready or not, an emissions trading scheme is on the way in New Zealand. Are law firms up for the challenge?
If there was ever any doubt that carbon trading is a serious business proposition, the listing of carbon credits for sale on Trade Me - the New Zealand equivalent of eBay - by a major energy company last year must have been a timely confirmation. Admittedly, the listing was a bit of a publicity stunt, but it does serve to highlight the fact that New Zealand is on the front foot when it comes to climate change.
Law firms were watching with interest in December last year as a new Bill was tabled in New Zealand parliament. The Bill was of interest to firms for two reasons. First, it sought to implement a 10-year restriction on new baseload fossil-fuelled thermal electricity generation - in other words, encouraging renewable energy, more investment in infrastructure and, of course, more work for law firms. Second, and perhaps of even more long-term significance, the Bill aimed to introduce a greenhouse gas emissions trading scheme covering all sectors and all gases.
"The Bill is still before parliament," says Simon Watt, partner at Bell Gully. "The general consensus is that the emissions trading scheme will happen and there's a good chance that it will happen this year. It will have a wide impact and eventually apply to just about all sectors of the economy."
As wide as the impact may be, not all businesses have cottoned on to the significance of the scheme. "Awareness is too low,' says Nigel Oliver, partner at Anthony Harper. "We've even thought of running some advertisements to generate some business."
Advertising for work in relation to a scheme not yet in existence may sound somewhat precipitous, but Oliver explains that carbon trading involves the kind of investment that can take a while to bring into effect.
"Carbon credits are a potential source of income. For example, changing energy inputs or the agricultural sector could create wind farms on land without any disruption to their farms and produce carbon credits. There's no reason why people can't be looking at the issue now - even though the system isn't up and running yet - because the infrastructure involved will most likely take a while to develop" Oliver says.
Characterisation
Bell Gully has created a multidisciplinary climate change group comprised of specialists from the firm's tax, banking, government, forestry, electricity and resource management teams. The link between carbon trading and areas such as government or resource management is obvious, but to the uninitiated, the nexus with areas such as tax and banking might not be so immediately apparent.
"Climate change is a matter of national economic policy, not necessarily just an environmental issue," says Watt. "The carbon trading skillset is quite similar to what you get in banking, and carbon credits will end up being just another commodity over time. Involvement of banking groups will be quite substantial."
Indeed, a lot of Watt's work to date has involved advising government clients on planning the commercial aspects of the scheme. "The aim is to make it work like the financial markets and to transfer financial markets principles across to carbon trading," he says.
But the work is not limited to facilitating the planning phases. Several trading systems are already operational overseas, the most notable being the European Union Emission Trading Scheme, which has generated work for New Zealand firms.
"We've done work for wind farms that have generated carbon credits for trade on the European market," says Watt. "We've also done work for British banks looking to acquire units to onsell to clients, and a Polish energy company that acquired units for its own use."
Of course, none of this should overstate the volume or lucrativeness of carbon trading work. "It's never going to be like banking or corporate in terms of scale of work," says Watt. "I'd say it will be more analogous to taxation work. Every transaction will have a carbon component and it will be a recognised practice group - perhaps around 5% of a firm."
BELL GULLY BRANCHES OUT
While florists are fond of the catchphrase 'say it with flowers', Bell Gully's equivalent may well be 'say it with trees'. This year the firm has taken a different approach to the marketing of its annual summer clerk recruitment program. Instead of the traditional printed brochure, the firm has directed 1,600 law students across New Zealand to a website and also mailed them native trees to plant. While organic growth is a good strategy for any law firm, the trees seem to be a sign that Bell Gully is taking this strategy rather literally.
The firm also recently purchased the first ever Certified Emission Reduction units to be transferred between countries, and intends to use these to offset its own emissions and achieve carbon neutrality. Given that the market is increasingly aware of the importance of environmental responsibility and the positive image that taking such action is likely to generate, this is a smart move by Bell Gully and one likely to consolidate its reputation as a 'green' firm.
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