‘Businesses fear regulation on transition-washing’: Environmental lawyer Joyce Melcar Tan

Earlier this month, Joyce Melcar Tan was appointed to lead ClientEarth’s operations in Japan and Southeast Asia, with a brief to work with policymakers to strengthen corporate climate governance, financial and energy regulation; and environmental rule of law.

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The battle to address the climate and nature crisis will either be won or lost in Asia.

Joyce Melcar Tan, associate director, Japan and Southeast Asia, ClientEarth

Tan tells the Eco-Business Podcast that a key emerging legal risk facing business in Asia is transition-washing – carbon-intensive companies that greenwash their transition to more sustainable ways of doing business. This phenomenon is particularly prevalent in climate finance.

This week, ClientEarth published guidelines to help policymakers plug the global regulatory gap in climate financing and tackle the rise of transition-washing.

Tan says the shift from voluntary to mandatory sustainability reporting will also pose legal risks for companies in Asia Pacific, as countries from Japan to Singapore start holding corporates’ feet to the flames over their declared impact on the planet.

The Philippine national talks to Eco-Business the week after the legal profession attracted scrutiny for its environmental impact and the clients it represents. Can law firms be guilty of greenwashing too?

Joyce Melcar Tan is ClientEarth’s associate director for Japan and Southeast Asia. Image: ClientEarth

Tune in as we discuss:

• Why be a environmental lawyer? Tan’s “Lightbulb” moment
• What is ClientEarth doing in Asia?
• How climate law varies across Asia
• The rise of climate litigation in the Global South
• The legal perils of transition-washing
• The big leap from voluntary to mandatory sustainability reporting
• Scrutiny of greenwashing in the legal profession
• Protesting against climate inaction in Asia

The transcript in full:

Why did you become an environmental lawyer?

I was born and raised in Cebu City, which is in Central Philippines. I spent my childhood weekends at the beach, so I had a keen appreciation and affiliation for nature. I went to law school partly because my dad was a lawyer, so it seemed natural to go on the same path.

When I graduated from law school, I joined what was then the biggest law firm in the Philippines, so I could train with the best legal minds. There I learned about the immense power of the law and language, which are very important tools for lawyers to shape society’s behaviour. 

Working for that firm really developed my work ethic. But I was also exposed to work involving environmental regulations, and that reignited my interest. I thought I should specialise in this, and decided to take a master’s degree in environment and development.

There was one class that changed the course of my life. It was called “Atmospheric quality and global change”. I was the only lawyer in that class. We had various sessions discussing different areas of climate change science and the policies underpinning the global response to these different issues. That really sparked this interest in me, and how my legal background could provide certain solutions to this global problem.

I liked the idea that we could do cross-discipline, cross-border work and that’s why I decided to stay in the field. It was sort of, my “light bulb” moment, and also made me realise that no matter what kind of experience you have as a lawyer, you could contribute to solving different parts of the climate crisis. So every lawyer can be an environmental lawyer.

You’ve recently been appointed to run Japan and Southeast Asia for ClientEarth, running energy transition and nature programmes. Tell us a bit about that role.

We should start with why we’re working there in the first place. Asia is very interesting because it has 60 per cent of the global population. It now accounts for the majority of global carbon dioxide emissions. And that’s also where about 80 per cent of the current and planned global coal fired power capacity are housed. In addition, the average age of a coal plant in Asia is only one third the age of an average European plant. They still have a long operating life ahead. At the same time, you have about 350 million people that still lack electricity access.

So for us, it’s this geography and this context where you have this intersection of global crises. And we know the battle to address the climate and nature crises will be won or lost in Asia. So that’s why we work here.

As you said, we have energy and nature disciplines. Our nature work is still very initiatory, we’re trying to understand who is doing what, the remaining gaps, and where an organisation like ours might be able to usefully support the work of those already working there, so that we can collaborate with them and amplify their impact.

On energy, that’s where we’ve been more active. Over the last four or five years, we’ve approached it through three different buckets. The first one focuses on companies. That’s to drive down private sector emissions and to try to shift the flows of money towards sustainability and achieving the Paris Agreement goal of keeping the temperature rise well below two degrees.

We use tools like directors’ duties, explain how current corporate law already obligates company directors to manage climate risk in order to promote long-term shareholder value. The second part is energy policy. That’s where we try to understand how the energy sector is regulated, so we can then identify possible hidden advantages for fossil fuel companies, make them transparent, and work to progressively reduce them and level the playing field and accelerate the penetration of renewables in the energy system.

Finally, we also work to build the field of environmental law. Because we’re an environmental law non-profit, we work with various stakeholders within the legal community – law schools, judges, regulators. We help keep them abreast of the latest developments in climate science and policy, and encourage them to put on an environmental lens on the way that they work within their spaces in the legal community.

For example, we’re now working with 20 law schools to train the next generation of environmental lawyers. That way, the long term vision is that we’ll have more lawyers who feel empowered to act on the climate and nature crisis.

ClientEarth’s approach in Asia Pacific is very different from the approach it has taken in the West, right? Some past activities in Europe have included campaigning for environmental justice for citizens and NGOs and using the law to close coal plants. Is there any scope for ClientEarth to take a more aggressive approach to holding polluters to account in this part of the world?

Well, you’re absolutely right that in Asia, we’re working collaboratively with stakeholders in government and business to spur more decisive climate action. But we’re also attuned to the different political, social and cultural environments. So we try to tailor our approach for what would be most impactful in the region. Yes, there is scope to take more aggressive approaches, but we still see so many opportunities for more collaborative ones.

As ClientEarth, we work within the entire legislative life-cycle, meaning we help with formulating laws, their implementation and enforcement. Then we help strengthen them to ensure they remain attuned to addressing the environment. So this work is not limited to litigation, it’s just one tool in our arsenal. In Asia, what we’re focused on at the moment is looking at potential improvements to legal systems and their enforcment.

The Philippines Commission on Human Rights ruled that fossil fuels companies could be liable for extreme weather. In Indonesia, the president has been taken to court over poor air quality in Jakarta. So I guess your job is extremely varied in terms of the levers that you’ll use in different countries in Asia?

Absolutely. Because while we’re scoping how we can usefully work in one country, especially one we’re new to, we do look at what else has been happening, what others are already doing.

In the Philippines and Indonesia, there’s a very dynamic civil society voice. And there are many orgnaisation who have brought forward these cases and campaigned quite effectively for their governments to take stronger action in enforcing environmental regulations. This is important, but there is another role would play in other areas of the law.

In the Global South, according to a study from 2023, we’ve seen a rise in climate litigation in tandem with deteriorating climate impacts. Why do you think that is? And do you think it’s the shape of things to come?

I think one of the key reasons is that in the Global South, certainly in the Southeast Asian jurisdictions we’ve been working in, you don’t really see climate deniers, right?

On the other hand, you have so many communities on the front lines of climate change impacts. It’s already existential, it’s not a future threat. As people start appreciating how this is connected to corporate behaviour, or lack of government regulation of corporate behaviour, there are a lot of communities and citizens’ organisations that have brought this issue before the courts and other tribunals to seek compensation for losses from these impacts.

I think this trend will continue. We’re witnessing more and more impacts, not just in the Global South, which science informs us are really linked to increased carbon emissions, and our current inability to address the climate crisis.

What environmental issues are companies in Asia Pacific most worried about from a legal perspective?

It’s certainly the threat of being held liable. This is both for not complying with the law, and also the potential costs associated with a non-compliance finding. But I just wanted to point out a couple of things, because these are very much live issues in our current work.

One is the rise of sustainability reporting. Many companies, especially in emerging Asia, still look at sustainability reporting as a compliance issue, a cost centre; they need to pay to get their reports done. But I think this misses the point of sustainability reporting being just one tool to get corporates to manage the way that they make business decisions in order to be Paris-aligned.

I think they’re having difficulties with that, so the mindset could shift from compliance to best practice, understanding how they can use these reporting tools to create long term shareholder value, because of the potential opporunities arising in response to the climate crisis.

The second one is also this fear that there might be coming regulations on transition washing. That’s the greenwashing of transition finance. For example, we’ve seen Japan take leadership in putting forth a transition finance program with their climate transition bonds.

But there’s a risk that companies might be putting labels saying ‘we’re transitioning’ when some of them aren’t actually transitioning, based on their financial decision and business plans. 

Can you talk about a company that is guilty of transition-washing or name an industry that is particularly guilty of that?

Well, rather than naming companies, I’ll point to an industry. The power generation sector is definitely a key one. Ambitious targets have been announced with no details behind them.

There definitely should be a lot of scrutiny into what these targets actually mean, and whether they’re setting short, medium and long term targets towards aligning with the Paris Agreement, and their actual planned actions to reach these targets. Other potential sectors to watch out for would be the steel and auto industries, because these industries are difficult to transition.

We need to be careful with the statements and the commitments made, and ensure we scrutinise the data behind high level statements.

There’s a bit of a regulatory lag at the moment in Asia Pacific regarding sustainability reporting in many countries, for example, Indonesia, where sustainability reporting is mostly voluntary and certainly they’re not legally bound to provide accurate data, right?

That is true. This has been the current challenge because regulators want to ensure eligible companies are able to comply with the mandates they issue. 

What we’ve heard from discussions with regulators, is that they also are not sure if the companies are already in a position to comply. So then they [the companies] say, okay, maybe for some parts, we’ll comply or explain [why we can’t comply]. And that is a major issue as then many companies will just explain away why they’re not reporting certain data.

So we really have a long way to go, first in transitioning sustainability reporting from voluntary to mandatory. Next, making sure that when these reports are mandated, the disclosures are actually meaningful so that they reach their goal of making investors and shareholders really understand what companies are trying to do and whether they’re genuinely transitioning or not.

An issue that’s popped up just in the last week from having spoken to a lawyer is greenwashing in the legal profession. There was a study that featured on a legal journal law.com that looked at 100 law firms and their exposure to fossil fuels transactions. Many of these firms win awards for sustainability. What’s your view on greenwashing in the legal profession and how big an issue it is? 

I think it is a really big challenge. In the past five years until 2023, some of these top 100 firms were reported to have facilitated US$2.9 trillion in fossil fuel transactions. They’ve also received about US$33 million in compensation for lobbying on behalf of fossil fuel interests. So, it is a very big issue.

To date, the legal profession has not received that much scrutiny. Certainly nowhere near fossil fuel companies, but we are an important enabler or disabler, as it were, for these kinds of transactions. Many of these fossil fuel contracts will have legal documents behind them and therefore legal advice underpinning them.

One of the ways this is tackled is through things like climate scorecards. I think that’s a very good first step because it raises awareness and makes fossil fuel exposure public. I think public discussion about the role lawyers play in enabling these transactions is vital. It also puts lawyers on notice about their role in advising their clients and their clients’ decision-making. 

What can the layperson in this part of the world do to protest against big polluters, knowing that they could get into serious legal trouble if they did so?

I do understand where people’s impatience is coming from, with regard to government and corporate action to address the climate crisis. But I do think that it is important to stay within legal boundaries to make sure we seek accountability from “the bad people”.

There are several things that you can do within those boundaries. One really important thing is to keep in mind whom you’re voting for, because the people you put in power are the ones who will be driving your community’s economic and environmental agendas for years to come.

So that’s both national and local elections. Besides that there’s also a big role for the public to play in terms of their opinions and the awareness they raise and impress upon their politicians, because ultimately their politicians will listen to the electorate.

If there’s a strong enough call for the laws to change to increase accountability then that could be very powerful.

Thirdly, there’s voting with your purse. If you know these big companies are really not making sufficient effort to become sustainable, then you can boycott their products.

Finally, I think wherever people are, if you’re working for a company, a local government, a bank, there are different ways that you can work within your organisation to increase your own sustainability. That has the effect of slowly moving the entire ecosystem towards sustainability.

The actions of Extinction Rebellion and similar outfits get media attention and are very powerful because they catch your eye. But there are also other things that can be done in a quieter manner that are equally or even more effective.

Can I just pick up on something you said earlier about not needing to be based in a specific country to have impact in another country as a lawyer. How does that work?

This is possible because law is ultimately based on or founded on what’s reasonable and what’s logical, right? So we put illegal obligations that govern the behaviour of companies and individuals based on the context, the data, the science that we see in the context of the climate and nature crisis – this is a shared crisis that is experienced across different geographies and borders. 

When we say we’re using climate science law, this means we can actually use climate science advances from other regions, or globally, to inform local policies and laws. For example, even if you’re based in Indonesia or the Philippines, you could work with overseas lawyers, scientists and bankers to develop governance frameworks for sustainable finance, or climate action locally.

So there are different ways we can leverage the knowledge and expertise in different jurisdictions to govern a set of behaviours in one particular jurisdiction. And I think that’s the beauty of it.

This transcript has been edited for brevity and clairty