Special thanks to Morrison & Foerster LLP for its generous Cleantech Committee sponsorship.

Cleantech Committee Co-Chairs

Jesse Francway, Corporate Attorney, Applied Materials

Anthony Lebe, CEO and CLO, Renewable Energy and Cleantech Ventures Consultants

The Cleantech Committee will organize a series of quarterly CLE programs to discuss critical Cleantech issues with leading experts in the space. Each program will be designed specifically with the SFBA chapter membership in mind, focusing on the Cleantech legal issues, developments and trends that all GCs need to understand.For more information on chapter activities, to suggest a topic for a CLE program or to participate in a presentation, please contact the Committee Chairperson.

Archived Past Program Materials

3/4/09 – “Cleantech: The 10 Most Critical Legal Issues Every GC Should Know”     
“We have no intention of backing away from our historic commitment to the fight against global warming because the economy has slowed down. The green rules and regulations that will help save our planet will also revive our economies.” -- Governor Arnold Schwarzenegger, United Nations Climate Change Conference, Poznan, Poland, Dec. 2008. 

In the long run, the world-wide "green" revolution may have as powerful an impact on business as the preceding digital revolution--affecting which products and services will be competitive and how they will be marketed, made, and sold.  In the United States, the revolution is gaining momentum, despite the troubling economic times.  Recently inaugurated President Obama and the new Congress are committed to investing billions to catalyze renewable energy and energy efficiency projects. Moreover, the sustainability imperative, driven both by government mandate and consumer demand, has and will continue to generate the need for a new legal framework -- reaching far beyond current environmental and energy regulations.

All corporations, regardless of whether or not they focus on the "Cleantech" sector, will be affected by these new opportunities, rules, and regulations. Understanding the emerging framework and, in many cases, taking action now, is essential not only to mitigate potential risk and liability but also to capture some of the benefits and new business opportunities generated by the green revolution.

At the very least, every in-house counsel and Board member should be aware of the following top ten legal issues related to Cleantech and Sustainability:

1.  Corporate Governance.  Prepare your company for increased disclosure obligations around the world related to the environmental impact of corporate operations reaching far beyond the sectors that typically experience high carbon emissions. Fiduciary duties and the business judgment rule now require directors and officers to evaluate the environmental impact of their operations, including greenhouse gas (GHG) emissions and use of non-renewable energy to power corporate facilities and production. Consequently, there are a host of new actions that every company now needs to consider taking, including the purchase of carbon credits, voluntary reporting of GHG emissions, and changes in purchasing and operations in order to buy in Cleantech solutions. Although the latter may increase costs without having direct positive impact on shareholder value in the short or long term, it may still be viewed as advancing the best interests of the corporation and thus not give rise to liability for Board members.

2.  Carbon.  “Carbon” will clearly be the buzzword of 2009.  Therefore, it will be critical to move beyond the hype and headlines to fully understand the state of carbon regulation and the carbon markets. Once the United States institutes a cap on carbon emissions (as a tax or a cap-and-trade regime), all companies will need to measure and eventually report their carbon footprint.  The resulting carbon assets or liabilities could significantly impact your company’s valuation and bottom line.  The impact of carbon emission and related caps will also be complicated by the lack of uniform accounting standards in the foreseeable future.

3.  M&A and Restructuring.  One function of the current economic environment is that there will be an increased amount of Cleantech M&A activity, reflecting tighter purse-strings of investors and lower valuations.  Expect to see the sale of divisions, assets, and technologies, and considerable restructuring as large and small corporations seek to weather the next 12 months.  Also, we predict a surge of licensing transactions and joint ventures, as the Cleantech industry matures.  One significant new factor that all corporations should consider is the effect of M&A activities and restructuring on their “baseline” for carbon emissions (1990 level pursuant to AB32 in California). U.S. companies in capped industries, as well as international companies operating in countries that are signatories to the Kyoto Protocol, will have to reduce their GHG emissions or pay for credits on an emissions exchange.

4.  Alternative Energy.  T. Boone Pickens has an energy plan.  With luck, after forty years of allowing sleeping dogs to lie, our country will adopt an energy plan as well.  In the not-to-distant future, government regulation or prudent business management to invest in alternative energy and reduce the use of fossil fuels will require your company.  Consequently, it will be important to understand the new technologies and the new regulations affecting the rapidly growing alternative energy industry in order to make informed purchasing or financing decisions.

5.  Sustainable Operations.  In addition to having an energy plan, you will need to understand how to implement sustainable operations and to navigate the ever-stricter environmental controls governing use and impact on air, water and soil with regard to production processes and operating facilities.  In addition, anticipating and taking advantage of "green chemistry" requirements will help your company get ahead of the competition and ensure regulatory compliance around the world.

6.  Intellectual Property Management.  In the Cleantech world, intellectual property is king.  Millions of companies, large and small, within and outside of the Cleantech space, have sprinted to the patent office in an attempt to preserve rights to the ideas and innovation fueling the green revolution.  Regardless of whether or not your company is involved in bringing Cleantech products, services, and processes to the marketplace, understanding the intellectual property aspects related to Cleantech will be essential.  Awareness of Cleantech IP issues may also allow you to capitalize on the untapped value in your existing technology, life sciences, and other IP portfolios. 

7.  Green Building. Depressed real estate valuations have not translated in all cases into a reduction in emphasis on green building.  To the contrary, it will be critical to understand the significant legal issues associated with green building and LEED standards.  Sooner rather than later, every company will invest in green building, either to capture the cost savings that energy efficient green buildings offer or to comply with federal, state and local laws that regulate how new environmentally sustainable facilities.  (E.g. California’s AB 32 & SB 375, and CA Bldg Code, SF, SJ)

8.  Green Marketing.  Understanding legal issues related to green marketing and advertising is critical to any company or entity that promotes itself, its products, or its services as green, socially responsible, or environmentally friendly.  You should understand how to develop strategies for affirmative green marketing and advertising claims that comply with state, federal and international "green advertising" laws, regulations, and guidelines, in order to avoid government enforcement proceedings or litigation; competitor vs. competitor litigation; consumer class actions‘ and other claims relating to green marketing and false advertising claims.

9.  Risk/Insurance.  Another key piece of the puzzle will be determining how to minimize environmental risk and mitigation/remediation costs from production facilities, particularly in light of emerging and evolving regulation concerning sustainable operations and greenhouse gases.  In addition, consideration will need to be given to managing and mitigating risk of liabilities potentially arising from green marketing lawsuits and failure to comply with environmental regulations.

10.  International Operations.   If your company has international operations it will be important to gain a basic understanding of the complex network of Cleantech, climate change and sustainability laws, regulations and incentives that will impact your company’s bottom line in every country where your products or services are used or sold.  Such understanding is not only essential to ensuring legal compliance and managing risks, but also for identifying potential opportunities and competitive advantages that may be presented by such laws and regulations for your company’s particular products or services.