Climate clauses: New contract templates to help businesses deliver on climate goals

James Murray
clock • 3 min read
Credit: iStock

Credit: iStock

The Chancery Lane Project publishes new draft clauses that can be applied to support businesses’ decarbonisation plans

The Chancery Lane Project has this week announced an update to its library of clauses to contracts that aim to help businesses embed their climate strategies in the contracts they sign with partners, suppliers, and other stakeholders.

The network of lawyers and sustainability professionals now boasts 2,500 participants from over 300 organisations, who have worked on a pro bono basis to draft over 100 free and open access clauses that can be inserted into contracts with immediate effect. 

The group said its latest clauses include two new finance-related clauses: 'Stella & Flora's Clause', which establishes how to set environmental targets for a limited partnership agreement; and 'Lara's Clause', which sets out ESG linked pricing adjustment for derivatives transactions.

Meanwhile, five new built environment clauses provide a template for embedding climate considerations in contracts between landlords and tenants. For example, 'Lotta's Clause' sets out landlord and tenant obligations to provide renewable electricity, while 'Hannah's Clause' establishes green service charge provisions for commercial leases and 'Olivia's Clause' establishes net zero obligations in FIDIC engineering, procurement, and construction (EPC) contracts.

Three recently released land and agriculture clauses complete the latest wave of updates from the Project, providing contractual solutions for soil preservation, landowner collaboration and regenerative farming.

In addition, the group confirmed it has updated a number of climate-aligned contract drafting tools, which lawyers and solicitors can use across multiple sectors and practice areas, to align contracts with climate targets.

"The carbon needs analysis that TCLP did this year confirmed there are significant opportunities to use contracts to decarbonise the built environment and finance sectors," said Becky Clissmann, managing director of The Chancery Lane Project. "These new clauses are key resources for these sectors where lawyers can have a significant impact on the transition to net zero. The built environment clauses provide additional tools for the legal community forming part of the Built Environment Project that we are running this year."

Lucy Cutler, director at Practical Law Finance, which supported the development of the new clauses, said the updates "extend The Chancery Lane Project's support to lawyers working in asset management and derivatives, providing resources to help their clients have a positive impact on our climate".

"It has been a privilege to collaborate with colleagues from world class law firms, financial institutions and companies, as well as having our Practical Law editors help draft and provide peer review of these new clauses," she added. "We look forward to helping lawyers incorporate TCLP clauses into their everyday work. Join us as we change the world one precedent at a time."

Emma Millington, head of finance group at LexisPSL, which also helped support the latest updates from the group, said the clauses and associated guidance would be made freely available to all businesses.

"A fundamental principle of the Rule of Law is that everyone should have access to the law," she said. "The new finance clauses provide companies of all sizes with the tools to reach net zero targets. LexisNexis places advancing the Rule of Law at the heart of our business - it is our central objective and purpose. As such, we were delighted to be a key partner on this project. The extended resources available via TCLP and LexisPSL will ensure the law becomes ever more accessible and usable, regardless of background, resources or circumstance."

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