A lawyer explains how to use ‘climate clauses’ in your organisation

I remember when I first heard about The Chancery Lane Project (who WorkforClimate has written about before). Another lawyer had recommended them, and I started attending their online events. There was a palpable buzz in the room, full of lawyers and business leaders, all of us new to the concept of climate contracting. Here, finally, was a legal solution to the climate crisis that we could act on immediately. No-one (at the time) had thought about amending contracts to decarbonise business operations. Soon after that, I applied for a position, and I’ve been working for TCLP ever since!

Contracts are at the heart of business. Any commercial commitment you make – whether financial, time or resource – is likely to be written, signed and dated. So why not do that for climate commitments too? If companies are serious about acting on the climate, then those commitments should be woven into every part of the business, rather than being separated as a standalone ESG issue.

And the best part? It’s easy to get started! Here’s how you can work climate clauses into your company’s DNA.

For big corporations

The real power of climate clauses comes when they get signed into live contracts. With a bit of collaboration and planning, it’s relatively easy to insert climate-friendly clauses for all sorts of day-to-day activities. Let’s go through it step by step. 

Step 1: Explore the clauses

You can browse our library at The Chancery Lane Project to quickly find climate clauses related to your industry, sector, or particular emissions targets. We have 122 free-to-use clauses (and counting). There are heads of terms precedents, recitals, and specific clauses for insurance, supply chain procurement, and pretty much anything else you can think of. If you don’t know where to start, try our handy climate clause selector.  

Step 2: Communicate internally

To get stakeholders on-side, you need to communicate the benefits of climate clauses, and how they directly relate to your company’s emissions reduction targets. What do you want to achieve with these clauses? Who is affected? And what will the process be? Set up robust internal discussions to get the ball rolling.

New Zealand Green Investment Finance says:

“Getting engagement at a senior level within your organisation is helpful to a smooth rollout of TCLP clauses. However, as important is getting staff engaged with the clauses and the difference they can make (particularly where staff will need to push for their inclusion in contracts, for example, where contracts are drafted by third parties).” 

Step 3: Build a roadmap

Nothing gets done in big corporations without a roadmap. In this case, you need to outline which clauses you’ll need, whether they’ll have to be tweaked for your business, which teams to bring on-board (legal, procurement, suppliers etc.) and a general timeframe for updating your contracts. 

Step 4: Draft collaboratively

Whether these are internal or external contracts, communication and collaboration are crucial. As one of our participants said, “Arguing whether or not to use these clauses is like rearranging deckchairs on the Titanic”. Keep the lines of communication open and bring multiple parties into the drafting process, and try to do this as early as possible in the contracting process. As climate clauses are a fairly novel concept, we have some conversation tips, if you’re feeling stuck.   

Step 5: Evaluate and improve

We recommend obtaining legal advice before making any changes to your contracts. And once they’re updated, you can always look to improve further. Joining a TCLP workshop or WorkForClimate’s Climate Academy is a great start. You can also increase your impact with our Net Zero Ambition Dashboard.

For SMEs

For agile SMEs, it’s even easier to take immediate climate action and update your contracts. There are usually fewer stakeholders involved, and less corporate red tape to wade through.

We recommend following the same process outlined above, and breaking your drafting into two distinct pathways:

1. Building a climate strategy for your organisation

For this, you can start with three basic clauses. 

• Lila’s Clause (a board paper for implementing a Net Zero strategy).
• Athena’s Clause (to provide climate training and education for your employees). 
• Ragnar’s Clause (to adopt Green Articles and embed climate action at the heart of your business).

2. Cleaning up your supply chain

Knowing your suppliers, and putting solid due diligence in place, is the best thing you can do to track and reduce your Scope 3 emissions. These are your indirect emissions; the ones associated with your value or supply chain. 

For this, you’ll need 

• Raphael’s Procurement DDQ (a due diligence questionnaire for potential suppliers). 
• Ming’s Clause (for setting your carbon budget).
• Alice’s Clause (to reduce single-use plastics in your supply chain).  

The Chancery Lane Project is changing the way we think about business. If each contract accounts for its environmental impact, every part of your business will too. It engrains climate solutions from top to bottom – from the boardroom to the warehouse floor.

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No matter the department you work in, WorkforClimate has the resources, advice and inspiration to help you kickstart your organisation’s decarbonisation journey.