The $105 trillion economy runs on contracts – it’s time to embed climate obligations

As the urgency to address climate change and biodiversity loss intensifies, organisations worldwide recognise the power of contracts as a tool for transformation. In 2024, The Chancery Lane Project saw a significant acceleration in the adoption of climate-aligned clauses, with businesses and legal teams embedding climate commitments directly into legal agreements. This movement is gaining traction, ensuring that economic activity aligns with global climate goals.

Contracts as a pillar of global climate strategy

The global economy is governed by contracts, yet most legal agreements fail to include climate obligations. As regulatory landscapes evolve and businesses face increasing scrutiny over their environmental impact, contracts present an immediate, scalable solution for embedding sustainability into corporate operations.

Key global developments reinforce the need for climate-aligned contracting. The International Sustainability Standards Board’s (ISSB)climate disclosure standards are driving companies toward greater accountability. California’s Climate Corporate Data Accountability Act and the EU Deforestation Regulations will require companies to integrate climate-related obligations into their contracts and supply chains. At the same time, ESGresources.org is tracking and promoting climate-related contractual initiatives, supporting the global push for climate-aligned law.

Data-driven insights: The impact of climate-aligned contracts

The effectiveness of climate-aligned contracting is becoming increasingly evident. Our 2024 Impact Report highlights this shift:

• 67% of respondents agreed that TCLP has helped them persuade others in their organisation to engage with climate-aligned contracting.
• Almost a third of respondents reported using TCLP’s clauses in contracts with modifications, while 28% have used them as a foundation to create their own climate-aligned clauses.
• We expanded our global reach into Asia by publishing our first non-English clauses in Japanese. We also introduced German and Italian clauses, bringing our library to 50 international clauses, with more jurisdictions in development.
• Over 165,000 people accessed our resources in 2024 – a threefold increase from the previous year – demonstrating the growing interest in legal tools for climate action.

These figures reflect a fundamental change in how businesses and legal professionals perceive contracts—not just as administrative documents, but as mechanisms for real, enforceable climate action.

Legal documents driving climate action

Climate-aligned contracting is no longer just a concept – it’s already delivering tangible results across industries.

The UK Government’s Cabinet Office has incorporated two TCLP clauses into its standard carbon reduction contract schedule, embedding climate commitments in public sector contracts. This builds on previous initiatives, such as references to TCLP clauses in The Construction Playbook, further reinforcing contracts as a tool for advancing sustainability in the built environment.

Telstra, Australia’s leading telecommunications company, has integrated climate clauses into its supply chain agreements, aligning with its target to reduce greenhouse gas emissions by 50% (including Scope 3) by 2030. These clauses now apply to 80% of Telstra’s supply chain spend, showcasing how contractual mechanisms can drive industry-wide emissions reductions.

Moreover, we launched our Deliver a Climate Transition Plan guide, which highlights how contracts and legal processes can serve as powerful tools for implementing transition plans. This practical resource received 1,920 views from over 1,000 visitors across 43 countries within its first week.

Looking ahead: Embedding climate commitments into contracts

Despite regulatory rollbacks in Europe and the U.S., our data shows that businesses are proactively using contracts to drive climate action. Regardless of policy changes, companies increasingly recognise climate as a material risk and are taking action to address it.

By using climate-aligned clauses, organisations can reduce emissions across their value chains, enhance resilience against climate risks, and strengthen ESG credentials while boosting investor confidence.

The time to act is now. Contracts are not just legal formalities – they are a powerful force for climate action. Join the movement and make climate-aligned contracting a standard business practice.