Sponsorship agreement: Net Zero Outcome
A clause focusing on activation of sponsor rights relating to net zero to incentivise change, including a ‘reverse win bonus’ for the Sponsor if they hit their net zero target sooner.
What this clause does
High profile sponsored parties can use this clause to ensure that their image is associated with ambitious action towards net zero, using the influence to drive positive change, whilst still being paid. The sponsor will receive additional promotional rights and incentives in relation to net zero and avoid reputational damage.
Clauses
Activating Clause for main body of contract:
NET ZERO PARTNERSHIP
3.1 The Sponsor acknowledges the Sponsored Party’s commitment to the environment [and tackling climate change].
3.2 Accordingly, the parties will work together to promote Net Zero and climate action in the form of a Net Zero Partnership in which, and subject to the terms and conditions of this Agreement:
(a) the Sponsored Party grants to the Sponsor the Net Zero Partnership Rights throughout the Territory for the Sponsorship Period; and
(b) the Sponsor shall use all reasonable endeavours to deliver or ensure delivery of each and all of the Net Zero Partnership Actions.
3.3 Given the importance and urgency of climate change and notwithstanding any other clause in this agreement, the Sponsored Party shall not be restricted from entering similar Net Zero arrangements with its other sponsors.
3.4 The Sponsor shall not knowingly do any act, use the Trade Marks or make any use of the Sponsorship Rights or Net Zero Partnership Rights during the Sponsorship Period that, in the reasonable opinion of the Sponsored Party, is:
3.4.1 prejudicial to the Net Zero transition; or
3.4.2 increases GHG Emissions; or
3.4.3 affects the good standing or reputation of the Sponsored Party in relation to environmental or climate change issues.
3.5 If, in the reasonable opinion of the Sponsored Party the Sponsor acts in a way which is contrary to clause 3.4 the Sponsor shall, on written notice from the Sponsored Party cease such act as soon as is reasonably possible and publish a press release, approved by the Sponsored Party confirming that such act has ceased.
Schedule [ ]
Net Zero Partnership
Part 1 – Net Zero Partnership Rights
[Drafting Note: To be tailored based on assets available to promote Net Zero and audience activation. Consider whether activation is designed to ripple NZ and green journeys through Sponsor’s staff and/ or customers.]
In addition to the Sponsorship Rights, the Sponsored Party grants to the Sponsor the following Net Zero Partnership Rights.
1.1 Net Zero Journey – Telling the story and communicating impact
1.1.1 The Sponsor may use the name, Trademarks and or likeness of the Sponsored Party for the purposes of:
(a) telling its Net Zero or “Green” story” to the Sponsor’s customers and shareholders;
(b) in its Net Zero Transition Plan; and
(c) in its [impact/ responsible business/ CSR report/ s.172 Companies Act 2006].
The Sponsor will notify the Sponsored Party promptly where this right is being exercised.
1.1.2 The Sponsored Party will appear at [one physical event and one virtual] event in each year of the Sponsorship Period hosted by the Sponsor, and at the Sponsor’s cost, for the purposes of engaging the Sponsor’s employees to promote and tell the Sponsor’s Net Zero story. To exercise this right, the Sponsor must give the Sponsored Party sufficient notice of the time and date of each event. The Sponsored Party will make reasonable efforts to appear at each event.
[Drafting Note: Consider the duration of the Sponsorship Period and how much notice is reasonable. What are the consequences for the Sponsored Party and the agreement generally if the Sponsored Party is unable to attend a planned event?]
1.1.3 The Sponsored Party or their designated sustainability or Net Zero champion will attend [at least one] of the Sponsor’s sustainability committee meetings each year in a non-executive capacity.
1.1.4 If requested by the Sponsor, the Sponsored Party will provide information about the Sponsored Party’s own Net Zero journey and changes they have made to improve their carbon footprint. The Sponsor may use such information for engagement and storytelling purposes.
1.2 Branding and Websites
1.2.1 The Sponsor may use the designation of “Sponsored Party’s Net Zero Partner” in all Sponsor:
(a) [marketing Materials provided that they are printed on FSC paper using vegan friendly inks;
(b) [websites that are hosted using 100% renewable energy];
(c) [social Media Posts]; and
(d) [at all Events that are plastic free, vegan catered and are operated on a Net Zero basis].
1.2.2 If requested by the Sponsor, the Sponsored Party will publish the Sponsor’s logo on the section of the Sponsored Party’s website relating to environmental and climate issues. Such publication will designate the Sponsor as a “Net Zero Partner” and provide space for [100] words to explain the Sponsor’s action on Net Zero.
1.3 Advertising
1.3.1 The Sponsored Party will provide the Sponsor:
[List any specific advertising campaigns relating to Net Zero or climate issues and whether these should be exclusive].
1.4 Communications and Social Media Content
1.4.1 The Sponsored Party shall publish a launch story agreed in advance with the Sponsor announcing the Net Zero Partnership and will promote this story to their [media contacts, fans/followers via their social media channels and on their website homepage].
1.4.2 The Sponsored Party shall record [one] video launching the Net Zero Partnership and will, subject to agreement with the Sponsor, post such video on the official [YouTube channel and TikTok account of Sponsored Party.]
1.4.3 The Sponsored Party shall record [one] video in [each year] of the Sponsorship Period to update on the impact being made as a result of the Net Zero Partnership using content provided by the Sponsor and provide such video for the Sponsor to publish via their social media channels.
1.4.4 The Sponsored Party shall use their social media accounts across [their active channels/in the following channels] to share and amplify the Sponsor's Net Zero and climate change messaging at least once a month during the Sponsorship Period. All such posts must comply with standards set out by the ASA to identify paid for content[.] [:]
[(a) TikTok];
[(b) Instagram];
[(c) etc.]
Part 2 – Net Zero Partnership Actions
[Drafting Note: To be tailored based on how far the Sponsor has already travelled on their NZ journey. Consider whether activation is designed to ripple NZ and green journeys through Sponsor’s staff and/ or customers.]
As part of its Net Zero Partnership with the Sponsored Party the Sponsor has agreed to take the following actions:
2.1 The Sponsor will, within [one month] of the date of this agreement:
2.1.1 join the Race to Zero as an actor;
2.1.2 issue a press release and actively promote the Net Zero Partnership and the Sponsor’s Net Zero Target. Such press release to include a quote of support from the Sponsor’s [CEO];
2.1.3 make available a budget and internal resource to create a Net Zero Transition Plan to meet the Net Zero Target announced; and
2.1.4 appoint a board member or executive committee primarily accountable for the creation and delivery of the Net Zero Transition Plan.
2.2 The Sponsor shall within [6 months] of the date of this agreement:
2.2.1 publish its Net Zero Transition Plan on its website; and
2.2.2 create an employee and customer Net Zero engagement plan to promote sustainable living and how they can play their part in the transition to Net Zero.
2.2.3 In each [year] of the Sponsorship Period the Sponsor shall provide the Sponsored Party with an impact report setting out all the outcomes of the Net Zero Partnership together with a progress report against the Sponsor’s Net Zero Target. The Sponsored Party shall be entitled to publish such report.
[Drafting Note: Depending on the Sponsor’s circumstances, it may be appropriate to include carbon reporting here. For definitions and explanatory notes, see TCLP Glossary Carbon Footprint Standards.]
2.2.4 The Sponsor will seek to achieve the Net Zero Target before the Target Date and in doing so shall reduce GHG Emissions as far as possible using Offsetting only in relation to Residual Emissions.
2.2.5 In relation to activation or use of the Net Zero Partnership Rights, the Sponsor shall ensure that such activity will be undertaken in the most sustainable way incurring the lowest amount of GHG Emissions possible [and shall undertake Offsetting in relation to any Residual Emissions].
2.2.6 If the Sponsor achieves its Net Zero Target more than [12 months ahead of the Target Date] [Drafting note: Consider tiered incentives linked to interim targets]:
(a) [The Sponsored Party will provide three (3) additional Public Appearances for the Sponsor in the following 12 months at no additional cost to the Sponsor;]
(b) [The Sponsored Party will waive 20% of its Sponsorship Fee from the date Net Zero is achieved to the end of the Sponsorship Period;]
(c) [Other incentives].
2.2.7 If the Sponsor fails to achieve its:
(a) Interim Net Zero targets set out in the Net Zero Transition Plan; or
(b) Net Zero Target by the Target Date; or
(c) the Sponsored Party, having reviewed the latest impact report provided by the Sponsor in clause 2.2.3, determines (acting reasonably) that the Sponsor is making insufficient progress towards delivering the Net Zero Transition Plan,
the Sponsored Party may, without affecting any other right or remedy available to it:
(i) terminate this agreement by giving one month’s written notice to the Sponsor; or
(ii) require the Sponsor to donate [insert sum] to a Selected Charity as soon as reasonably practicable, providing satisfactory evidence of such donation to the Sponsored Party[.] [; or
(iii) elect to reduce the Promotional Appearances by [insert reduction] for each remaining year of the Sponsorship Agreement.]
2.2.8 Without prejudice to any other claims, rights or remedies under this Agreement, the parties agree that:
(a) damages payable by the Sponsor to the Sponsored Party for breach of clause [ ] would not be an appropriate remedy in the wider context of damage to the climate, the environment and the Sponsored Party’s reputation (all of which the Sponsor accepts for the purpose of this Agreement as being losses that would be incurred by the Sponsored Party);
(b) any donation payable under clause [2.2.7(ii)] to provide compensation for damage caused by the Sponsor’s breach of clause [ ] is reasonable and proportionate to the legitimate interests of the Sponsored Party in mitigating, setting off, counteracting, and repairing the damage to the climate and the Sponsored Party’s reputation and preventing future damage; and
(c) each party agrees that it has been properly advised regarding the negotiation of this Agreement, and in particular regarding the inclusion of the donation as a remedy for breaches.
Definitions
GHG Emissions means emissions of GHGs, each expressed as a total in units of carbon dioxide equivalent (CO2e) and calculated in accordance with the GHG Protocol Corporate Accounting and Reporting Standard or such other equivalent and generally recognised greenhouse gas emission calculation methodology.
Greenhouse Gas (GHGs) means gases that contribute to, or accelerate, the greenhouse effect by absorbing infrared radiation, including but not limited to: carbon dioxide, methane, nitrous oxide, sulphur hexafluoride, nitrogen trifluoride, hydrofluorocarbons, perfluorocarbons and chlorofluorocarbons.
Net Negative means achieving and maintaining a Net Zero Target and also creating an environmental benefit by removing GHGs from the atmosphere or reducing GHG Emissions to the atmosphere such that the aggregated reductions and removals exceed the unabated emissions.
Net Zero means both a reduction of Scope 1, 2 and 3 Emissions from all activities including value and supply chains and a removal of GHG Emissions associated with Offsetting acquired to address Residual Emissions so that there is a balance between sources and sinks of GHG Emissions in a calendar year and for each subsequent year thereafter, consistent with the goals of the Paris Agreement, taking into account the need for a just transition.
Net Zero Partnership means the partnership created by and subject to the terms of this agreement as described in clause [3.2].
Net Zero Partnership Actions means the actions the Sponsor will take relating to Net Zero during the Sponsorship Period as specified in Part 2 of Schedule [ ] (Net Zero Partnership).
Net Zero Partnership Rights means the rights that the Sponsor will be granted relating to Net Zero, as specified in Part 1 of Schedule [ ] (Net Zero Partnership).
Net Zero Target means the Sponsor’s target to reach Net Zero that is in line with the scale of reductions required to keep global temperature increase below 2 degrees Celsius above-pre-industrial levels and pursue efforts to keep global temperature increase below 1.5 degrees Celsius above-pre-industrial levels.
Net Zero Transition Plan means the setting of short, medium and long term interim GHG Emissions reduction targets, identifying a year on year percentage decarbonisation aligned with halving GHG Emissions every decade (being a minimum, a 7% year on year reduction of absolute emissions) together with a clear action plan to meet the Net Zero Target [and remain Net Negative thereafter], an Offsetting Strategy[, a procedure that links executive remuneration to the achievement of the interim targets] and an evaluation of how the Net Zero Target can be delivered in a way that promotes a just transition to a low carbon economy.
Offset or Offsetting means the purchase of a quantity of carbon credits equal to the amount of the GHG Emissions being offset from a project that has been verified in accordance with [insert name of voluntary standard] or from a United Nations Framework Convention on Climate Change (UNFCCC) clean development mechanism (CDM) [or [successor/ equivalent] UNFCCC mechanism] project.
Offsetting Strategy means a plan [as agreed by the parties] specifying:
(i) the verified credits from a recognised offset provider that may be used by the Sponsor to offset its Residual Emissions;
(ii) how the Sponsor will transition from using credits resulting from offsetting projects that avoid or reduce GHG Emissions to those from projects that remove GHG Emissions and involve long-term storage methods that have a low risk of reversal; [and]
(iii) how the Sponsor will [use best endeavours to] reduce its use of credits by reducing its Residual Emissions [to zero/ by [x] %] by 2050[;] [and][.]
[(iv) the impact of the relevant offsetting projects on a just transition and wider social and ecological goals.]
Promotional Appearances means personal appearances of the Sponsored Party for the Sponsor, as required under the Sponsorship Agreement. [Drafting Note: This can be expanded to cover other obligations of the Sponsored Party under the Sponsorship Agreement.]
Race to Zero means the UNFCCC global campaign to rally individuals and businesses to transition to Net Zero.
Residual Emissions means any GHG Emissions that are emitted after all technically and economically feasible efforts have been made by a party to reduce GHG Emissions from all operations including value and supply chains or the relevant activities as appropriate.
Scope 1, 2 and 3 Emissions means the three classifications of GHG Emissions in The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, Revised Edition 2015 as updated from time to time [Drafting note: Scope 1, 2 and 3 emissions are defined on page 27 of the GHG Protocol].
Selected Charity means a UK registered charity with a primary focus on tackling climate change and/ or nature conservation, as selected by the Sponsored Party and notified to the Sponsor.
Sponsored Party means [Talent/ Athlete/ Musician/ Governing Body/ Event].
Target Date means the first year by which the Sponsor aims to achieve the Net Zero Target, being [insert date] [Drafting Note: Define as per Sponsor specific target].
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