Climate clause

Climate Change Due Diligence Questionnaire

Lola & Harry's DDQ

A due diligence questionnaire which asks the target company to provide information regarding a wide range of climate change-related issues going far beyond the standard compliance-focused questions.

This is a net zero clause

This clause aligns with Paris Agreement goals, Race to Zero requirements and the Oxford Principles for Net Zero Aligned Carbon Offsetting. For tools and support to use this clause, use our toolkit or join one of our events.

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Why use this?

This clause is for buyers to assess the target’s readiness to transition to net zero, its resilience and ability to adapt to future climate risks. Buyers can protect their risk and investment positions before purchase by seeking appropriate climate warranties and indemnities from the seller(s) and or negotiating on price.

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The clauses on this website (and published in our Climate Contract Playbook) have been prepared in good faith on a pro bono basis and are free to download and use. The clauses have been drafted and edited by a variety of lawyers and, as such, the approaches to drafting may not conform to any particular drafting norms. We acknowledge this as a consequence of the collaborative drafting process.

The clauses on this website (and published in our Climate Contract Playbook) are provided on an ‘as is’ basis and without any representation or warranty as to accuracy or that the clauses will achieve the relevant climate goal or any other outcome.

This website (and the Climate Contract Playbook) does not comprise, constitute or provide personal, specific or individual recommendations or advice of any kind, and does not contain legal or financial advice. The clauses are precedents for legal professionals to use, amend and negotiate using their professional skill and judgement and at their own risk.

While care has been taken in the drafting of these clauses, neither The Chancery Lane Project nor any of its contributors owe a duty of care to any party in relation to their preparation and do not accept any liability for any errors or omissions, nor for any loss incurred by any person relying on or using these clauses or any other person. Users should use their own professional judgement in the application of these clauses to any particular circumstance or jurisdiction or seek independent legal advice.

At present, all the clauses are based on the laws of England and Wales. We encourage the conversion of these precedent clauses for use in other jurisdictions.

The clause

Climate Change Due Diligence Questionnaire 


We are making this information request as part of our due diligence review in connection with the proposed purchase by [company] or a special purpose acquisition company (“Buyer”) of the entire issued share capital of [target] (“Company”) from [shareholders] (“Sellers”, each being a “Seller”) agreed to be purchased under the heads of terms dated [date] (“Transaction”).

[Insert paragraph on the strategic importance of climate change issues to the Buyer (for example by reference to its corporate strategy)]. Accordingly, the Buyer is making this information request to understand how the Company approaches climate change-related issues. Please note the Response Guidelines below and provide your answers in the spirit of openness and transparency – the Buyer does not expect the Company to be ‘perfect’ and would prefer the Company to be honest if particular areas have not been addressed to date.

Response Guidelines

[Standard Response Guidelines to be inserted by Buyer’s legal advisers]

This is an initial request for information and we may ask for further information in due course.

Responses to this information request are not disclosures for the purposes of any warranties in the legal documents relating to the Transaction.


Please provide the information and copy documents requested below.

1. Has the Company set a Net Zero Target, a Science Based Target or a Carbon Budget or signed up to Race to Zero? 

2. Details of the Company’s plans to achieve the targets in question 1\, including:

(a) a timeline and short, medium and long term interim targets;

(b) the intended pace of decarbonisation and how this aligns with halving greenhouse gas emissions every decade (a minimum 7% year on year reduction), pursuing efforts to to limit global temperature increase to 1.5 degrees Celsius above pre-industrial levels and the other objectives of the Paris Agreement;

(c) emissions reduction targets broken down by scope 1 , 2 and 3 emissions (as classified by The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, Revised Edition 2015 as updated from time to time); 

(d) plans beyond net zero to become net negative (i.e. for the Company’s removals of greenhouse gases from the atmosphere to exceed the residual emissions that it not been able to, after best efforts, to abate); and 

(e) whether the Company reports on progress against its targets (whether publicly or otherwise).

3. Details of all greenhouse gas emissions or carbon footprint measurement and reporting by the Company, including the standard used for calculation, any benchmarking versus peers and/or industry standards, any independent verification of its greenhouse gas emissions reporting and any reporting, public or otherwise, on emissions.

4. Details of how the Company embeds its achievement of its climate and/or sustainability targets into any or all of its contracts and relationships with other parties.

5. Details of how the Company assesses and discloses climate risks and opportunities in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures.

6. Copy of the Company’s sustainability policy and details of any key performance indicators it has set to measure its success against this policy.

7. Details of how climate change issues are considered in the Company’s corporate strategy/business plan, including examples of where it has mapped against UN Sustainable Development Goal (SDG) 13 (Climate Action)

8. Copy of the Company’s climate change risk register. If not maintained, details of any known or reasonably foreseeable climate change risks to its business or possible legal, financial and commercial impacts of climate change on its business (for example, the impact of extreme weather on its supply chain, the potential for increased operating costs due to climate change, the potential for decreased revenues due to policy, regulatory, technological developments or stakeholder preferences in the economic transition to net zero, or climate-related liability risks). Details of any adaptation or resilience measures that minimise the Company’s exposure to physical climate risks.

9. Details of any analysis of how wider local and global stakeholders (including employees, clients, end customers and supply chain partners) are affected by climate risk and transition and actions taken to improve their resilience.

10. Details of any evaluation the Company has undertaken on the potential impact of rising climate change-related costs on its business. Could increases in costs materially affect the profitability of its business and, if so, what mitigation efforts have been considered?

11. Details of any current or proposed climate change laws and regulations in the jurisdictions that the Company operates that might impact upon the Company’s business.

12. Details of any scenario analysis or stress-testing of the Company’s strategy and business model against plausible climate futures, including rapid or disruptive transition scenarios to a ‘well-below’ 2° or 1.5°C and warming scenarios above 4°C. Details of any other climate change-related current awareness/ horizon activities undertaken by the Company.

13. Which functions within the Company’s business are responsible for climate change measurement, management and reporting? Please provide details of their roles and examples of recent measurements undertaken or reports submitted to the board.

14. Does the Company have a board member or executive committee who is primarily accountable for climate risk measurement, management and reporting or a non-executive director with experience of improving sustainability and mitigating carbon footprint who advises it on these issues? If so, please provide details of their role, expertise, qualifications or access to expert advice in performing this role with the requisite degree of professionalism, care and diligence and examples of recent board discussions regarding climate change matters and their impact on the Company’s business.

15. Details of any pay, benefits or remuneration of any of the Company’s employees, directors or shareholders that is linked to achievement of any of its climate or sustainability related targets.

16. (In so far as you are aware of them) Details of any actions that the Company’s competitors are taking to mitigate or assess the risks and opportunities to their business arising from climate change, and the climate change impacts of the Company. How do the Company’s actions compare with the actions of its peers?

17. Do you foresee any opportunities for the Company’s business which will arise from the Net Zero transition? If so, please provide details.

18. Details of how the Company integrates climate change and just transition factors into decision-making?

19. Details of any board decisions taken where climate change or just transition factors were:

(a) given a higher weighting than other commercial factor; or

(b) disregarded in favour of other commercial factors.

20. Details of the Company’s policies and procedures to align its lobbying activities, trade association memberships and public policy positions with the Paris Agreement, whether these are reported or published and how they are reviewed. 

21. Details of ways that the Company enables others to contribute to the global transition toward (net) zero through engagement, information sharing, access to finance, capacity building or any other type of climate leadership.

22. Details of any climate change-related, sustainability or social due diligence the Company conducts when procuring goods or services.

23. Details of any environmental or social obligations the Company includes in its contracts for the supply of goods or services.

24. Details of any contracts which the Company considers to be not environmentally friendly (or where a more sustainable option was rejected due to other factors, such as economic factors) and any rights of termination or renegotiation for this reason. 

25. What, if any, steps have been taken to minimise environmental and related social impacts of the Company (for example, to use recycled goods/packaging where possible, to use environmentally friendly production methods, to use local, low carbon materials and labour, to implement circular economy and zero waste principles, to give surplus materials to community projects, to invest in training for low carbon product manufacturing, to help underrepresented groups to access new green job opportunities, to offset carbon footprints, etc). 

26. If the Company’s business is operated online, are customers provided with the option to offset the carbon footprint of delivering the Company’s goods or services at the point of sale?

27. Details of any activities the Company undertakes to offset its business’ carbon emissions. In particular please detail whether:

(a) the Company has a strategy for offsetting;

(b) the Company follows a mitigation hierarchy (i.e. only offsetting greenhouse gas emissions after it has used all reasonable efforts to first reduce them, revising this approach over time as it is able to reduce more emissions);

(c) the Company sources its offset credits through a project that has been verified in accordance with a recognised voluntary standard or from a United Nations Framework Convention on Climate Change (UNFCCC) clean development mechanism (CDM), with a view to the offsets being additional, permanent and verifiable;

(d) the Company considers the implications of the offsets purchased on global equity and wider social and ecological goals;

(e) the Company has a plan to transition the underlying offsetting projects to long lived storage methods which have low risk of reversal over millennia; and

(f) whether the Company has a plan to transition the underlying offsetting projects to  purely offsets that remove emissions, rather than avoid or reduce others’ emissions. 

28. Details of any renewable energy technologies employed by the Company.

29. Does the Company purchase utilities on renewable energy tariffs and/or use web hosts and cloud service providers which run their servers on renewable energy?

30. Are any of the Company’s facilities certified to meet the requirements of an accredited green building programme (e.g. BREEAM)?

31. Copies of the energy performance certificates (EPCs)  for the Company’s facilities.

32. Details of any data the Company collects about the environmental impact of its business. Does the Company have an environmental management system [EMS] covering waste generation, energy usage, water usage and GHG emissions?

33. If the Company collects environmental data or maintains an EMS, have these led to environmental improvements or energy savings at the Company’s facilities? If so, by how much?

34. Details of the steps the Company takes to recycle its waste.

35. Does the Company send any of its waste to landfill?

36. Details of any single-use plastic products that the Company purchases or consumes on a regular basis.

37. Details of any investments made by the Company in ethical funds.

38. Is the Company’s pension scheme invested in ethical funds by default?

39. Details of any information provided or training given to the Company’s employees regarding climate change-related issues in so far as they affect its business.

40. Details of any other engagement activities the Company undertakes to educate its employees about climate change-related issues generally or consult with them about changes that could be made to business activities or practices which would have a positive environmental impact.

41. Details of any ‘green’ employment benefits, terms or initiatives offered to the Company’s employees and their level of take-up.

42. Does the Company have any policies in place to reduce the environmental footprint caused by travel/commuting?

43. Does the Company donate to environmental causes that are seeking to mitigate the impact of climate change?

44. Is the Company aware of any business activities, practices or outcomes that have produced a substantial negative environmental impact? If so, please provide details.

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