Model clause

Climate and Net Zero Due Diligence

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.

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Why use this?

The risks of ignoring the potential impacts of climate change on a target company are obvious. Without doing so, the buyer may not fully understand or even have considered whether its investment or reputation could be jeopardised by climate change risks or how geared up the target company is to make the net-zero transition.

Answers to this questionnaire should inform the type of warranties and indemnities that the buyer may wish to seek from the target company and/or investment requirements it may wish to impose in its investment agreement.

The questionnaire may also help the buyer understand if the target company has been ‘greenwashing’, which might present a reputational issue in the future.

Whilst this questionnaire has been drafted to be issued as a stand-alone information request, it could also be incorporated into other due diligence questionnaires.

How it promotes a net zero future

Having this questionnaire available gives the opportunity for buyers to appraise how the target company currently approaches climate change matters (if it does at all).

If the target company has not previously considered how climate change might have a future impact upon it, at least a buyer who asks these types of questions will be aware of that and can act accordingly.

At one extreme, the buyer may pull out if the risks are too great or it might appropriate to seek a price chip or contractual indemnities; at the other, the buyer may wish to proceed anyway due to other commercial factors but will have properly evaluated the target company’s approach to climate change-related issues and be aware of the work that is required to be undertaken post-acquisition to align the target company with the wider group’s environmental strategy or manage climate change risks that are identified through the due diligence process.

Disclaimer - please read

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. re. 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 you 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. 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 SDG 13 (Climate Action). Has the Company set a Net Zero Target, a Science Based Target or a Carbon Budget? Does the company assess and disclose climate risks and opportunities with regard to the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD)?

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

3. 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 to mitigate against physical climate risks.

4. 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?

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

6. 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.

7. 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.

8. 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 and examples of recent board discussions that have been led by this board member/NED regarding climate change matters and their impact on the Company’s business.

9. (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?

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

11. Details of how the Company integrates climate change factors into decision-making?

12. Details of any board decisions taken where climate change factors were:

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

(b) disregarded in favour of other commercial factors.

13. Details of any climate change-related due diligence the Company conducts when procuring goods or services.

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

15. Details of any [material] 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.

16. If the Company’s business involves the production and supply of goods, what, if any, steps have been taken to minimise environmental impacts of the company, for example, to use recycled goods/packaging where possible, to use environmentally friendly production methods, to offset carbon footprints, etc.

17. 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?

18. Details of any activities the Company undertakes to offset its business’ carbon emissions.

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

20. 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?

21. Are any of the Company’s facilities certified to meet the requirements of an accredited green building programme?

22. Copies of the EPC certificates for the Company’s facilities.

23. 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 carbon emissions?

24. 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?

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

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

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

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

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

30. 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.

31. 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.

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

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

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

35. 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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