Climate clause

ESG Clauses for Rules of Procedure for Managing Directors of a German Limited Liability Company (GmbH)

Lily's Clauses

Clauses that set out ESG obligations for the management of private limited liability companies. These clauses are drafted to be flexible for parties to tailor to their requirements.

This is a climate clause

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Why use this?

To encourage managing directors to adopt ESG-oriented corporate governance and comply with fiduciary duties to take ESG into account. The clauses also helps German limited liability companies comply with their obligations under the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD).

Disclaimer - please read

The clauses on this website 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 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.

The clauses on this website do not comprise, constitute or provide personal, specific or individual recommendations or advice of any kind, and do 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.

The clause

Example I: 

Management principles

1. The managing directors shall manage the affairs of the company 

1.1.1 In accordance with common corporate goals, 

1.1.2 In [the most environmentally conscious manner possible/ a manner that is consistent with the goals of the Paris Agreement/ accordance with the company’s sustainability policy], and 

1.1.3 In accordance with the plan for the allocation of duties among the managing directors attached hereto as Annex [●] [including, inter alia, the role of Chief Sustainability Officer (CSO)].

2. The managing directors shall discuss the sustainability policy and the allocation of duties among the [board of management/ managing directors] in their annual meeting.

Example II:

Environment-related duties of the managing directors

The managing directors shall [use their [best/ reasonable] endeavours to]:

1. Conduct the business of the company in [the most environmentally conscious manner possible/ a manner that is consistent with the goals of the Paris Agreement/ accordance with the company’s sustainability policy] and [to] reduce, to the fullest extent possible, the scope 1, 2 and 3 greenhouse gas emissions that arise as a consequence of the company’s business;

2. Reduce or avoid [●] tCO2e of scope [1/2/3] emissions of the company by [●];

3. Achieve [net] zero emissions across the global operations of the company by [●];

4. Reduce the company’s paper-based documents and correspondence where electronic versions offer a viable alternative;

5. Reduce their travel, as well as the travel of the company’s employees (e.g. by conducting meetings remotely), as far as practicable;

6. Power [●]% of the company’s global operations with renewable sources of energy by [●];

7. Achieve [●]% annual reduction in [electricity/ natural gas] consumed by the company;

8. Achieve [●]% of plastic packaging of the company to be free of PVC by [●];

9. Achieve [●]% of packaging of the company to be made of post-consumer recycled content by [●]%;

10. Achieve [●]% of packaging of the company to be recyclable, reusable or industrially compostable by [●];

11. [●]

Example III:

Approval of the [shareholders’ meeting/ advisory board]

The prior written approval of the [shareholder’s meeting/ advisory board] shall be required if the company wishes to do any of the following (as far as such transactions and measures are at all within the competence of the managing directors):

1. Enter into a transaction that may result in the emission of more than [●] tCO2e per year.

2. Change or amend the company’s sustainability policy.

3. [●]

Example IV:

ESG reporting

1. The managing directors will report [quarterly/ [at least] annually] to [the shareholders’ meeting/ the advisory board / the sustainability committee/ the public] on ESG matters in accordance with [international ESG reporting standards/ the company’s sustainability policy]. 

2. The managing directors will publish the company’s sustainability report on the company’s website within thirty (30) days following the annual report to [the shareholders’ meeting/ the advisory board/ the sustainability committee].

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