Climate clause

Stakeholder Company Climate Questionnaire [New]

Javier's Clause

A set of questions that explore the climate position and net zero ambition of an organisation, specifically companies.

This is a climate clause

This clause brings climate considerations to your drafting. It is not yet net zero aligned. To align this clause with net zero, use our toolkit or join one of our events.

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Why use this?

For individuals, this questionnaire provides a framework for understanding net zero and the steps organisations need to take (and the policies governments need to enact) to transition to a net zero future. It also provides a way for individuals to participate in - and potentially influence - organisational shifts towards climate positive, net zero aligned behaviours that are critical for mitigating the dangers of climate change.

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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

Stakeholder Company Climate Questionnaire

This questionnaire is designed to understand a [company]’s position on climate change and its net zero ambition.

Request for information – Introduction

As a [purchaser/ user/ employee/ supplier] [of [company/ company’s products and or services], [we/ I] would like to understand the ways in which [company]]/ [the provision of company’s products and or services] is consistent with the global transition to a net zero economy. [We/ I] would be grateful if you could provide the information set out below.

Governance and Strategy

Policies

1. What is the [company]’s policy on climate change? Is it contained in a specific policy document and if so, please provide a copy?

2. Describe the risk management policies the [company] has in place related to climate change?

3. Is the remuneration of any of the [company]’s employees, leadership team or shareholders linked to the [company] achieving its climate objectives (including interim and long-term emissions reductions/ net zero targets)?

4. Do any of the remuneration structures create perverse incentives (for example that may favour investment in assets at risk of being stranded in the transition to a low-carbon economy)?

Strategy

5. Does the company have a climate strategy (the Strategy)? If so, is it contained in a specific policy document and who has operational responsibility for it? 

6. Is the Strategy embedded in the company’s overall strategy and operations?

7. How is the Strategy shared with internal and external stakeholders?

8. Does the [company] consider that its business strategy and operations are exposed to climate-related risks? If so, how will the [company] adapt its business strategy and operations to minimise its exposure to such risks?

9. Has the [company] used stress-testing and scenario analysis in its strategic planning? Can it disclose the results of its analysis?

Board/ Leadership Team

10. Are board level decisions on climate and climate strategy based on specialist climate advice or expertise? 

(Climate must be embedded in [company] decision-making and take place at the highest level.)

11. How do the board and senior management (including legal, governance, finance and risk teams) keep up to date with climate change risk and climate governance?

12. Is [company] management held accountable for implementing climate-related policies and strategies set by the board and if so, how?

Shareholders

13. Where applicable, has the [company] introduced shareholder voting on climate transition action plans (i.e. Say on Climate)?

Third parties

14. Has the [company] embedded its climate targets and behaviours into its contracts with other parties?

Metrics and Targets

15. Describe any Key Performance Indicators that are relevant to the [company]s exposure to climate change risks. For example, has the [company] set a net zero target?

(A net zero target is a target to reduce greenhouse gas emissions and/ or to ensure that any ongoing emissions are balanced by removals.)

16. Does the [company] aim to achieve net zero or absolute/ gross zero by 2050 or sooner? Does it have plans in place to be net negative thereafter?

(The Intergovernmental Panel on Climate Change Special Report (the United Nations body for assessing the science related to climate change) in 2018 and its Sixth Assessment Report in 2021 made clear the vital importance of reaching net zero by 2050 or sooner. See Oxford Net Zero’s summary for information on the difference between terms.)

17. Does the [company]’s net zero target relate to operational emissions only or to full value chain emissions? Does it specify sub-targets for Scope 1, 2 and 3 emissions?

(The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, Revised Edition 2015 as updated from time to time, categorises greenhouse gases into scope 1, 2 and 3 emissions. Scope 1 relates to direct emissions from sources owned or controlled by the [company]. Scope 2 relates to indirect emissions associated with electricity purchased by the [company]. Scope 3 relates to all other indirect emissions from sources not directly owned or controlled, upstream and downstream in the supply or value chain.)

18. Does the net zero target or its accompanying information align with the Paris Agreement goal of pursuing efforts to limit global temperature increase to 1.5℃ above pre-industrial levels?

(Companies that emit highly then decarbonise rapidly for 2050 will bake in higher warming than  those who adopt immediate but gradual emissions reduction.)

19. Has the [company] joined Race to Zero?

(Race to Zero is a recognised standard for target setting, actions and behaviours that companies can sign up to.)

20. Has the [company] set a Science Based Target?

(The Science Based Targets initiative (SBTi) validates and advises companies on emissions reduction targets in accordance with what the latest climate science indicates is necessary to prevent the worst effects of climate change.)

21. Has the [company] set short and medium term interim targets between the date of this questionnaire and the net zero target date (in particular over the next 5-10 years)?

(It is recommended that companies set an interim target to achieve in the next decade, which reflects maximum effort toward or beyond a fair share of the minimum 50% global reduction in CO2 by 2030 identified in the IPCC Special Report on Global Warming of 1.5 degrees Celsius and reaffirmed by the IPCC Sixth Assessment Report in 2021.)

22. Does the [company] aim for annual percentage reductions in emissions, or other continuous measured emissions reductions?

(It is suggested that, as a minimum, organisations should aim to halve absolute emissions every decade, a 7% year on year reduction. See The ‘Carbon Law’; and  J. Rockström et al., A roadmap for rapid decarbonisation, Science 355.6331, 1269-1271 (2017).)

23. Does the [company] have a decarbonisation plan to achieve its targets?

24. What action has the [company] already taken to achieve or reach its emissions reduction targets?

25. Are the [company]’s emissions measurements  [and or other climate  risk-related metrics i.e. water use, energy consumption] verified by an independent third party?

26. Does the company report (at least annually) on its progress against interim and long-term emissions reduction targets, as well as the actions taken to achieve them?

27. Who monitors [company] compliance with its targets and how regularly does compliance monitoring take place?

Leadership and Just Transition

28. Describe how the [company] enables others to contribute to climate change strategies?

(The Paris Agreement requires equity and common but differentiated responsibilities to decarbonisation in the light of different national circumstances.  It is widely accepted that a just transition to a net zero future needs to be inclusive but there are varying views on how the burden for reducing emissions should be shared.)

29. Does the [company] consider wider local and global stakeholders (including employees, clients, end customers and supply chain partners) affected by climate risk and support them to improve their resilience to climate change?

30. How does stakeholder feedback feed into the company’s collaboration and focus on climate change initiatives with wider stakeholders?

31. How does the [company] incorporate social and ‘just transition’ considerations into its climate related strategies?

32. Does the [company] consider climate in its resourcing choices? For example, local, low carbon materials and labour, giving surplus materials to community projects, investing in training for low carbon product manufacturing or helping underrepresented groups to access new green job opportunities.

33. Does the [company] have a policy to ensure that its lobbying activities, trade association memberships and public policy positions align with the Paris Agreement?

34. Does the [company] embed climate policy engagement throughout its organisations, for example by employee and business network education?

35. Does the [company] engage in climate policy leadership (for example by sectoral collaboration or funding climate projects)?

36. Does the [company] consider or engage in other policies or behaviours that indirectly drive emissions reductions or support the transition to net zero, for example, in its approach to food procurement and waste, circular economy considerations, reduction of single use plastics, risk/ resilience and adaptation considerations, waste reduction, water conservation, promoting or protecting biodiversity and nature or other environmental matters?

Offsetting (Compensation and Neutralisation)

37. Does the [company] use offsetting to reach its net zero target?

(Offsetting means the purchase of carbon credits from a project:

(i) that has been verified in accordance with [insert name of voluntary standard] or under the United Nations Framework Convention on Climate Change (UNFCCC) clean development mechanism (CDM) [or [successor/ equivalent] UNFCCC mechanism];

(ii) where the emissions of greenhouse gases (GHG) avoided, reduced or removed by the project are additional;

(iii) that, in relation to GHG removals, employs long-lived storage methods that have a low risk of reversal over millennia;  

(iv) that prioritises the removal of GHG from the atmosphere rather than avoids or reduces third party emissions of GHG; and

(v) that takes account of a just transition and addresses wider social and ecological goals.)

38. Does the [company] follow a mitigation hierarchy when using offsetting i.e. the [company] continuously reduces, properly accounts for and discloses absolute emissions before compensating unavoidable or residual emissions?

(Residual emissions are emissions of GHGs that remain after all reasonable efforts have been made by the [company] to reduce GHG emissions from all operations (including value and supply chains).  See also The Oxford Principles for Net Zero Aligned Carbon Offsetting for best practices of offsetting.)

39. Can the [company] provide details of its offset credits provider?

(Purchasing offset credits from a recognised provider should help to ensure that offsets are additional, permanent and verifiable.)

40. Can the [company] provide details about the types of projects its offset credits are invested in?

(Ideally, offsets should gradually move:

  • from short-lived, uncertain and higher risk storage to long-lived storage methods that have low risk of reversal over millennia (‘like for like’); and 
  • to offsets that remove emissions, rather than avoid or reduce others’ emissions; and 
  • consider implications on a just transition, global equity, and wider social and ecological goals.)

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