Glossary entry

Carbon Neutral & Carbon Neutral Footprint

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The definitions 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 definitions 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 definitions 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 definitions will achieve the relevant climate goal or any other outcome.

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

Definitions

Carbon Neutral

Option 1

Carbon Neutral means the Greenhouse Gases emitted by [an entity] are equal to Greenhouse Gases sequestered by [the entity] (and/or offset by carbon credits [or equivalent] purchased by [the entity]) [in [define time period]].

Option 2

Carbon Neutral means [the entity] has purchased carbon credits equal to, or undertaken activities that will remove the same amount of, Greenhouse Gases that it is responsible for emitting through its activities [in [define time period]].

Option 3

Carbon Neutral means annual zero net anthropogenic (human caused or influenced) Greenhouse Gas [carbon dioxide] emissions by [insert date].

Option 4

Carbon Neutral means [name of party] has compensated for every tonne of Greenhouse Gas [carbon dioxide] it has emitted or caused to be emitted with an equivalent amount of Greenhouse Gas [carbon dioxide] removed in the same period.

Option 5

Carbon Neutral means [the entity’s] Carbon Footprint has been quantified and a carbon reduction and management plan has been developed and implemented to ensure reductions in Greenhouse Gas emissions year on year that will result in net zero emissions by [insert date] .

Option 6

Carbon Neutral means where an entity has reduced its Carbon Footprint to zero.

Option 7

Carbon Neutral means an activity which does not increase the Greenhouse Gases in the atmosphere.

Option 8

Carbon Neutral means striking a balance between emitting and absorbing carbon from the atmosphere.

[This definition is adopted from the LMA’s Green and Sustainable Lending Glossary of terms.]

Option 9 / Carbon Neutral Footprint

A Carbon Neutral Footprint is one where the sum of the Greenhouse Gas Emissions (Carbon Dioxide Equivalent (CO2e)) produced is offset by natural carbon sinks [and/or] the purchase of carbon credits.

Drafting notes

Various options are included. Which definition to use will depend on the subject and purpose of the clause being drafted and what the drafter thinks best suits the purpose.

These drafting options will be clarified and consolidated as we receive feedback from users.

Application

Supply chain clauses, national climate laws, green leases (where the premises being leased are to be carbon neutral), project finance (e.g. loan, guarantee and recourse agreements, engineering, procurement and construction contracts), policy documents.