Glossary entry

Offsetting Strategy

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Definitions

Offsetting Strategy

Offsetting Strategy means a plan [as agreed by the Parties] specifying:

(i) the verified credits from a recognised Offset Provider that may be used by the [Company] to offset its Residual Emissions;

(ii) how the [Company[ will transition from using credits resulting from offsetting projects that avoid or reduce emissions of GHG to those from projects that remove emissions of GHG and involve long-term storage methods that have a low risk of reversal; [and]

(iii) how the [Company] will [use best endeavours to] reduce its use of credits by reducing its Residual Emissions [to zero/ by [x] %] by 2050[;] [and][.]

[(iv) the impact of the relevant offsetting projects on a just transition and wider social and ecological goals.]

Drafting notes

See TCLP’s Offsets, Insets and Credits Explainer for more information about carbon credits purchased from regulated and voluntary markets, as well as what drafters need to consider when including offsetting in contracts.

Application

Corporate climate policies, supply chain agreements, climate laws, investment and finance documentation.

Offsetting Strategy is used in the following TCLP clauses:

[Alexandro’s Clause] Net Zero Sponsor Activation Clause;

[Cassie’s Clause] Insurance: Disclosure and Mitigation of Pending Climate Change Litigation;

[Dottie’s Clause] Climate Purchase Agreement and Underwriting Sponsor Warranties; 

[Emma’s Clause] Green Residential Lease Clauses;

[Owen’s Clause] Net Zero Target Supply Chain Cascade Clauses;

[Pasfield’s Clause] Paris Aligned Company Articles; 

[Rose’s Clause] GHG Emissions Management Plans in Infrastructure and Construction Project Finance; and

[Sebastian’s Clause] Entire Business Net Zero Objectives.