Request climate information in due diligence questionnaires

Example wording

Please provide information and copies of documents detailing:

1. [Party B]’s emissions-reduction targets, a science based target, a carbon budget or membership of Race to Zero.
2. [Party B]’s greenhouse gas emissions broken down by scope [1 and 2] [and 3] emissions (classified by The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard as updated periodically).
3. [Party B]’s transition plan to achieve its emissions-reduction targets, including:

• short- and medium-term interim targets that align with international standards (for example Science Based Targets initiative’s net zero standard)
• short-, medium- and long-term actions to achieve the emissions-reduction targets and a plan for how they will be financed
• a strategy specifying the verified credits from a recognised offset provider that may be used to offset its residual emissions
• governance and accountability mechanisms to support the transition plan, including annual reporting and linking executive remuneration to achieving the interim targets (see Corporate governance below)
• measures to address risks to employees and stakeholders (for example suppliers, communities and customers) and the environment
• measures to maximise opportunities for employees, stakeholders and the environment
• strategies to promote a just transition to a low-carbon economy
• strategies to adapt to the effects of the climate crisis on [Party B]’s [business and operations]
• [Party B]’s resilience planning for the effects of the climate crisis on its [future business and operations].

4. All greenhouse gas emissions being measured and reported by [Party B], including:

• the standard used for calculation
• any benchmarking versus peers and/ or industry standards
• any independent verification of its emissions reporting
• any reporting, public or otherwise, on emissions.

5. How [Party B] embeds its achievement of emissions reduction and other climate targets into its contracts and relationships with other parties.

Example wording

Please provide information and copies of documents detailing:

1. Which functions in [Party B]’s business are responsible for measuring, managing and reporting greenhouse gas emissions.
2. Please provide copies of recent emissions-measurement reports submitted to the board.
3. Whether [Party B] has all of the following:
   • a board member or executive committee accountable for climate risk management and reporting
   • a non-executive director with experience in improving sustainability who advises [Party B] on climate -risk issues. If so, please provide details of their role, expertise, qualifications and access to expert advice.
4. Whether the remuneration of any of [Party B]’s employees or leadership team (including directors and managers) are [linked to or conditional on] [Party B] achieving its transition plan (particularly its interim and long-term emissions-reduction targets).
5. Whether dividends paid to [Party B]’s shareholders are linked to [Party B] achieving its transition plan (particularly its interim and long-term emissions-reduction targets).
6. Recent board minutes discussing climate matters and their impact on [Party B] and its business.
7. [Party B]’s sustainability policy and transition plan, and details of any key performance indicators set to measure [Party B]’s success in meeting them.
8. How climate issues are considered in [Party B]’s corporate strategy or business plan.

Example wording

Please provide details of any activities [Party B] carries out to offset its greenhouse gas emissions. In particular, please detail if [Party B]:

• has an offsetting strategy
• follows a mitigation hierarchy – that is to offset emissions only after it has used all reasonable efforts to first reduce them, revising this approach over time as it further reduces emissions
• sources its offsets through a project that has been verified by a recognised voluntary standard or from a United Nations Framework Convention on Climate Change clean development mechanism
• knows if the emissions avoided, reduced or removed by the offsetting projects are additional, permanent and verifiable
• considers the implications of the offsets it has bought on a just transition to a low-carbon economy and wider social and environmental goals.

Example wording

Please provide information and copies of documents detailing:

1. Whether [Party B] engages in activities that could directly or indirectly influence public policy on climate-related issues through policy makers, trade associations, research organisations or other finance or advocacy methods, including lobbying.
2. Whether [Party B] has a policy or position on conducting its lobbying activities, trade association memberships and public policy positions in line with Paris Agreement goals.
3. [Party B]’s procedures to ensure that the policy or position disclosed in [question 2 above] is complied with.
4. Whether [Party B] has a team that oversees lobbying activities, trade association memberships and public policy positions from a sustainability, risk or compliance perspective.
5. Whether [Party B] reports on or publishes [publicly] how its lobbying activities, trade association memberships and public policy positions align with Paris Agreement goals.
6. Whether [Party B] conducts and or publishes [publicly] a review of its trade associations’ climate positions and alignment with Paris Agreement goals.

Example wording

Please provide information and copies of documents detailing:

1. Whether [Party B] assesses and discloses climate risks and opportunities under [insert relevant domestic law or international reporting standard such as the International Financial Reporting Standards (IFRS)]. If so, please provide copies of any internal and external reports.
2. Whether [Party B] has a climate risk register (or equivalent document). If the register is not updated or maintained, please provide details of all of the following:
   • any known or reasonably foreseeable climate risks to [Party B]’s business
   • possible legal, financial and commercial impacts of the climate crisis on [Party B]’s business, and the impact of [Party B]’s business on the climate.
3. Any scenario analysis or stress-testing [Party B] has done on the impact of plausible climate futures on Party B’s strategy and business model, including the impact of:
   • rapid or disruptive transition scenarios to well below 2C, or 1.5C
   • warming scenarios above 4C.
4. Adaptation or resilience measures taken by [Party B] to minimise the exposure of [Party B], its business and operations to physical climate risks.
5. Any current or proposed climate laws in jurisdictions [Party B] operates in that might impact [Party B]’s business, and how [Party B] intends to mitigate these impacts.
6. [Party B]’s transition plan.
7. Any past or current legal actions, regulatory fines or insurance costs related to [Party B]’s business, including its climate liability-mitigation plan.
8. Any other climate-related awareness or horizon-scanning activities carried out by [Party B].

Example wording

Please provide information and copies of documents detailing: 

1. Any climate-related or sustainability due diligence [Party B] conducts when procuring goods or services, including information on greenhouse gas emissions related to the contract(s) under which it procures such goods or services.
2. Any environmental obligations [Party B] includes in its contracts for the supply of goods or services.
3. The percentage of contracts in [Party B]’s supply chain that contain decarbonisation and other climate-related obligations.
4. Any contracts that exceed a material carbon footprint threshold of [●] carbon dioxide equivalent and [Party B]’s right to terminate, renegotiate and vary the contracts.

Example wording

Please provide information and copies of documents detailing:

1. Any pay or benefits of [Party B]’s employees or leadership team (including directors and managers) that are [linked to or conditional on] [Party B] achieving its emissions-reduction targets.
2. Any dividends [Party B] pays to its shareholders that are [linked to or conditional on] [Party B] achieving its emissions-reduction targets.
3. Any information or training [Party B] gives to its employees and leadership team (including directors and managers) regarding climate and its impact on [Party B]’s strategy, profitability and operations.
4. Any other activities [Party B] carries out with its employees and leadership team (including directors and managers) to do all of the following:
   • educate them about the climate crisis generally
   • consult with them about potential changes to [Party B]’s business activities that would have a positive environmental impact.
5. Any ‘green’ employment benefits, terms or initiatives offered to [Party B]’s employees and their level of take-up.
6. Any policies [Party B] has in place to reduce the carbon footprint caused by travel and commuting.
7. What percentage of [Party B]’s fleet (including company cars) is electric.