Model clause

Climate Underwriting Sponsor Warranties

Dottie's Clause

Extension of director (& possibly major shareholder) warranties and issuer/director undertakings in underwriting, sponsor and similar agreements in respect of environmental position and climate risk.

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Why use this?

The proposed amendments will result in improved transparency and greater prospects of accountability, resulting in improved performance against specified climate risk metrics.

How it promotes a net zero future

The increased risk of liability will:

- Force directors and others to assign greater priority to climate risk-related disclosure, performance and continuous improvement.

- Increase knowledge of company’s (and group’s) operations and associated risks including climate change risks.

- Increase engagement and understanding at board and senior management levels.

- Mean that this becomes, and stays, a prominent item on board meeting agendas.

- Minimise the chance that directors, when challenged, can successfully assert that they were unaware.

Over time standards will be raised, even for companies not seeking a listing.

Disclaimer - please read

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

[Note: The following warranties may be added to the warranties schedule in the Placing Agreement.]

a) The Company’s [historic/current] environmental [position/performance/record] meets the Specified Metrics;

b) The company and [each of the subsidiaries] have at all times operated in compliance with all Environmental Laws in force from time to time and there are no facts or circumstances that may lead to any breach of or liability under any Environmental Laws or liability in respect of Environmental Matters;

c) There have been no claims, investigations, prosecutions or other proceedings against or threatened against the company [or any of the subsidiaries] or any of their respective directors, officers or employees in respect of any breach or alleged breach of any Environmental Laws, and there are no facts or circumstances that may lead to any such claims, investigations, prosecutions or other proceedings;

d) At no time has the company [or any of the subsidiaries] received any notice, communication or information alleging any liability in relation to any Environmental Matters or that any works are required;

e) The Company has implemented in full the recommendations of the Task Force on Climate-related Finance Disclosures in relation to the governance, strategy, risk management and disclosure of climate risks and opportunities;

f) The Company has carried out an assessment of its Carbon Footprint in accordance with international carbon reporting practice, being the accepted practice from time to time in relation to reporting for the purposes of the protocols to the United Nations Framework Convention on Climate Change and such assessment is accurate in all material respects;

g) [INSERT any bespoke warranties as to company’s historic/current environmental position/performance/record]; and

h) [INSERT any bespoke undertakings to address/monitor environmental/climate change risk relevant to the business on a continuing basis thereafter, including rectifying/ameliorating any identified problems or deficiencies].

Carbon Footprint”: the amount of carbon dioxide equivalent emissions that will be released into the atmosphere as a result of the activities of the Company in the year ending [date].

Environmental Laws” means all applicable laws, statutes, regulations, subordinate legislation, bye-laws, common law and other national, international, federal, European Union, state and local laws, judgments, decisions and injunctions of any court or tribunal, and [legally binding] codes of practice and guidance notes to the extent that they relate to or apply to the environment, energy efficiency or climate change.

Environmental Matters means all matters relating to:

a) pollution or contamination of the environment;

b) the presence, disposal, release, spillage, deposit, escape, discharge, leak, migration or emission of hazardous substances or waste;

c) the creation or existence of any noise, vibration, odour, radiation, common law or statutory nuisance or other adverse impact on the environment; or

d) the condition, protection, maintenance, remediation, reinstatement, restoration or replacement of the environment or any part of it.

Specified Metrics means [insert].

Glossary references: Carbon Footprint

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