What are climate clauses?
Contract wording that helps you reduce emissions, manage climate risks, and deliver on climate goals
What are climate clauses?
Climate clauses are legal provisions and related tools designed to help reduce greenhouse gas emissions, build climate resilience, or otherwise support climate-aligned outcomes.
They embed climate considerations directly into the way organisations draft, negotiate, and document their activities — not only in contracts, but also in corporate governance (such as board minutes), procurement processes (like supplier engagement and due diligence), and in deal structures (like deal design, financing and transactional due diligence).
Key features of climate clauses
- Mitigation: They can require parties to reduce emissions (for example, using low-carbon materials, renewable energy, or green logistics).
- Adaptation: They may involve preparing for climate risks (for example, building resilience into infrastructure or supply chains).
- Accountability: Clauses can introduce reporting, auditing, or consequences if climate commitments aren’t met.
- Standardisation: Drafted using standard legal language, making them easy to adopt or adapt.
Why use climate clauses
- Cut emissions: Drive low-carbon choices in projects, procurement, logistics and finance
- Manage risk: Future-proof agreements and the value chains they support against climate-related disruptions and regulation
- Meet targets: Turn climate commitments into enforceable legal obligations - not just for your business but also for your partners, suppliers and throughout the whole value chain.
- Show leadership: Demonstrate to investors and stakeholders how climate goals will be delivered in practice, using contracts that are faster to implement and more tailored than regulation
- Standardise action: Use tried-and-tested wording that’s open source and ready to adopt
Examples of where they could be used
- A construction contract might require the use of sustainable materials or mandate carbon reporting.
- A loan agreement could link interest rates to the borrower’s climate performance.
- A supply agreement might oblige suppliers to align with a buyer’s net -zero targets.