By Daniel Kip

Introduction

According to the 9th August, 2021 Report of the Intergovernmental Panel on Climate Change (IPCC), the United Nations body for assessing the science related to climate change, the average temperature of the Earth’s surface is now about 1.1° C warmer than it was in the late 1800s (before the industrial revolution) and warmer than at any time in at least the last two thousand years. Climate Scientists have also shown that human activities have been the main driver of virtually all global heating over the last 200 years. While a growing number of countries are committed to net zero emissions by 2050, emissions of carbon dioxide (CO2) and other greenhouse gases must be cut in half to keep warming below 1.5° C. It is forecasted that between 2030 and 2050, climate change will cause an approximately 250,000 additional deaths per year from malnutrition, malaria, diarrhoea and heat stress alone, amongst others.

Net zero means cutting greenhouse gas emissions to as close to zero as possible, with any remaining emissions re-absorbed from the atmosphere, by oceans and forests for instance. The science shows clearly that in order to avert the worst impacts of climate change and preserve a livable planet, global temperature increase needs to be limited to 1.5°C above pre-industrial levels. Transitioning to a net-zero world is one of the greatest challenges humankinds have faced. It calls for nothing less than a complete transformation of how we produce, consume, transact and move about. The energy sector is the source of around three-quarters of greenhouse gas emissions today and holds the key to averting the worst effects of climate change.

Creating a fair and fast decarbonized economy is imperative for addressing climate change. Key principles include but are not limited to equitable distribution of benefits, rapid reduction of carbon emissions, and global collaboration to ensure a sustainable future. The Sustainable Development Goals, the UN Framework Convention on Climate Change and the Paris Agreement are all climate change solutions and actions geared towards combating climate change. This piece, which is greatly inspired by the 2023 Impact Report of The Chancery Lane Project (TCLP), focuses on a strategy rooted in Contract, one which is inevitably a vital aspect of the climate change campaign. This strategy requires the infusing of climate contracting principles via climate clauses in commercial & business Agreements, Contracts and Engagements.

CLIMATE CONTRACTING PRINCIPLES & CLIMATE CLAUSES

Climate contracting principles generally refer to guidelines and agreements aimed at addressing climate change through contractual arrangements. These principles may include commitments to reduce carbon emissions, promote sustainable practices, and adhere to environmental standards in business agreements. The goal is to integrate climate considerations into various contracts and encourage environmentally responsible behavior among parties involved. Climate Clauses in Contracts on the other hand are contractual provisions aimed at addressing environmental sustainability and climate-related concerns in business agreements. These clauses can include commitments related to carbon emissions, renewable energy usage, and environmental impact assessments. They are designed to align business practices with climate goals and may involve reporting obligations, penalties and/or rewards based on environmental performance. Incorporating such clauses into contracts reflects a commitment to responsible and sustainable business practices.

THE CHANCERY LANE PROJECT (TCLP) CLIMATE CLAUSES

The Chancery Lane Project is the largest global network of lawyers and business leaders using the power of climate contracting to deliver fast and fair decarbonization. The TCLP has a bank of 160 climate clauses which can be incorporated into contracts. These best-in-class clauses align with Paris Agreement goals, Race to Zero requirements and the Oxford Principles for Net Zero Aligned Carbon Offsetting.

According to the TCLP 2023 Report, the Law Society of England & Wales in its Guidance on Impact of climate change on solicitors, cited the TCLP as a useful resource for solicitors seeking to align their work with Environmental, Social and Governance (ESG) goals. The Law Society also in its Guidance on green leases in commercial properties, referred to TCLP climates clauses that assist lawyers in drafting green leases. Also, in a Guidance published by a group of global telecommunications networks, the Sarah’s clause was recommended as a resource to help companies clarify their emissions management obligation. In March, 2023, Addieshaw Goddard, the global hotels and lodging trade association, and Energy & Environment Alliance, a company registered in England, collaboratively wrote a Guide on sustainability in the hotel industry, providing numerous climate clauses, all of which are adaptations of TCLP climate clauses. The Cambridge University Press has also used the Owen’s clause in approximately 20 contracts as a general long-form supplier clause, in order to meet its climate target of 72% reduction of greenhouse gases by 2030.

The TCLP, through its network of 37 active transpositions working groups across the world, has championed the adaptation and modification of TCLP climate clauses to fit into various jurisdictions, some of which are Aotearoa New Zealand, England & Wales, Germany, Ireland and USA.

The climate clauses cover a number of practice areas and Sectors such as:

Practice areas-

Buildings & Land (including Property, Construction, Environment & Planning) (44) Commercial (56) Corporate (44) Corporate Governance (21) Dispute Resolution & Arbitration (4) Employment (including Share Schemes & Incentives & Pensions) (8) Finance, Financial Services & Capital Markets (29) Heavy Industry (including Energy, Infrastructure & Transport) (13) Insurance (13) IP, IT, TMT, Life Sciences, Data Protection & Information Law (14) Net Zero Best in Class (49) Public Sector (including Public Law & Local Government) (15) Supply Chain (33) Universal (25) Sectors–

Communication Services (9) Consumer Discretionary (7) Consumer Staples (6) Energy (13) Financials (37) Healthcare (4) Industrials (35) Information Technology (7) Materials (24) Real Estate (32) Universal (75) Utilities (16) Note that the number beside each area or sector is an indication of the number of clauses available and accessible.

CONCLUSION

Implementing of climate contracting principles in every facet of human contractual, business, and commercial relationship and engagements, and ensuring that they are not just discussed but infused as clauses into Contracts, Agreements & Policy documents, will go a long way in instilling a sense of obligation between or amongst parties, and ensure compliance. I will recommend that Lawyers, the various Bars, and in-house Counsel/Legal Officers in Companies/Businesses/Establishments, take advantage of and adopt the ready to use Climate Clauses carefully and devotedly crafted by The Chancery Lane Project (TCLP), applicable and usable for various industries, sectors, & transactions, in a bid to achieve a decarbonized global economy. More countries are committing to net-zero emissions by 2050. The coalition is growing but commitments must be backed by bold, credible actions and drastic measures.

In the coming days or some time in the near future, I will devote time to appraising the TCLP climate clauses in order to adapt and also revise same to fit into Africa as a jurisdiction, using Nigeria as the yardstick.

KIP is Legal Practitioner, Arbitrator, Notary Public & Rights Activist.

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