Climate Contract Playbook #3: precedent drafting to address climate change

The Chancery Lane Project released the third edition of its Climate Contract Playbook in September 2020. The playbook provides precedent drafting that will help parties to commercial transactions address climate change in a variety of legal documents. The playbook is free to access on the Chancery Lane Project website.

For government contracts where PPN 06/20 (taking account of social value - published in September 2020) applies, these precedent clauses could be a valuable tool to demonstrate compliance. PPN 06/20 includes fighting climate change in its themes and outcomes. A brief summary of PPN 06/20 is available in my previous blog.

For government contracts for construction, infrastructure and capital investment procurements where PPN 09/16 (Procuring for Growth Balanced Scorecard) still applies, the precedent clauses could also help show compliance with the strategic theme of sustainability. Precedent clauses most relevant to construction and general commercial agreements are summarised below. The Chancery Lane Project gives each precedent clause a child’s name to signify a connection with the next generation.

General commercial clauses

Heads of Terms (Hanley’s Clause): Provides that parties agree to consider climate change as a key factor in determining the structure of the deal and carrying out due diligence.

Confidentiality Agreement (Kaia’s Clause): Provides that parties discuss and consider how the transaction can address climate change, and reveal their climate change targets and ESG commitments to each other.

Invitation to Tender (Phillipe’s Clause): Provides for the contractor to implement an environmental volunteering scheme allowing groups including retirees, those out of work and former prisoners to carry out environmental volunteering.

Construction clauses

Energy efficiency targets (Mary’s Clause): Provides that the building must meet certain energy efficiency targets before practical completion is certified.

Green modifications (Luna’s Clause): Provides a procedure for the contractor to modify the contract that incentivises "green modifications".

Green design and construction standards (Estelle’s Clause): Amends the contractor's standard of care to impose a requirement to comply with "Green Objectives" (including sustainable use of materials and minimising the emission of greenhouse gasses).

Climate Resilient landscape design contracts (Edgar’s Clause): Requires the appointee of architect appointments/ building contracts to use available open space in an environmentally efficient manner and where applicable, include pain/gain mechanism to allow for future savings.

Sustainability of procurement of construction materials (Tristan’s Clause): Provides that a set value for greenhouse gas emissions will not be exceeded (and that liquidated damages will be payable if it is). It also includes a best endeavours obligation to source materials locally wherever possible.

Climate Aligned Construction Waste Management (Francis’ Clause): Requires the contractor to produce a site waste management plan (SWMP) for the works.

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