Law firms unite to create climate aligned contract clauses

The project, which is often referred to as ‘TCLP’, began in the UK in 2019 and has since expanded to Australia. Under the Australian Transpositions Project, lawyers from MinterEllison, DLA Piper, Clayton Utz, Ashurst, King & Wood Mallesons as well as in-house lawyers and editors from Practical Law, collaborate to transpose UK climate clauses to Australian law so they are accessible to Australian companies.

Phoebe Roberts, Senior Associate at MinterEllison, Director of Implementation and Co-Lead of the Asia Pacific (APAC) Chapter of TCLP, said the project provides a unique opportunity for lawyers to do things differently.

“Working side-by-side with lawyers from other firms is usually very novel,” said Roberts.

“It is inspiring to work with lawyers who are as passionate as you are about the climate. It gives you goosebumps,” she said.

Eliza Kane, a lawyer at MinterEllison, also praised the collaborative nature of the work and the importance of bringing together multiple parties in the race to net zero.

“The collaborative nature reinforces the importance of bringing stakeholders, contracting parties and colleagues alike ‘along for the journey’ to navigate the dynamic nature of climate risks and workshop solutions to meet net-zero objectives and targets,” said Kane.

TCLP was originally conceived by Chair and Founder Matthew Gingell who contemplated the role of transactional lawyers in the climate crisis. He considered the potential for every contract to deliver net zero in alignment with goals of The Paris Agreement.

To date, there are over 100 climate clauses available. Each clause has been peer reviewed by a group of lawyers from the UK’s top 25 law firms.

“Our focus is on mobilising lawyers to upskill on climate drafting and changing the norms of contracting,” said Roberts.

“To me, it seems absolutely fundamental to include [climate clauses] in your contracts if you want to meet your emissions reduction targets,” she said.

“If it’s not in your contract then it’s not happening, particularly in your supply chain and across your value chain.”

The UK’s Environment Agency, and Salesforce were some of the earliest adopters of the climate clauses. Vodafone, NatWest, and LexisNexis have also since come on board. Across the ditch, the NZ Green Investment Finance has recently adopted climate clauses in their contracts which is driving engagement.

Each of the climate-aligned contract clauses are named after the children of lawyers involved in the drafting teams.

“The project is in service of children,” said Roberts.

“It brings a nice personal touch, and always reminds you why this work is important.”

The climate clauses are open source and not personally attributable to the people that drafted them. The purpose is to be collaborative and for the clauses to be owned by the entire legal community.

Many of the clauses deal with climate-related risks and opportunities, particularly as they relate to an organisation’s supply chain. For example, the fundamental supply chain clauses – otherwise named Owen, Zoe & Bea, and Matilda’s annex – reflect a net zero aligned ambition into the supply chain, ensuring the goods and services being procuring are aligned with those targets.

Agatha’s clause allows termination for a ‘greener supplier’. It provides customers the right to switch supplier if an existing supplier is unable to match a ‘greener’ offer made by an alternative supplier.

“The reason I like Agatha’s clause is it’s a bit more ambitious,” said Roberts.

“It tries to lift the behaviour of the entire supply chain in providing them with the opportunity to improve before switching to the other supplier.

“Driving better behaviour is core to the clauses and incentivising the commercial parties to do better through contract drafting.”

Lawyers worldwide are working to adapt climate clauses for their jurisdictions, including India, China, Japan, New Zealand, Ireland, Germany, USA, and across Latin America.

“The Transpositions Project is a really hands-on way of getting involved and contributing back to the global community of lawyers by taking the content and adapting it for your jurisdiction,” said Roberts.

“Every clause is made jurisdictionally specific. It responds to the specific commercial realities and where that country is at in relation to climate action,” she said.

“We want to be ambitious but also realistic so that the clauses are used.”

Claire Robertson, a solicitor at DLA Piper, said the Australian Transpositions Project is an important initiative encouraging a more proactive approach to reducing emissions.

“The TCLP’s transposed clause bank is a powerful tool industry can use to help the private sector take the lead on Australia’s transition to net zero,” said Robertson.

The clauses are applicable to a range of different sectors including built environment, construction, real estate, development, insurance, finance, general mergers and acquisitions, corporate, human resources, and employment.

“The TCLP clause bank provides an invaluable resource to embed climate in all manner of contracts,” said Natalia Crnomarkovic, Distinguished Fellow at the College of Law.

“From employment contracts to debt financing, I feel privileged to be part of such a vibrant purpose-led community.”

If you are interested in getting involved, you can read more here.