Net Zero Contracts – How to implement them in the Built Environment

With an increased interest in the market for net zero contracts, we look at the approach to net zero, and how to align net zero goals into a contracting strategy.

25th March 2022

What really is Net Zero?

Net zero is not defined in law nor is there a general consensus as to what this means. This makes it challenging for businesses as they cannot benchmark their business strategy to a common net zero standard.  This is especially so when faced with the increasing pressure on businesses to transition to achieve net zero, and in setting their objectives and methodology in respect of tackling embodied and operational carbon.

This however also presents an opportunity for those that operate in this space i.e., developers, social housing associations, utility companies and SMEs, to name a few, to define “net zero”, often with support from advisors such as sustainability consultants and low carbon specialists.

Two people in hard hats in discussion with a laptop on a development site

The differentiator in the market

"Often this net zero definition and solution can enhance a business or brand in the market, and can act as the differentiator in the market that places a particular business or brand in a unique position over its competitors."

Suriya Edwards Managing Associate

No two situations are the same

Each net zero brief is unique and can vary depending on each businesses pathway to achieving net zero, which is why we use our sector knowledge and technical expertise in drafting bespoke contracts, or use and adapt construction contracts such as NEC, JCT or FIDIC (etc.) to provide net zero contract solutions.

As an advisor we provide contract solutions to align our client's net zero objectives into their contracts.  Our team of experts advise clients in incorporating climate clauses in contracts, which is a core part of our advisory service, in order to manage their climate risk.

The importance of TCLP collaboration

The Chancery Lane Project (TCLP) has an excellent set of provisions to advise, start a conversation and embed climate aligned clauses in contracts. We seek to future-proof contracts by collaborating with and using the TCLP provisions to suit our client’s particular climate change requirements and climate risk mitigation strategies.

This means we do not simply include TCLP provisions in precedent form documents (which can later be taken out) but seek to engage in a dialogue to effect climate & client focused contract changes. This is more effective in supporting our clients in their transition to net zero. This can therefore cover a spectrum of low-key clauses to a more rigorous approach.

Whilst we use a range of methods to implement and facilitate net zero contracts, some examples of contract solutions where we have used or adapted for use TCLP’s provisions include:

  • TCLP’s Ayshe’s Clause has been used in the context of employer/funder due diligence and reporting obligations in an energy storage project
  • TCLP’s Tristan’s Clause on construction materials and procurement has been used in the built environment context (including MMC projects)
  • TCLP’s Luna’s clause on net zero modifications has been used in the built environment context
  • TCLP’s Mary’s clause on energy efficiency has been used in the context of the built environment – construction of office / working space and MMC projects.
Get in touch to find out more

How can we help?

Our approach to net zero

  • We get to know our client’s environmental standards and net zero brief.
  • We are here to manage our client’s climate risk in the built environment.
  • We use legal tools from TCLP’s Climate Clauses to draft solutions.
  • We are trained facilitators and can provide bespoke training on TCLP’s climate and net zero aligned clauses
  • We use our cross-sector expertise with social housing clients, private sector developers and renewable energy clients to drive climate contract solutions.
  • We liaise with key industry stakeholders such as Innovate UK, Construction Innovation Hub, The Housing Forum, emerging data / software providers, banks, sustainability and planning consultants, the Offsite Alliance, MMC manufacturers etc. to stay up-to-date with industry trends and to also get to know its people.
  • We are a member of TCLP’s Built Environment advisory group.
  • We are a member of The Housing Forum’s decarbonisation scoping group.

What we offer

  • We advise on construction procurement routes and review & draft contracts (including development agreements) aligned to a client’s net zero objectives. Our clients can be social housing clients, private sector developer clients, SMEs, utility companies, renewable energy firms.
  • We advise on procurement routes and contracts in respect of off-site construction / MMC projects as they tend to have a strong sustainability focus or solution.
  • We advise on retrofitting related issues and contract approaches. In fact we are market leaders in the industry in this regard.
  • We advise on other elements of development schemes such as in respect of micro grids or energy storage.
  • We advise on supply chain contracts, issues and due diligence requirements. This is particularly relevant with regards to managing scope 3 emissions.
  • We advise on and draft clauses that facilitate reporting to funders or to our client’s board.
  • We advise on risk mitigation and dispute resolution in respect of net zero clauses.
  • We support in-house lawyers and GC’s in embedding climate aligned provisions. We can organise a climate contract call to discuss approaches and steps you can take in contracts.

Contact us

Please get in contact with any of the team members below, they'd be happy to meet you for a coffee and tell you a bit more about what we are doing and how we can help:

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