With the spotlight on Glasgow for COP26, there is growing focus on climate change and alongside it increasing pressure on companies to respond to the climate crisis. As many companies commit to net zero, there are calls for this commitment to be incorporated into all aspects of their businesses, including their employment contracts. The Chancery Lane Project, a pro bono initiative which develops contracts and model legislation to help combat climate change and achieve net zero, has recently published a Net Zero Toolkit to address this demand.

Climate-friendly contractual clauses

Net zero refers to a state in which the greenhouse gases released into the atmosphere are balanced by the elimination of gases from the atmosphere. A commitment to achieving net zero has gathered considerable force amongst both governments and companies on a global scale. Whilst historically private companies have been criticised for worsening the climate crisis, increasingly many businesses have placed commitments on reducing emissions at the forefront of their environmental, social and governance (ESG) agenda.

The Chancery Lane Project (the Project) describes its Net Zero Toolkit as "a set of practical tools to help professionals implement climate-conscious clauses in their organisation". The intention is for companies to take a proactive and all-inclusive approach to their ESG efforts, incorporating a net zero focus in all areas of their business. The Project has published model clauses and policies spanning a wide range of areas, including commercial transactions, construction, dispute resolution, intellectual property and insurance. Businesses are encouraged to either adopt the clauses in full or make suitable adaptions to their pre-existing clauses. The new Toolkit includes a model whistleblowing policy and a revised employment handbook which may be of interest to climate-conscious employers. 

A climate-conscious whistleblowing policy

One of the new clauses introduced by the Net Zero Toolkit is "Sasha's Clause". This provides wording for use within whistleblowing policies to ensure it covers disclosure of climate issues and non-adherence to the climate or sustainability policies of businesses. In the guidance notes, the Project explains that this drafting aims to codify employers' net zero commitments and ensure accountability, so that if the company is not fully adhering to its commitment this can be reported and remedied. 
The clause also provides employers with guidance and relevant considerations for implementing their whistleblowing policy. For example, it encourages employers to collate statistics on the number of net zero whistleblowing reports. Analysis of these statistics will allow employers to review the effectiveness of the policy and enact remedial change if required.

Net zero employment handbook

The Project has also published a revised "Elliot's Clause", a template employment handbook which "sets a tone for ambitious climate action involving every employee". This sets out a wider framework for achieving net zero, and the expectations placed on employees to help fulfil this goal. The rationale behind this is that the employment handbook can be used to set the tone of an organisation and the expectations of the relationship between employers and employees. On this basis, a handbook could be used as a tool to promote the company's net zero commitment.

The model clauses within the handbook cover a wide range of topics. They begin with a section on the company's general commitment to achieving net zero, and the central role individual employees have in this. They also contain more specific and tangible requirements of employees. For example, the expenses policy section states employees will only be entitled to have their meals expensed, including meals with clients, if they choose vegetarian options. A clause on commuting sets out a framework by which employees who walk or cycle to their office are given a "green travel allowance". To discourage workers from driving to the office, they may be subject to a daily parking charge which will be donated to charity. Another model clause gives employees additional holiday entitlement if they choose to take their annual leave domestically rather than travelling abroad.

A green future for employment contracts?

By the Project's own characterisation, many of its model clauses are "ambitious". In today's climate, several of the clauses, such as the requirement for employees to eat only vegetarian meals on work trips, are likely to be perceived by many as unusual and intrusive and it seems unlikely they will see mass adoption. However, the Toolkit is best viewed as a starting point for discussion rather than an end product. It serves as an illustration that employers could incorporate a net zero focus at all levels of their organisations, albeit a more conservative approach is perhaps likely to begin with than that included in the model clauses.

Reaching net zero for companies is a challenge for everybody involved. However, with COP26 bringing climate change to the foreground again, employers should recognise that everyone in the business has a role to play in achieving net zero, from the board to individual employees. Moving forward, employers should consider whether they want to incorporate climate-conscious clauses into their employment contracts as a step towards achieving this.