Contracts for Climate Change (June21) Capital markets claus…

Contracts for Climate Change Capital markets clauses

Each of the precedents has a child’s name chosen by the drafting team. This is to encourage long-term thinking and to focus on the next generation as they will be most affected by the serious consequences if we fail to effectively respond to the climate crisis.

CAPITAL MARKETS ESG DUE DILIGENCE QUESTIONNAIRE — GORDON’S CLAUSE #duediligence #capitalmarkets #ESG Issue Climate finance is significantly lacking, which is largely due to Climate Change considerations being overlooked in the early stages of transactions. Solution Gordon’s Clause would introduce a capital markets focused Due Diligence Questionnaire to complement existing processes and prompt ESG disclosure and dialogue from the outset.

CLIMATE UNDERWRITING SPONSOR WARRANTIES — DOTTIE’S CLAUSE #warranties #undertakings #climaterisk Issue

Warranties and undertakings in underwriting/sponsor agreements do not go into significant detail in regards to an applicant/issuer’s environmental position and Climate Change risk. Increased transparency is needed. Solution Dottie’s Clause would extend warranties and undertakings in underwriting/sponsor agreements in respect of an entity’s environmental position and climate risk. The clause would require full disclosure of the applicant’s climate position by reference to specified metrics and ongoing disclosure in this regard. Impact The increased risk of liability would encourage directors to prioritise climate risks and increase engagement with climate issues at board level.

Impact The clause would streamline industry practices and encourage early discussion and evaluation of ESG issues by investors, lenders, underwriters and companies.