Climate Contract Playbook Edition 3
13
[Kaia’s clause]
The Origin Story
Child’s name
Kaia’s clause
Full name
Climate Purposed NDA Terms (Confidentiality Agreement)
Practice Area / Sector
Universal
Climate change issues and alignment of commercial objectives with Net Zero policies are rarely discussed at the outset of a new commercial relationship and identified at that early stage as a key focus for the parties. As a result, are often relegated to secondary issues or brought up towards the end of a negotiation – if at all. Additional provisions for standard mutual non-disclosure/confidentiality agreement (NDA) to ensure climate change and environmental issues are discussed at the outset of a new commercial relationship. Hanley’s clause from the 1st edition of the Climate Contract Playbook showed how heads of terms can be used to give prominence to climate change issues. The theory being that the earlier climate issues are raised in the documentation the more likely that they will be a key consideration in the transaction or deal. This drafting solution expands on that logic: the earliest document that parties often sign is an (NDA) 6 . NDAs help build trust and encourage a more open conversation. At this stage, discussions tend to be fluid and exploratory in nature and the parties will not only be assessing the immediate commercial opportunity but also whether the parties’ values are aligned. It is common for a business to sign hundreds if not thousands of NDAs each year 7 . Therefore, this provides a unique opportunity to raise climate issues in numerous and varied scenarios across all sectors of the economy. Most precedent and template NDAs focus on the commercial purpose only. Discussions relating to climate change or the transition to net zero are rarely stated objectives. This drafting will be particularly relevant where one or both of the parties has a publicly stated net zero target. It sets the tone of every commercial conversation and in that way aims to create a pervasive net zero culture. The clauses will ensure climate change is considered from the earliest part of a commercial relationship. In effect, it will help to make climate change a mainstream topic within commercial teams. The clauses will also: • Set the tone for future documentation should the parties progress to a more formal relationship. • Allow boards to demonstrate how climate change was considered as part of every commercial relationship and thus demonstrate its commitment to a Net Zero business strategy, Corporate Social Responsibility (CSR), and Environmental, Social and Governance (ESG) factors, whilst also potentially mitigating the risk of future liability relating to climate change.
Issue
Solution
Context
Impact
6 https://www.gov.uk/government/publications/non-disclosure-agreements/non-disclosure-agreements 7 https://www.quora.com/How-many-NDAs-does-a-company-sign-each-year
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