Sustainability Reporting for Private Companies

The Chancery Lane Project continues to be at the (legal) forefront encouraging business leaders and their advisers to use the power of climate contracting to deliver fast and fair decarbonisation. 

Many private businesses will have policies and commitments and targets to reach Net Zero (or to otherwise improve their environmental footprint), and many will want to know what more they might do.

This newly proposed clause may be the answer for those companies asking that “what else can we do” question, by suggesting clauses to be embedded in a company’s articles of association to commit the board to consider, monitor and update (with independent input) their sustainability policies.

It will be interesting to see if companies do adopt such clauses and to also monitor whether shareholders or other stakeholders start to ask boards to do so. 

https://chancerylaneproject.org/climate-clauses/sustainability-reporting-clause-for-the-constitution-of-a-private-limited-company/

Obviously embedding such a commitment in a company’s articles may also lead to the possibility of board’s being held to account (and possibly liable for breaching any such clauses) by stakeholders in future, so adopting such clauses would have to be done only where a board is fully committed – and wants to show it is fully committed – to managing its environmental impact and its sustainability reputation. Adopting such a clause would be a real clear show – as opposed to a press release or nice words on a website – that a company is taking climate change action seriously! 

...it is increasingly important for companies not only to ensure that they have corporate sustainability policies in place - but that these policies are being regularly discussed at board level and updated as necessary

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