Guest post by Natasha Morgan, head of legal content at The Chancery Lane Project
Morgan: Contracts are at the heart of corporate transition plans
Legal professionals play an important role in helping organisations turn their climate ambitions into concrete, enforceable commitments.
As the climate crisis accelerates amid growing investor scrutiny and evolving regulations, companies can no longer rely on vague pledges. To meet the moment, they must develop transition plans that are not only credible but legally binding, transforming ambition into enforceable action.
Contracts lie at the heart of this transformation. They form the foundation of business relationships and play a critical role in embedding climate objectives. A well-crafted contract has the power to translate a company’s climate commitments into enforceable obligations.
Contracts as drivers of climate action
Contracts are the infrastructure of the business world. They define relationships, set expectations and allocate risk. Increasingly, they are also becoming the means by which climate objectives are supported and advanced.
Effective climate contracts provide a valuable opportunity to engage suppliers in a shared climate journey. Setting clear but achievable goals, such as encouraging the use of renewable energy or incremental emissions reductions, fosters collaboration and transparency.
Regular reporting requirements help keep all parties aligned while also creating space for ongoing engagement.
If challenges arise, provisions like renegotiation clauses or corrective measures provide opportunities for dialogue and joint problem-solving, helping all parties stay committed to shared climate goals.
NatWest’s supplier contracts offer a compelling example. To support its net-zero strategy, the bank requires suppliers to show measurable improvements in emissions and sustainability scores. If they do not, the contract allows for review or renegotiation.
It is a clear case of a company using legal tools to reinforce climate commitments across its value chain.
Embedding climate goals into business operations
Legal teams play a central role in ensuring that climate transition plans are effective.
By aligning commercial contracts with corporate climate targets, particularly those tied to the Paris Agreement’s 1.5°C goal, lawyers help move climate strategy from the margins into day-to-day business operations.
This alignment is not just about compliance. Businesses recognise that climate change presents material risks – and that taking proactive steps to meet climate goals helps mitigate these risks.
Climate-aligned contracting offers a strategic approach to embedding sustainability commitments directly into business operations. Integrating climate goals into contracts allows companies to safeguard against financial, operational and environmental risks while reinforcing their leadership in the transition to a low-carbon economy.
Tools like The Chancery Lane Project’s Deliver a Climate Transition Plan guide provide legal teams with the resources they need to support this shift. The guide offers practical, structured approaches to translating climate plans into legal language, giving businesses a way to embed decarbonisation across contracts, policies, and processes.
Moreover, the free Climate Contracting in Action training programme provides lawyers, sustainability champions and supply chain procurement professionals with the skills to align their practices with climate action
Overcoming barriers and leading change
There are still challenges to overcome, namely uncertainty around climate metrics, resistance to change, and the difficulty of tracking outcomes. But legal professionals are well-equipped to address these head-on.
By educating stakeholders on the value of enforceable climate goals and by tailoring contract terms to suit sector-specific realities, lawyers can drive both understanding and adoption. In doing so, they also encourage collaboration across the value chain, creating shared ownership of climate objectives.
Key takeaway
The path to net zero runs through the legal department. By transforming transition plans into enforceable obligations, lawyers play a vital role in making climate action real. It is not just about drafting better contracts, but shaping a future where sustainability is built into the very structure of how business gets done.
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