ESG in Sport – net zero targets and “coolerplate” clauses

Last week Williams F1 became the latest sports organisation to formalise their commitment to a more sustainable future by announcing a net zero target by 2030 and signing up to the UN Sport for Climate Action Framework. This is evidence of a wider step-change within the sports industry as the conversation on climate change moves from theory to action. All sports organisations will need to react, but what does this mean in practice and what role can your contracts play?

Sport, Climate Change & the UN 

Sports organisations, through their relationships with billions of passionate fans worldwide, have a unique opportunity (arguably a responsibility) to lead by example on climate change. From a more selfish perspective, taking this sort of stance is increasingly vital to engaging with fans and attracting sponsorship and investment.

However, a rise in “greenwashing” claims and a lack of clear regulatory guidance make this a challenging area for those tasked with plotting an organisation’s path through the issues at hand.

One helpful sports-specific resource is the UN Sports for Climate Action Initiative which invites sports organisations to unite behind a set of 5 key principles and work together by sharing best practice and collaborating on areas of mutual interest to develop the climate action agenda in sport. The IOC has taken a lead role here along with 273 other signatories – and this list will surely continue to grow steadily from here.

Net Zero Commitments

Net zero concerns an organisation’s emissions of the type of greenhouse gases (GHGs) which so urgently need to be reduced in order to address global warming.

Committing to be “net zero” by a particular date (i.e. your GHG emissions will balance with the amount of GHG you take away) is a powerful statement and can galvanise an organisation towards meaningful change. However, definitions vary and there is increasing scrutiny around not just when but how you get to net zero, particularly the extent to which you may have relied on offsetting as opposed to avoiding or reducing your emissions.

As a starting point, you’ll need to fully understand your existing carbon footprint, meaning not just your direct emissions but also emissions you’re indirectly responsible for up and down your value chain. From there you can prioritise addressing emissions in aspects of your operations based on scale of impact and ability to change.

Contract Management & “Coolerplate”

With indirect emissions playing such a key role, organisations chasing net zero have no choice but to include their partners, suppliers and other stakeholders in their journey. For that reason, sustainability considerations have become increasingly important in procurement processes and contract drafting. There’s even a developing body of standard contractual clauses to facilitate climate change aims. I recently saw this referred to ingeniously as “coolerplate”.

To give you an idea, “coolerplate” might cover, amongst other things:

• Warranties regarding existing and historic compliance with environmental legislation and/or sustainability guidelines
• Commitments to adhere to one or both parties’ sustainability policies and/or specific action plans (agreed or to be developed between the parties) relating to the subject matter of the contract, with related rights to suspend or terminate the agreement for non-compliance.
• Obligations to report performance and submit to independent audits
• Incentives for achieving specific sustainability targets and (where relevant) service credits for failing to do so

The drive to net zero will be a key theme in all industries in the coming years and those sports organisations that act now are likely to reap rewards in the long run.