---
title: Climate Change Due Diligence Questionnaire
excerpt: 
date: 2024-03-27T14:15:58Z
modified: 2025-07-23T11:12:48Z
file_type: md
permalink: clauses/climate-change-due-diligence-questionnaire.html
wpid: 2027
status: publish
type: clause
jurisdiction:
  - USA
maintenance-status:
  - Not maintained
practice-area:
  - Corporate, mergers and acquisitions (M&amp;A)
eleventyComputed:
  clause_child_name: "Drew's DDQ"
  clause_summary: This DDQ is for buyers to assess a target’s net zero transition readiness, resilience and ability to adapt to future climate risks.
  clause_last_updated_date: 2023-09-19
layout: layouts/clause.njk
---

# Climate Change Due Diligence Questionnaire

## Child’s name

Drew's DDQ

## Summary

This DDQ is for buyers to assess a target’s net zero transition readiness, resilience and ability to adapt to future climate risks.

## What this clause does

Asks questions so that Buyers can reduce risk and protect their investment positions by using the information gained with this questionnaire to seek appropriate climate warranties and indemnities from the seller(s) and/or negotiating on price.

## Clause Content

**Introduction**

We are making this information request as part of our due diligence review in connection with the proposed \[purchase\]/ \[investment\] by \[company\] or a special purpose acquisition company (**Buyer**) \[of \[the entire issued share capital of\]\]/ \[in\] \[target\] (**Company**) from \[shareholders\] (**Sellers**, each being a **Seller**) agreed to be purchased pursuant to \[name of agreement\] dated \[date\] (**Transaction**).

\[If desirable, insert paragraph on the strategic importance of climate change issues to the Buyer: for example, by reference to its corporate strategy\].

Accordingly, the Buyer is making this information request to understand how the Company approaches climate change-related issues.

**Response Guidelines**

\[Buyer’s legal advisers to insert Standard Response\]

This is an initial request for information and we may ask for further information in due course. Please answer all questions in full and provide copies of all documents referenced in your responses.

**Questionnaire**

**General**

1\. Please identify and provide copies of all current climate engagement and/or sustainability policies and/or practices and details of any key performance indicators or other ways the Company measures the successful implementation of these policies and/or practices.

**Emissions Reduction Targets and Reporting**

2\. Has the Company set a Net Zero Target, a Science-Based Target, a Carbon Budget or other similar goal to reduce its climate and/or environmental impact (including, any plan to reduce water or other raw materials usage)?

3\. If the answer to question #2 is yes, please provide all details of such plan(s), including:

3.1 A timeline and short, medium and long-term interim targets;

3.2 The intended pace of decarbonization or, as applicable, reduction in adverse impact. At minimum, please express this as a year-over-year reduction based on current absolute emissions or usage;

3.3 To what extent such plan(s) are consistent with one or more goals established by a climate-related treaty, law, regulation or non-governmental organization.

3.4 Greenhouse gasses (**GHG**) emissions reduction targets broken down by Scope 1 , 2 and 3 emissions (classified by [*The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, Revised Edition 2015*](https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf) as updated periodically) \[*Drafting note: Scope 1, 2 and 3 emissions are defined on page 27 of the GHG Protocol*\];

3.5 Plans, if any, to become a Net Negative organization; and

3.6 Whether and how the Company reports on progress against the targets in question #2 (whether publicly or otherwise).

4\. Details of the decision-making process that resulted in the setting of the targets in question #2, including: which experts or external sources were consulted, the factors considered and who within the Company was involved in setting proposed and final targets.

5\. Details of all \[current\] GHG emissions (or carbon footprint) measurement and reporting by the Company \[in the past five years\], including:

5.1 The standard and/or methodology used for calculation;

5.2 Any benchmarking versus peers and/or industry standards;

5.3 Any independent verification of its GHG emissions (or carbon footprint) reporting; and

5.4 Any reporting, public or otherwise, on GHG emissions.

6\. Details of how the Company embeds achievement of its climate and/or sustainability targets into its contracts and relationships with other parties.

**Governance**

7\. Which functions within the Company are responsible for the measurement, management and reporting of GHG emissions and/or progress to achievement of the targets referenced in question #2? Please provide details of their roles and examples of recent measurements undertaken or reports generated by or on behalf of these functions.

8\. Please describe who within the Company has primary responsibility for climate risk measurement, management and reporting, including a board member, executive committee, or a non-executive director with experience improving and/or overseeing sustainability in an organization similar to the Company. Please include details of this person’s role, expertise, qualifications or access to expert advice in performing this role.

9\. Please provide copies of board and board committee minutes from \[the last five years\] that discuss climate change matters and their impact on the Company’s business.

10\. Details of how climate change issues have been considered in the Company’s corporate strategy and long and short-term business plans \[over the last five years\], including any analysis of potential climate change-driven risks to Company operations, supply chains, and/or customer base due to climate change (e.g., increased heat, decreased water or other resource availability, sea level rise).

**Climate Risk, Adaptation and Resilience**

11\. Details of any known or reasonably foreseeable \[material\] physical risks to Company operations or assets due to climate change (e.g., water risk, risk to real property due to sea level rise).

12\. Details or any known or reasonably foreseeable \[material\] transition risks to Company operations or assets or reasonably foreseeable \[material\] legal, financial or commercial risk to the Company due to climate change (e.g., increased operating costs to acquire certain materials, increased costs due to anticipated regulation).

13\. Details of any analyses conducted by or for the Company to evaluate risks required to be disclosed under questions #11 and #12 above.

14\. Details of any scenario analysis or stress-testing of the Company’s strategy and business model against plausible climate futures, including:

14.1 Rapid or disruptive transition scenarios; and

14.2 Warming scenarios above, 1.5°C, 2°C and 4°C.

15\. Details of any adaptation or resilience measures taken over \[the last five years\] that reduce the Company’s exposure to climate risks.

16\. Do you foresee any opportunities for the Company that may arise from the Net Zero transition? If so, please provide details.

**Just Transition**

17\. Details of any analysis of how local and/or global stakeholders (e.g., employees, clients, customers and supply chain partners) are affected by climate risk and any actions taken by the Company to improve the resilience of such stakeholders to climate risk.

17.1 Details of how the Company integrates Just Transition factors into its decision-making.

17.2 Details of any board decisions taken over the \[last five years\] where climate change or Just Transition factors were:

(i) Given a higher weighting than other commercial factors; or

(ii) Disregarded in favor of other commercial factors.

18\. Details of any ways that the Company enables others (e.g., employees, customers, suppliers, shareholders, general public) to contribute to the global transition toward Net Zero through engagement, information sharing, access to finance, capacity building or any other type of climate leadership.

**Finance and Investments**

19\. The amount the Company has spent as a result of any Climate Change Event in \[the last five years\].

20\. Details of any investments made by the Company \[in the last five years\] that qualify as environmental, social or governance (**ESG**) investments.

21\. Does the Company’s employee benefits and retirement plans include ESG investment options?

22\. \[In the last five years\] has the Company donated to any non-profit organizations or causes seeking to mitigate the impact of climate change?

**Legislative and Regulatory Risk; Lobbying**

23***.*** Details of any current or proposed climate change laws or regulations in jurisdictions the Company operates in that might impact the Company’s business.

24\. Details of any other climate change-related current awareness/ horizon activities undertaken by the Company.

25\. Details of all governmental lobbying efforts and political donations made \[in the last five years\].

26\. Details of the Company’s policies and procedures to align its lobbying activities, trade association memberships and public policy positions with the goal of limiting global temperature increase to 1.5 degrees Celsius above pre-industrial levels. How are these policies and procedures set?

**Employment**

27\. Details of any pay, benefits or remuneration of any of the Company’s employees, directors or shareholders that are linked to the achievement of any of its climate or sustainability related targets.

28\. Details of any information provided or training given to the Company’s employees \[in the last five years\] regarding climate change-related issues as they affect its business.

29\. Details of any other activities the Company undertakes to educate its employees about climate change-related issues generally, or to consult with them about potential changes to business activities or practices which would have a positive environmental impact.

30\. Details of any sustainability-related employment benefits, terms or initiatives \[currently\] offered to the Company’s employees and their level of take-up.

31\. Does the Company have any policies in place to reduce the carbon footprint of employee travel/ commuting?

**Competition**

32\. To the best of your knowledge, details of any actions that the Company’s competitors are taking to mitigate or assess the risks and opportunities to their business arising from climate change. How do the Company’s actions with respect to climate change compare with those of its peers?

33\. Is the Company aware of any of its business activities, practices or outcomes that have produced a substantial negative environmental impact \[in the past five years\]? If so, please provide details.

**Climate Contracting and Procurement**

34\. Details of any climate change-related, sustainability or social due diligence the Company conducts when procuring goods or services.

35\. Details of any environmental or social obligations the Company includes in its contracts for the supply of goods or services.

36\. Details of any active contracts which the Company considers to be not environmentally friendly (or where a more sustainable option was rejected) and any applicable rights of termination or renegotiation.

**Offsets**

37\. Details of any activities the Company undertakes to offset its GHG emissions. In particular, please detail:

37.1 The Company’s offsetting strategy, including the types of offsets it purchases;

37.2 A description of the volumes, prices and projects financed for all offsets purchased in the last five years;

37.3 If the Company follows a mitigation hierarchy (i.e., only offsetting greenhouse gas emissions after it has used all reasonable efforts to first reduce them and revising this approach over time);

37.4 If and how the Company sources its offset credits through a project that has been verified by a recognised voluntary standard or from a United Nations Framework Convention on Climate Change clean development mechanism;

37.5 How the Company verifies that the emissions of GHG avoided, reduced or removed by the Company are additional, permanent and verifiable;

37.6 If and how the Company considers the implications of the offsets purchased on global equity and wider social and environmental goals;

37.7 If and how the Company has a plan to transition existing offsetting projects to long-lived storage methods which have low risk of reversal over millennia; and

37.8 If and how the Company has a plan to transition existing offsetting projects to purely offsets that remove emissions, rather than avoid or reduce others’ emissions.

**Environment and Sustainability**

38\. Other than what has already been disclosed in questions #1-37 above, what, if any, steps have been taken to minimize the environmental and related social impacts of the Company? For example, to:

38.1 Use recycled goods and packaging where possible;

38.2 Reduce overall raw material usage;

38.3 Use local, low carbon materials and labor;

38.4 Implement circular economy and zero waste principles;

38.5 Give surplus materials to community projects;

38.6 Invest in training for low carbon product manufacturing; or

38.7 Help underrepresented groups to access new green job opportunities.

39\. If applicable, are customers provided with the option to offset the carbon footprint of delivering the Company’s goods or services at the point of sale?

40\. Details of any renewable energy purchase plans or technologies employed by the Company.

41\. Does the Company purchase utilities on renewable energy credits and/or use web hosts and cloud service providers which run their servers on renewable energy?

42\. Are any of the Company’s owned or leased facilities certified to meet the requirements of an accredited green building program (e.g., LEED)?

43\. Copies of the energy performance certificates for the Company’s owned and leased facilities.

44\. Details of any data the Company collects about the environmental impact of its business.

45\. Does the Company have an environmental management system covering waste generation, energy usage, water usage and GHG emissions? If so, how has it led to environmental improvements or energy savings at the Company’s facilities?

46\. Details of the steps the Company takes to recycle its waste, including categories of waste, volume and frequency.

47\. Details of Company waste sent to landfills, including categories of waste, volume and frequency.

48\. Details of any single-use plastic products that the Company purchases or consumes on a regular basis, including volume and regularity of purchase.
