climate-related-disclosure-in-loans.md

title: Climate-Related Disclosure in Loans excerpt: date: 2024-03-27T14:16:13Z modified: 2025-07-23T11:15:58Z file_type: md permalink: clauses/climate-related-disclosure-in-loans.html wpid: 2055 status: publish type: clause jurisdiction:

• England & Wales maintenance-status:
• Not maintained practice-area:
• Banking and finance
• Capital markets eleventyComputed: clause_child_name: "Anna's Clause" clause_summary: "A generic reporting/disclosure clause that can be included in the Loan Market Association (LMA) information and undertakings provisions of any corporate loan and is not limited to 'green' loans." clause_last_updated_date: 2022-06-17 layout: layouts/clause.njk

Climate-Related Disclosure in Loans

Child’s name

Anna's Clause

Summary

A generic reporting/disclosure clause that can be included in the Loan Market Association (LMA) information and undertakings provisions of any corporate loan and is not limited to 'green' loans.

What this clause does

Encourages borrowers to consider their climate-related risks, mitigation opportunities and impacts (and also to prompt borrowers’ corporate and social responsibility (CSR)/sustainability teams to interact more with their finance colleagues). The clause also encourages lenders to consider their own climate-related risks and impacts and comply with their reporting obligations.

Clause Content

[Drafting note: Using this clause in Loan Market Association form documents: While this clause can be used in recommended form documents published by the LMA, it has not been endorsed by, or produced in conjunction with, the LMA. Using and reproducing LMA documents generally are subject to certain restrictions, specifically they may only be used by LMA members for preparing and documenting agreements relating to transactions or potential transactions in the loan markets. Further information is available on the LMA website – www.lma.eu.com.]

[Drafting note: Reporting regimes: This clause deliberately only addresses reporting requirements in relation to Climate-Related Risks and would ideally be used in conjunction with other TCLP clauses that cover contract emissions reduction and reporting relating to all scopes of emissions and/ or require that suppliers meet organisational emissions reductions targets.]

1. Reporting of Climate-Related Risks and Mitigation

1.1 The Company shall supply to the Agent, with (or as part of) each annual report:

1.1.1 a report containing the following information, in a form and substance [satisfactory to the Agent]/ [agreed between the Company and the Agent]*:

(a) details of the processes and procedures implemented by the Company to identify, assess and manage Climate-Related Risks impacting the business, strategy and financial planning of the Company; and

(b) details of actual or potential impacts of Climate-Related Risks which shall include (without limitation) the assessment of:

(i) Physical Risks of climate change affecting the business operations of the Company and the value of the Company’s assets (including without limitation its commercial property); and

(ii) Transition Risks associated with the transition to a Net Zero economy,

and any step(s) being taken to address or mitigate such risks.

(c) details of processes, procedures and any targets implemented by the Company to (a) contribute to or (b) mitigate any harm to the following environmental objectives:

(i) Climate Change Mitigation;

(ii) Climate Change Adaptation;

(iii) Sustainable Water and Marine Resource Use;

(iv) transition to a Circular Economy;

(v) Pollution Prevention and Control; and

(vi) Biodiversity Protection,

(together, the Environmental Objectives).

* [Drafting note: In some instances borrowers may already voluntarily comply with Environmental, Social or Governance (ESG) reporting standards which cover the material covered by this clause. In these cases, borrowers may be reluctant to agree to disclosure obligations imposed by lenders which result in duplicating work. It may therefore increase the uptake of this clause if the optionality that the borrower and agent can agree on the form and substance of the report is included.]