Key Points
- The Chancery Lane Project’s (TCLP) climate clauses have been incorporated into the UK Government’s Model Services Contract (MSC) through its optional Schedule 28 on carbon reduction.
- The Model Services Contract is the Government’s standard form for high-value and complex services contracts, typically involving contracts worth £20 million or more.
- Schedule 28 incorporates two mechanisms adapted from TCLP clauses: a gain-share mechanism based on Jess & Rory’s Clause and a net zero modification procedure adapted from Luna’s Clause.
- The gain-share mechanism can allow a contracting authority to share the value generated when a supplier reduces emissions beyond its agreed contractual target.
- The net zero modification procedure allows either party to propose changes during the contract where a lower-carbon method becomes available.
- The provisions are optional, meaning contracting authorities must determine whether they are relevant and proportionate to the contract.
- TCLP’s clauses moved through a multi-year process from an open-access legal clause library to Government procurement policy and ultimately into the Government’s standard contractual architecture.
- The Cabinet Office’s Procurement Policy Note 01/24 (PPN 01/24) introduced a contract-specific carbon reduction schedule in March 2024.
- PPN 01/24 was subsequently updated as PPN 016 in February 2025 to align with the Procurement Act 2023.
- The Government’s carbon reduction guidance identifies the gain-share and net zero modification provisions as mechanisms based on TCLP terms.
- The wider framework covers emissions measurement and reporting, contractual reduction targets, supplier commitments, performance management and the cascading of relevant obligations through supply chains.
- The Chancery Lane Project says embedding climate provisions into standard contracts can give individual legal drafting much wider reach because contracting authorities can adopt ready-made provisions across multiple contracts.
- The development places climate considerations more directly within public procurement, contract governance and supplier management.
The development is significant because climate clauses developed by The Chancery Lane Project’s community of legal volunteers have moved beyond an open-source legal resource and into the UK Government’s standard contracting framework. The provisions are not automatically mandatory in every Model Services Contract, but their inclusion in Schedule 28 gives contracting authorities a ready-made mechanism for incorporating carbon reduction requirements into eligible high-value services contracts.
What has happened to The Chancery Lane Project’s climate clauses?
The Chancery Lane Project has reached a milestone in the adoption of climate-aligned contracting, with mechanisms developed by its community of legal volunteers now incorporated into the UK Government’s Model Services Contract.
In a project update published on 23 July 2026, Simone Potter of The Chancery Lane Project said the organisation had seen its climate clauses move from its free clause library into Government procurement policy and subsequently into the Government’s own Model Services Contract. Potter described the development as placing the clauses within the machinery through which public money can contribute to emissions reduction at scale.
The Model Services Contract is used by UK Government contracting authorities as a standard starting point for high-value and complex services procurements. Government guidance indicates that it is particularly suited to services where contract charges exceed approximately £20 million, although the exact choice of contract depends on the procurement and its requirements.
The incorporation of TCLP-derived mechanisms therefore represents a change in where climate-related contractual provisions sit: rather than existing solely as optional external drafting resources, relevant provisions are now available within the Government’s own standard contractual framework.
What is included in Schedule 28?
The central development is Schedule 28, the Carbon Reduction Schedule, which was added to the Model Services Contract as an optional schedule.
The Cabinet Office’s Model Services Contract guidance states that Schedule 28 implements PPN 016 – Carbon Reduction Contract Schedule. It is intended to be used where a contracting authority wants to include carbon reduction provisions and considers them relevant to the subject matter of the contract and proportionate to do so.
The Chancery Lane Project identifies two mechanisms within Schedule 28 as being adapted from its model clauses.
The first is a gain-share mechanism based on Jess & Rory’s Clause. The second is a net zero modification procedure adapted from Luna’s Clause.
These mechanisms are designed to address two different aspects of contract management: incentivising additional emissions reductions and allowing contracts to evolve when lower-carbon approaches become available.
How does the gain-share mechanism work?
The gain-share mechanism is intended to encourage suppliers to reduce emissions beyond the minimum contractual requirement.
Under the approach described by The Chancery Lane Project, where a supplier reduces the carbon footprint associated with the contract by more than its agreed annual target, the contracting authority can share the value associated with that additional reduction with the supplier. The agreed emissions target therefore operates as a minimum level rather than an upper limit on performance.
The Government’s Carbon Reduction Schedule guidance also describes gain-share as a mechanism for incentivising greenhouse-gas emissions reductions above established contractual requirements and explicitly states that it is based upon The Chancery Lane Project terms.
This is important because conventional contractual targets can establish a defined performance obligation without necessarily creating a direct incentive to outperform it. A gain-share structure introduces an economic incentive for suppliers to identify additional opportunities for carbon reduction during delivery.
The mechanism consequently connects environmental performance with commercial contract management rather than treating emissions reduction solely as a policy commitment made before a contract begins.
How does the net zero modification procedure work?
The second TCLP-derived mechanism is the net zero modification procedure, adapted from Luna’s Clause.
The provision is designed to allow the parties to modify the way a contract operates where a lower-carbon approach becomes available during the life of the agreement.
For example, a supplier could identify a method of delivering the contracted service that produces fewer emissions than the approach originally anticipated. The net zero modification mechanism provides a contractual route for considering changes rather than leaving the parties dependent solely on the original specification.
The Chancery Lane Project says this approach builds decarbonisation into the ongoing management of a contract rather than treating climate considerations as something settled only at the point of contract formation.
The distinction is particularly relevant for long-term services contracts, where technology, energy sources, operating practices and market conditions can change significantly over the contract term.
Why is Schedule 28 optional?
Despite the significance of the development, the inclusion of the climate provisions does not mean every Government services contract must automatically contain them.
The Chancery Lane Project stresses that Schedule 28 is optional and can be used where the contracting authority considers it appropriate. Government guidance similarly says authorities should use the schedule, or relevant parts of it, where carbon reduction provisions are relevant to the subject matter of the contract and proportionate to do so.
This distinction is important when assessing the development. The Model Services Contract provides a standardised route for using the provisions, but individual contracting authorities retain discretion over whether the schedule should be included.
The Cabinet Office guidance says authorities should indicate on the contract’s Front Sheet whether Schedule 28 will be used.
The Chancery Lane Project argues that optionality does not remove the significance of the development because the clauses are now available within the document from which contracting authorities begin their contracting process. Their availability can therefore reduce the practical barrier to incorporating climate provisions where they are considered appropriate.
How did the clauses move from TCLP resources into Government procurement policy?
The development follows several years of work involving climate contracting and public procurement.
According to The Chancery Lane Project, the Government Commercial Function was already treating procurement as a potential mechanism for emissions reduction by 2022. A September 2022 Government Commercial Function guidance note, Promoting Net Zero Carbon and Sustainability in Construction, identified The Chancery Lane Project as a resource for contracting authorities.
The Government’s 2022 carbon and net zero guidance described TCLP as an independent collaborative forum involving legal and sustainability professionals working to ensure contractual terms address the climate crisis. It also pointed contracting authorities towards TCLP’s resources, which included more than 100 draft clauses covering areas such as carbon benchmarking, emissions measurement and mitigation, sustainable working practices, materials procurement and construction waste management.
The next major step came in March 2024, when the Cabinet Office introduced Procurement Policy Note 01/24.
PPN 01/24 established a carbon reduction contract schedule designed to create a contract-specific approach to reducing supplier emissions in relevant Government services contracts. The Government guidance accompanying the policy included provisions covering net zero obligations, supplier commitments, contractual emissions-reduction targets, reporting, gain-share, net zero modification, rectification plans and supply-chain cascading.
The Cabinet Office’s guidance explicitly identified the gain-share and net zero modification mechanisms as being based on The Chancery Lane Project terms.
What changed with PPN 016?
The procurement policy subsequently evolved.
The Chancery Lane Project states that PPN 01/24 was updated to PPN 016 in February 2025, reflecting the requirements of the Procurement Act 2023. The carbon reduction approach was then migrated from procurement policy into the Government’s standard contractual architecture through Schedule 28 of the Model Services Contract.
The Government’s Model Services Contract documentation confirms that Version 2.2 implements PPN 016 through the new optional Schedule 28 on carbon reduction.
The move is significant from a contractual perspective because it changes the location of the provisions. They are no longer only contained within procurement policy guidance; they are incorporated into the Government’s standard-form contractual documentation.
That can make the provisions easier for contracting authorities and procurement professionals to identify, evaluate and adopt when appropriate.
What wider climate obligations are covered by the framework?
The TCLP-derived mechanisms form part of a broader approach to carbon reduction.
The Government’s Schedule 28 includes terminology covering the Government Net Zero Target, supplier net zero targets and different categories of greenhouse-gas emissions. It defines Scope 1 emissions as direct emissions, Scope 2 emissions as emissions associated with purchased electricity and identifies relevant Scope 3 categories.
The schedule also includes a net zero obligation under which suppliers are required, through best endeavours, to minimise their environmental impact throughout contract delivery.
The Government’s carbon reduction guidance additionally identifies requirements and mechanisms covering supplier commitments, contract-level emissions reductions, reporting, performance management, fuel emissions and the proportionate cascading of requirements to key supply-chain partners.
This broader approach is consistent with TCLP’s wider guidance on integrating climate obligations into contracts. The organisation advises that contractual arrangements can require counterparties to set emissions-reduction targets, develop transition plans, measure and report emissions and extend relevant climate obligations through their own value chains.
For organisations involved in public procurement, this places climate considerations alongside other established contractual issues such as performance, reporting, risk allocation and supply-chain management. It also makes Legal, Contracts and Procurement relevant to the growing practice of embedding environmental requirements into commercial agreements, particularly where procurement professionals need to understand how contractual mechanisms translate policy objectives into supplier obligations.
Why could the development affect public procurement?
The UK Government is one of the country’s major purchasers of services, meaning its procurement decisions can influence supplier behaviour beyond individual contracts.
The Chancery Lane Project argues that public-sector buying power can be a significant lever for decarbonisation because climate mechanisms incorporated into high-value government contracts can influence how suppliers deliver services and manage their supply chains.
The importance of standardisation is also central to TCLP’s argument.
A clause developed once in an open-access legal resource can have limited impact if every organisation must independently discover, assess and adapt it. When comparable provisions are incorporated into standard contractual documentation, the same drafting can potentially be considered across many contracts.
That does not mean every contract will contain the clauses. The optional nature of Schedule 28 remains important. However, the provisions are now located within the Government’s established contractual framework, which provides a route for wider adoption.
What does this mean for suppliers and supply chains?
For suppliers bidding for or delivering major Government contracts, the development adds another layer to the relationship between procurement requirements and emissions performance.
PPN 016 and Schedule 28 link supplier commitments, emissions reporting and contractual requirements. The Government guidance states that PPN 016 requires suppliers bidding for major Government contracts to commit to achieving net zero by 2050 and publish a Carbon Reduction Plan, subject to the applicable policy requirements.
The wider approach can also extend beyond the principal supplier.
The Chancery Lane Project has emphasised the importance of cascading climate obligations down supply chains. Its consolidated sustainability clauses, for example, cover greenhouse-gas emissions targets and sustainability requirements during the contract term alongside remedies, dispute-resolution options and incentives.
The practical consequence is that carbon reduction can become part of supplier management rather than remaining solely an internal corporate sustainability objective.
This is particularly relevant to organisations operating across complex supply chains, where emissions associated with subcontractors, transportation, waste and other activities can contribute materially to the overall environmental impact of a service.
What is the significance for climate-aligned contracting?
The Chancery Lane Project presents the development as evidence of a wider shift towards using legal documents as tools for climate action.
Its resources include climate clauses addressing commercial contracts, procurement, supply chains, corporate governance and other legal processes. The organisation says its objective is to reduce emissions through legal thinking and works across more than 110 countries.
The organisation’s existing case studies also show that climate clauses have been used by organisations across sectors. Its published examples include Clyde & Co, Field, Buro Happold, Telstra, Cambridge University Press & Assessment and the Environment Agency.
The Government adoption therefore sits within a wider movement in which climate requirements are being integrated into commercial decision-making and contract management.
What happens next for the Government’s climate contracting approach?
The Chancery Lane Project has stressed that the work is not complete.
Schedule 28 remains optional, and its practical reach depends on contracting authorities deciding to use it where relevant and proportionate. The organisation says the mechanism for scaling the approach is nevertheless now established within Government documentation.
The next stage will therefore depend partly on implementation: how authorities apply the schedule, how suppliers respond, how emissions data is measured, how targets are monitored and whether gain-share or modification mechanisms produce measurable reductions.
The Government’s approach also sits alongside other procurement policies and contractual tools addressing carbon reduction and sustainability. The available guidance indicates that authorities must consider the suitability and proportionality of the provisions rather than applying them indiscriminately.
For procurement and legal professionals, the development means climate considerations are increasingly connected to the practical architecture of public contracts. For suppliers, it means environmental performance can become more closely connected with contract delivery, reporting and commercial relationships.
Ultimately, the significance of The Chancery Lane Project’s climate clauses entering the Model Services Contract lies less in making every Government contract automatically climate-aligned and more in institutionalising a set of mechanisms that contracting authorities can use. The journey from an open-source clause library, through procurement policy and into Schedule 28 demonstrates how legal drafting can move into mainstream public-sector contracting. Whether that produces substantial emissions reductions will depend on how widely the provisions are adopted, how rigorously they are managed, and whether the resulting contractual commitments translate into measurable changes in supplier performance.