This can be achieved with the help of legal drafting to ensure that the relationships between each party in the hotel industry chain are governed by mutually agreed provisions setting out obligations and the terms of their collaboration.

Reed Smith has been involved with the Chancery Lane Project, an organization that brings together legal and industry professionals to create new, practical contractual clauses to address climate risk. Each new clause is given a child’s name to remind users that future generations are the ones most affected by climate change.

Some of the provisions that you may think of including in your company’s legal documents are set out below:

1. Heads of terms: To ensure all parties are aligned on sustainability, environmental provisions can be included in the heads of terms from the start of the transaction. Doing so makes your company’s position on these issues clear to the counterparty. See Hanley’s Clause.
2. Building contracts: During the construction or major refurbishment of a hotel, consider including a carbon budget in the JCT Design and Build Contract to incentivize the contractor to adopt materials that are beneficial to the environment and longevity of the project. Include liquidated damages provisions, whereby the contractor would need to pay for every ton of carbon by which the development exceeds the carbon budget agreed by the contractor and the developer. See Tristan’s Clause.
3. Benchmarking: During the building contractor procurement process, introduce a mechanism to benchmark the contractor’s carbon footprint against the market. The mechanism would be triggered only if the contractor failed to meet the forecast assessment of emissions submitted as part of its tender. See Izzy’s Clause.
4. Supply chain contracts: To ensure that your suppliers’ net zero aspirations align with your own climate strategy and targets, consider issuing a due diligence questionnaire to your suppliers, to gather the information that you need early in the procurement stage. See the Chancery Lane Project’s sample procurement due diligence questionnaire.

In summary, no one single approach to reducing carbon emissions in the hotel industry will be enough on its own. Each organization needs to word the provisions of its contracts in a way that best reflects its environmental goals, and many organizations are doing so, with provisions on carbon emissions becoming increasingly common in the industry. As we move closer to the net zero target dates in 2030 and 2050, such provisions will likely need to become a norm in the industry if such targets are to be met.