Field and TENT publish blueprint for companies and investors to directly link funding to tangible climate impact

Posted 18 Oct 2022
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  • Field, the battery storage company, and Triple Point Energy Transition plc (TENT) have cooperated with The Chancery Lane Project (TCLP) to make Field & TENT’s ‘Interest Ratchet Clause for Carbon Saving’ open-source to allow any company to replicate it.
  • This clause supports the growth of companies accelerating the transition to net zero, by enabling them to achieve lower costs of capital linked to the greenhouse gas emissions their operations save.
  • By publishing the clause, Field, TENT and TCLP aim to support more investors and businesses in developing robust impacting investing practices.
  • Field and TENT worked in partnership to create this clause, which enables Field to pay less interest on its £47m debt facility with TENT if it meets specific carbon saving targets through its battery storage sites.

Field, the battery storage company, and TENT, one of its investors, have partnered with The Chancery Lane Project (TCLP) to make their ‘Interest Ratchet Clause for Carbon Saving’ open-source, to help businesses and investors to implement robust incentives for positive environmental impact in their funding agreements.

This clause supports the growth of companies accelerating the transition to net zero by enabling them to access lower costs of capital, linked to the greenhouse gas emissions saved through their business operations. It is the first known open-source interest ratchet mechanism in the renewables sector that is linked to measurable, objective carbon savings.

Companies using the clause could benefit from an interest rate reduction proportional to the carbon emissions they reduce or avoid in their operations. This clause incentivises Field by offering one of the highest carbon saving ratchets available, and expects to expand this to other battery storage operators over the next year, in reflection of its lending policy to encourage them to maximise the environmental credentials of storage assets.

By financially incentivising greener practices in this way, responsible lenders can support investment in renewable and low-carbon infrastructure and technology that can benefit the wider economy.

The objective of this clause is to ensure that the company’s performance against carbon savings targets - or other climate targets agreed with the lender - are measured using independent, verifiable and, where possible, public data.

In Field’s case, carbon savings from its operations will be calculated using National Grid data on the grid’s carbon intensity before and after Field’s batteries discharge renewable electricity.

The ratchet principle is innovative within the renewables sector, while making the contract clause principle open-source will make it possible to replicate within multiple business sectors.

A user-friendly template of this clause will exist in the TCLP climate clause library, which any individual or company can access to lift sustainability clauses that are peer-reviewed by a global collective of legal professionals directly into any of their contracts.

By making this clause open-source, we hope to have a meaningful impact on how fundraising is conducted. At Field, we’ve always talked about the importance of aligning capital with the planet - and this is our next step forward in showing that’s possible.
Elspeth Vincent - General Counsel at Field

Elspeth Vincent, General Counsel at Field, comments:

“While there has been much discussion about ESG investment in recent years, there have been few direct, robust incentives for organisations to reduce their greenhouse gas emissions as part of funding agreements. That’s why we’re excited to be working with The Chancery Lane Project, to help make truly climate-conscious business practices more commonplace.

“By making this clause open-source, we hope to have a meaningful impact on how fundraising is conducted. At Field, we’ve always talked about the importance of aligning capital with the planet - and this is our next step forward in showing that’s possible.”

Becky Clissmann, Managing Director at The Chancery Lane Project, adds:

“This is a really exciting moment for The Chancery Lane Project , TENT and Field. This clause is an interest ratchet tool to lower the cost of loans for companies that want to reduce carbon in their operations. It represents a shift towards data-driven ESG mechanisms that encourage private companies to decarbonise.

“TENT has offered this clause to the climate contracting community to use for free, which is a milestone in the way lawyers are collaborating to enable the net zero transition. More open-access, sustainable contract drafting like this will enable a world in which every contract enables solutions to the climate crisis.”

Jonathan Hick, Investment Director and Fund Manager of Triple Point Energy Transition plc (TENT), says:

“When selecting the partners we wanted to back in the battery storage sector, working with an organisation that shared our commitment to accelerating the transition to Net Zero was critical for us. We were delighted that Field agreed to become our first test case for the interest margin ratchet and we hope to continue to put this in place for future investees in the storage space and other sectors as we invest to achieve the transition to net zero.”