39.1 Commitment to continuous improvement: The Company commits to pursuing continuous improvements in methods of production, in ways that produce equal benefits for people of all genders and social groups, including Indigenous Peoples, in order to:

(a) reduce greenhouse gas emissions generated by the Project;

(b) capture and store carbon through the Project Operations;

(c) support [Legitimate Tenure Rights Holders]/[the Local Community]/[Contract Farmers] to build resilience and adapt to climate change, [access climate-resilient production technologies]/[access payments for ecosystem services]/[insert other as appropriate for the project];

(d) prevent deforestation, restore deforested areas, and restore and protect biodiversity [including through agroecological practices such as agroforestry];

(e) reduce air and freshwater pollution and land contamination; and

(f) [insert other environmental objectives, including for example reducing exposure to pesticides and fertilizers, increasing water efficiency, increasing nutrient use efficiency, and controlling soil erosion]

39.2 The Company further commits to upgrading production technology where new technologies become available that would improve production methods in pursuit of the objectives described in paragraph 39.1.

39.3 The Company shall outline how it intends to implement this Section in the Environmental and Social Management Plan (ESMP), including:

(a) identification of the specific priority areas and actions;

(b) a list of indicators and time-bound targets for those actions;

(c) the distinct or shared benefits for women and men from improvements to methods of production; and

(d) a description of how the priority areas and actions contribute to or align with the Host State’s [national adaptation plan]/[nationally determined contributions under the Paris Agreement under the United Nations Framework Convention on Climate Change]/[just energy transition investment plan]/[insert other policies of the Host State relating to climate change, biodiversity, pollution reduction, or the environment.]

39.4 Environmental Performance Payments: Where the Company identifies a possible improvement in methods of production, acquisition of new technology, or other positive environmental outcome from the Project that is likely to incur a non-minor cost to the Company, the Company may request the Authority to consider the provision of a performance-based incentive, reduction in Rental Fees, or other benefit (the Environmental Performance Payment) agreed by the Parties for the implementation of that method of production, acquisition of that technology or achievement of that environmental outcome. Any such agreement for the provision of an Environmental Performance Payment shall be evidenced in writing and shall be incorporated into this Agreement as an Annex in accordance with Section 68.5.

39.5 The Authority shall give priority consideration to a request for an Environmental Performance Payment for an improvement in methods of production or positive environmental outcomes in the area of [insert priority areas as appropriate, e.g. reforestation or prevention of deforestation, protection of endangered species, preservation of ecosystem services, climate-sensitive agroecological farming practices].

39.6 The Company shall report annually on measures undertaken to comply with this Section, using Gender-Disaggregated Data and results, and where necessary, a review and update of the priority areas, indicators, and time-bound targets referred to in Section 39.3.

For more information: See generally IISD, 2014, Section 9.2 (Commitment to Continuous Improvement of Production Methods); Aizawa & Mann, 2021, Section 4.5 (Anticipate and Manage Climate Change Risks); UNIDROIT & IFAD, 2021, Chapter 4.V.A.4 (Environmental Performance Bonds).