1428808_Contracts for Climate Change – Summaries of Suppl…

1428808_Contracts for Climate Change – Summaries of Suppl…

Contracts for Climate Change – Summaries of Supply Chain Clauses (3)

Each of the precedents has a child’s name chosen by the drafting team. This is to encourage long-term thinking and to focus on the next generation as they will be most affected by the serious consequences if we fail to effectively respond to the climate crisis.

NET ZERO TARGET SUPPLY CHAIN CASCADE CLAUSES — OWEN’S CLAUSE

SUSTAINABILITY CLAUSES IN SUPPLY CHAIN CONTRACTS — AUSTEN’S CLAUSE

#NetZero #supplychain #cascade

#supplychainsolutions #climatechangemitigation #sustainableprocurement Issue While some countries are prepared to commit to measures that mitigate Climate Change, other countries are less willing or able to do so. Solution Austen’s Clause would allow clients to use supply chain contracts to extend positive Climate Change measures adopted in one country to contracting parties in other countries. Impact Adopting a bottom-up approach by way of supply chain requirements would address the imbalance in regulatory activity between regions. SUPPLY CHAIN EMISSIONS SCORECARD — MARIA’S SCORECARD #greenhousegasemissions #supplychainmanagement #environmentalimpact Issue 90% of companies’ impacts on the environment come from supply-chains. At the same time, most supply-chain managers do not have visibility into sustainability practices in their supply chain. Solution Maria’s Scorecard would be incorporated into commercial agreements as a schedule providing a standard form for the information on a company’s sustainability performance. Impact The scorecard could help reduce GHG emissions as companies realise the benefits in green investing and building strong relationships with clients and suppliers alike.

Issue Many businesses have publicly committed to a Net Zero target across their value chain. In order to achieve this target, a business needs to work with its suppliers by passing on obligations through their supply and service contracts. Solution Owen’s Clause would “back to back” or align a business’s Net Zero target with its supply chain and business partners enabling it to achieve its target. Impact Cascading Net Zero obligations through a value chain would accelerate the rate of change in the economy and make Net Zero targets common place.

GREEN SUPPLY AGREEMENT TERMS — ZOË AND BEA’S CLAUSE

#NetZero #CarbonNeutral #CarbonNegative

Issue Although many companies are pledging to become Carbon Negative, they may find it difficult to achieve if locked into “brown” supply agreements that do not encourage transition to Net Zero or Carbon Negative supply chains. Solution Zoë and Bea’s Clausewould impose obligations on suppliers to monitor their GHG emissions, set an emission reduction target and report on their progress in emission reductions to the customer. Impact The clause would encourage existing suppliers to continuously reduce emissions in their business and transition to Net Zero / Carbon Negativity.

CARBON CONTRACT CLAUSES FOR ENVIRONMENTAL PERFORMANCE — JESSICA’S CLAUSE

SUPPLIER ENVIRONMENTAL THRESHOLD OBLIGATIONS — TEDDY’S CLAUSE

#greenbusiness #responsiblecontracting

#supplierobligations #responsiblecompanies

Issue Currently the carbon costs of producing goods/delivering services are not specified or considered in contracts.Where a breach of contract causes the customer to miss its GHG targets and/or has negative climate impact, it is hard to quantify or remedy. Solution Jessica’s Clause for supply/service contracts would introduce climate considerations and climate metrics for performance. It would also provide for a climate remediation fee to be donated to an appropriate NGO for breaches of contract which have negative climate implications. Impact Suppliers would be incentivised to meet targets for climate and environmental impacts while breaches of contract would result in a suitable environmentally focused remedy.

Issue The lack of legally enforceable standards for environmental improvement, specifically for mainstream supply contracts and government procurement contracts, harms the UK’s ability to lower emissions and meet its 2050 Net Zero commitment. Solution Teddy’s Clause would introduce a warranty given by the supplier at purchase that the carbon footprint of products/ services/business operations has been assessed and that it would be continually monitored and improved upon. Impact The carbon costs of producing goods or delivering services would be internalised into the contract providing an incentive to reduce carbon emissions and create a market for carbon reducing technologies.