1428808_Contracts for Climate Change – Summaries of Supply …

1428808_Contracts for Climate Change – Summaries of Supply …

Contracts for Climate Change – Summaries of Supply Chain Clauses (2)

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.

TERMINATION FOR GREENER SUPPLIER — AGATHA’S CLAUSE (LONG-FORM) — ANNIE’S CLAUSE (SHORT-FORM)

CARBON CHANGE RIGHTS — ZAIN’S CLAUSE

#emissioncontrol #carbonreduction #obligations

#greenbusiness #greensupplier #environment

Issue Contracts do not currently give sufficient flexibility to parties to adjust their obligations with a view to becoming ‘lower carbon’ or require their counterparty to do the same. Solution Zain’s Clause would allow the parties to enter an agreement to perform/require the other party to perform their contractual obligations in a way that reduces their carbon footprint. Impact Contracting parties could have more control over their own/ the other party’s Scope 1-3 emissions.

Issue Parties are often locked in supply contracts for years. Currently no standard clause exists that would allow a customer to terminate their supply contract and switch to an environmentally friendly supplier without incurring exit-related liabilities. Solution Agatha’s and Annie’s Clauses would give the customer the opportunity to switch to a greener supplier without further contractual liabilities if their existing supplier could not match the greener supplier’s offer. Impact These clauses would encourage green competition between suppliers and ensure that an assessment of green credentials would become an important part of any procurement process.