Green Termination Provision (Short Form)
A clause that allows a right of termination for a customer so that they can pivot to a greener supplier to meet their sustainability, climate or other environmental objectives.
What this clause does
Gives customers a right to switch suppliers if the existing supplier is unable to match a ‘greener’ offer from an alternative supplier. This embeds assessment of green credentials into procurement, supporting parties to meet their net zero targets and increase their competitiveness.
Clauses
Green Termination
1.1 Without affecting any other right or remedy available to it, the Customer may terminate this agreement by giving [1 month OR [NUMBER] month’s] written notice to the [Supplier]:
1.1.1 if the Customer, [acting in good faith OR having made a reasonable comparison of the Supplier and other available suppliers]*, has decided to switch to an alternate supplier to achieve a reduction in Customer’s Carbon Footprint, provided:
- the potential reduction is [supported by reasonable evidence and is] at least [PERCENTAGE]% less** than the Customer’s Carbon Footprint at the time of the comparison [(with that calculation meeting the requirements of [INSERT CARBON MEASUREMENT METHODOLOGY USED BY THE CUSTOMER])]; [and]
- the proposed obligations of the alternate supplier are at least as onerous as those of the Supplier under this agreement; [and]
- [the proposed price of the alternate supplier is not significantly different to the price of the Supplier in aggregate over an equivalent period;]
1.1.2 if the Supplier’s environmental practices, negative environmental impacts, lobbying activities, partnerships, trade associations or public policy positions [may] bring the Customer’s reputation into disrepute because they conflict with the Customer’s published [net zero/carbon reduction] or [add specific environmental] targets from time to time; or
1.1.3 if the Supplier acts [persistently and materially] in a manner that [reasonably justifies the Customer’s opinion that the Supplier’s business operations or other conduct] [is/are] inconsistent with good environmental practice and policy [, as exemplified in [INSERT INDUSTRY ACCEPTED GUIDANCE OR STANDARD]]; or
1.1.4 if the Supplier fails within [30] days to respond fully to a request for information made by the Customer to allow the Customer to assess the Supplier’s Carbon Footprint, environmental practices and policies that relate to [the activities/ supply of Services/ Services provided] under this agreement.
* [Drafting note: To raise the climate ambition of this clause, consider removing the good faith and or reasonableness requirement.]
** [Drafting Note: It may be difficult for the Customer to evidence the percentage reduction. This could be addressed by the Supplier providing reporting, or dispensing with the requirement or clarifying that third party analytics or reasonable belief can be the trigger.]
Definitions
Carbon Footprint means the total annual Scope 1, 2 and 3 Emissions of [a party], expressed as a carbon dioxide equivalent. [Drafting note: See TCLP Glossary - Carbon Footprint. Amend the definition to match the scope imagined by the agreement this is inserted into.]
Scope 1, 2 and 3 Emissions means the three classifications of emissions in the The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, Revised Edition 2015 as updated from time to time [Scope 1, 2 and 3 emissions are defined on page 27 of the GHG Protocol].
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