Net Zero Target Supply Chain Cascade Clause
Aligns a business’ carbon reduction target with its supply chain and business partners, enabling the business to achieve its target or take control to achieve it.
What this clause does
This clause supports parties to achieve decarbonisation by setting emissions reductions to be achieved and reported on; and requiring sub-contractors to be similarly bound. It also provides that if the objectives are not achieved, the customer can terminate or offset the supplier’s carbon emissions at the supplier’s expense.
Clauses
1. Supplier Net Zero Obligations
1.1 Customer has set a Net Zero Target to be achieved no later than the Net Zero Target Date. Accordingly, the Supplier shall during the Term of the Agreement:
1.1.1 meet the Contract Target by the Contract Target Date;
1.1.2 set a Supplier Net Zero Target and a Supplier Net Zero Date;
1.1.3 exercise commercially reasonable efforts to use emission reduction technologies, processes, and policies, as well as offsetting carbon removal initiatives, in its provision of the Goods or Services;
1.1.4 maintain records of Supplier’s Carbon Reporting activity and data with respect to its provision of Goods or Services and comply with Customer’s reasonable request for copies of such records;
1.1.5 include in the attached Exhibit [●] the Supplier’s plan to achieve and current progress towards achieving the Contract Target by the Contract Target Date;
1.1.6 not knowingly do or omit to do anything which could reasonably be expected to cause the Customer to miss its Net Zero Target Date.
1.1.7 include the equivalent of the obligations set forth in Section 1 in its contracts with vendors, sub-contractors, and agents used in the provision of Goods or Services.
2.1 If:
2.1.1 the Supplier is in material breach of any obligation in Section 1; or
2.1.2 the Customer reasonably concludes based on the Supplier’s Carbon Reporting that Supplier will not meet the Contract Target by the Contract Target Date; or
2.1.3 the Supplier fails to achieve the Contract Target by the Contract Target Date, then Customer may:
(a) terminate the Agreement upon 60 (sixty) days’ prior written notice to the Supplier;
(b) require the Supplier to plant native trees, or use another form of real, additional, lasting, and independently verified emissions removal sufficient to compensate for the Customer’s shortfall in progress towards the Contract Target in accordance with Exhibit [●]; or
(c) recover from the Supplier any costs reasonably incurred by the Customer in achieving the Contract Target to the extent that the Contract Target is missed by:
(i) obtaining carbon credits to offset the Supplier’s net Greenhouse Gas emissions footprint attributable to the provision of Goods or Services; or
(ii) planting, or arranging for the planting of, native trees, or using another form of real, additional, lasting, and independently verified emissions removal to offset the Supplier’s net Greenhouse Gas emissions footprint attributable to the provision of Goods or Services in accordance with Exhibit [●].
3.1 The Supplier shall meet with Customer annually, and at least 60 (sixty) days before renewal or extension of the Term, to discuss new and evolving relevant technologies and processes which could accelerate the achievement of the Contract Target. Both parties shall provide sufficient detail to enable the other to properly evaluate the benefits of a proposed new technology or process.
4.1 The Supplier represents and warrants to Customer that:
4.1.1 it has sufficient resources, infrastructure, and materials to achieve the Contract Target by the Contract Target Date;
4.1.2 the Goods or Services supplied under this Agreement will not be of lower quality as a result of working towards the Contract Target.
Definitions
Carbon Reporting means reporting of an organization’s greenhouse gas emissions and extraction to a standard not less than that required by the [insert a relevant emissions reporting legislation or carbon reporting standard].
Contract Target means the proportion of the Customer’s Net Zero Target that Supplier shall achieve under this Agreement, the amount being [insert target].
Contract Target Date means the date by which Supplier shall meet its Contract Target, such date being [insert date such as a hard date or a reference to a defined date (for example, 'the last day of the initial Term of the Agreement')].
Greenhouse Gas means gasses that contribute to or accelerate the greenhouse effect by absorbing infrared radiation, including, but not limited to, carbon dioxide, methane, nitrous oxide, sulphur hexafluoride, hydrofluorocarbons, perfluorocarbons and chlorofluorocarbons.
Net Zero Target means a net reduction of Greenhouse Gas emissions from all operations including value and supply chains to zero by a specified date so there is a balance between emissions and removal of Greenhouse Gasses in a calendar year and for each subsequent year thereafter. [Note: this clause provides for a Net Zero Target. If the Customer instead prefers a gross zero target, replace this definition with the following: 'Gross Zero Target' means an absolute reduction in Greenhouse Gas emissions from all operations [including value and supply chains] to zero by a specified date and for each subsequent year thereafter.']
Net Zero Target Date means the date by which the Customer aims to achieve the Net Zero Target, being [January 1, 2050]. [Note: define as per customer specific target.]
Native Trees means those species of trees that are native to the United States since the last ice age.
Supplier Net Zero Target means a Net Zero Target set by the Supplier for its own operations including value and supply chains.
Supplier Net Zero Date means the date by which the Supplier aims to achieve the Net Zero Target, being [January 1, 2050]. [Note: define as per supplier specific target.]
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