Insert this clause into any supply agreement to make sure that greenhouse gas emissions targets are set and complied with throughout the supply chain.
[Drafting note: insert the following text below the existing Recitals in the document.]
(A) The Parties acknowledge that the performance of this Agreement will result in certain climate and ecological impacts, including the emission of greenhouse gases.
(B) The Parties acknowledge their common intention to fulfil their obligations under this Agreement in a way that reduces greenhouse gas emissions and minimises their adverse impact on the climate.
Operative Provisions
[Drafting note: capitalised terms relate to either a defined term in this clause or a defined term in the main agreement that this clause is designed to be inserted into.]
[Drafting note: include the following provisions in the body of the agreement.]
1. Carbon Targets, Sustainability Requirements and Reporting
1.1 The Parties agree that each Carbon Target in respect of the Supplier Carbon Footprint shall be set or determined in accordance with the process(es) set out in Schedule [●] Part 1.
1.2 The Supplier shall measure the Supplier Carbon Footprint, and comply with each Carbon Target, in accordance with Schedule [●], Part 1.
1.3 The Supplier shall comply with the Sustainability Requirements and measure such compliance in accordance with Schedule [●], Part 2.
1.4 The Supplier shall report annually on its performance against the Carbon Targets and Sustainability Requirements in accordance with Schedule [●], Part 3.
1.5 Any breach of this Agreement by the Supplier specified in Schedule [●], Part 4, will lead to the corresponding consequences under Schedule [●], Part 5.
1.6 If the Customer discovers a Greener Supplier, the Customer is entitled to terminate this Agreement in accordance with Schedule [●], Part 5.
1.7 The Customer shall take steps to incentivise the Supplier’s performance under this Agreement in accordance with the mechanisms set out in Schedule [●], Part 6.
1.8 The Parties shall comply with the supporting obligations in Schedule [●], Part 7.
1.9 The Parties shall follow the climate expert determination procedure in Schedule [●], Part 8 where appropriate.
Schedule [●] – Emissions Reporting and Measurement Schedule
1. Part 1: Carbon Targets
1.1 Initial Assessment
(a) Within 3 (three) months of the Commencement Date, the Supplier shall measure the Supplier Carbon Footprint (the Proposed Measurement) and provide the same to the Customer, with its supporting evidence and calculations.
(b) The Supplier shall measure its Supplier Carbon Footprint for the purposes of paragraph (a), above, in accordance with the Reporting Standard and the provisions of this Schedule.
(c) Within 1 (one) month of receiving the Proposed Measurement, the Customer shall by written notice to the Supplier, either:
(i) confirm that the Proposed Measurement is agreed, in which case the Proposed Measurement shall be deemed to be the Initial Measurement; or
(ii) reject the Proposed Measurement on the basis that it does not comply with the requirements of paragraph 1.1(b) (acting reasonably and by providing reasons), in which case paragraph 1.1(e) shall apply.
(d) If the Customer does not respond to the Supplier within 1 (one) month under 1.1(c) above, the Proposed Measurement shall be treated as rejected and paragraph 1.1(e) shall apply.
(e) If the Customer rejects the Proposed Measurement submitted by the Supplier (in accordance with paragraph 1.1(c)(ii) or 1.1(d)), and if the Parties fail to reach agreement on the Proposed Measurement within [10 (ten)] Business Days of such rejection, the Parties agree to refer the Proposed Measurement to a Climate Expert for determination in accordance with the procedure set out in Part 8 of this Schedule (a Proposed Measurement Determination).
1.2 Establishing Carbon Reduction Ambitions
(a) The Parties shall provide reasonable assistance and information to one another as required, in pursuit of the Customer’s ambition and the Supplier’s obligation to reduce the Supplier Carbon Footprint.
(b) Within 5 (five) Business Days of the Initial Measurement being agreed or determined in accordance with paragraph 1.1 of this Schedule, and having regard to its Climate Transition Plan if applicable, the Supplier shall set the Term Carbon Target, which must be less than the Initial Measurement, and notify the Customer thereof, with its supporting evidence and calculations.
(c) Within 10 (ten) Business Days of:
(i) the commencement of the Emissions Reporting Period (in the first year of the Term); and
(ii) each year thereafter, the determination of the prior year Supplier Carbon Footprint in accordance with paragraph 3 of this Schedule,
the Supplier shall set the Annual Carbon Target and notify the Customer thereof, with supporting evidence and calculations. Such Annual Carbon Target must:
(iii) be less than the Annual Carbon Target at the end of the last completed Emissions Reporting Period; and
(iv) be less than the Supplier Carbon Target achieved in the last completed Emissions Reporting Period as set out in the Annual Emissions Report (or determined by the Climate Expert in accordance with Part 8 of this Schedule).
(d) Provided that the Annual Carbon Target meets the criteria set out in paragraphs [1.2(c)(iii) to 1.2(c)(iv)], upon submission it will automatically become the Annual Carbon Target. If the submission does not satisfy the requirements after one further submission by the Supplier in accordance with paragraph 1.2(c) within 10 (ten) Business Days of the Supplier being notified of such non-compliance, the Annual Carbon Target will be deemed to be the lesser of the:
(i) Annual Carbon Target at the end of the last completed Emissions Reporting Period; and
(ii) the Supplier Carbon Target achieved in the last completed Emissions Reporting Period as set out in the Annual Emissions Report (or determined by the Climate Expert in accordance with Part 8 of this Schedule).
(e) Once determined in accordance with this paragraph 1.2:
(i) in each Emissions Reporting Period, the Supplier shall achieve the Annual Carbon Target; and
(ii) over the course of the Term, the Supplier shall meet the Term Carbon Target.
1.3 Amendment to the Term Carbon Target or Annual Carbon Target
[Drafting note: these provisions are intended to form a framework only and will need to be updated by the parties to adapt to the specific circumstances of the contract in question OR the subject matter of it.]
(a) A Party may propose to the other Party, by notice in writing, an amendment to:
(i) the Term Carbon Target, at any time throughout the Term; or
(ii) the Annual Carbon Target, at any time during an Emissions Reporting Period,
in accordance with the requirements of this paragraph 1.3.
(b) Any notice issued in accordance with paragraph 1.3(a) (a Target Amendment Proposal) may only be issued in the following circumstances:
(i) [insert]; [Drafting note: these circumstances are to be specific to the certain goods or services being provided in accordance with the broader contract. The intention of this mechanism is to allow amendments only where strictly necessary. The circumstances listed should be robust and clear enough to prevent the mechanism being misused to undermine the Carbon Targets. For example:
(ii) Following an amendment to the method used to calculate GHG Emissions such that the Supplier Carbon Footprint will be materially changed.]
(c) Within 10 (ten) Business Days of receipt of a Target Amendment Proposal, the Party in receipt of the Target Amendment Proposal is required to provide notice to the other Party either:
(i) approving such Target Amendment Proposal; or
(ii) rejecting such Target Amendment Proposal, with reasons.
(d) Upon receipt of the notice in paragraph 1.3(c)(ii), within a further 5 (five) Business Days, the Party may issue a revised Target Amendment Proposal in accordance with paragraph 1.3(a) for the recipient Party’s consideration. Paragraph 1.3(c) then reapplies.
(e) If such Target Amendment Proposal is rejected for a second time in accordance with paragraph 1.3(c)(ii), the Party proposing the Target Amendment Proposal may, within 10 (ten) Business Days of such rejection, notify the other Party in writing that the matter will be referred to a Climate Expert for determination in accordance with the procedure set out in Part 8 of this Schedule (a Target Amendment Proposal Determination).
2. Part 2: Sustainability Requirements
2.1 The Supplier shall comply with the following requirements:
(a) [No later than 6 (six) months after the date of this Agreement, the Supplier shall sign up to the Carbon Trust Standard (as published from time to time) and thereafter maintain such accreditation for the duration of the Term];
(b) When delivering the [Goods OR Services] in accordance with this Agreement, the Supplier shall only use electric vehicles;
(c) The Supplier shall purchase electricity for all of its premises and facilities, including offices [, factories and production facilities] on a green tariff that uses [100 (one hundred)] percent renewable energy;
(d) Within 12 (twelve) months of the Commencement Date, the Supplier shall sign up to the [Global Organic Textile Standard*] (or equivalent) and thereafter maintain such accreditation for the duration of the Term;
*[Drafting note: inclusion of the Global Organic Textile Standard is provided by way of example only. This should be replaced by any broadly applicable sustainability accreditation or an industry specific scheme.]
(e) The Supplier shall commit to a programme of Climate Advocacy, approved by the Supplier’s Board and shall monitor and report on its ongoing commitment to such Climate Advocacy in accordance with paragraph 3.3 and to the Customer’s reasonable satisfaction;
(f) The Supplier shall comply with the Customer’s Supplier Code of Conduct; and
(g) The Supplier shall create, update and implement a Climate Transition Plan in accordance with paragraph 2.2,
[Drafting note: other requirements can be included in this list, based on sector and level of ambition of the Parties]
(the Sustainability Requirements).
2.2 Within 12 (twelve) months of the Commencement Date, the Supplier shall either:
(a) provide to the Customer; or
(b) if no such plan has been developed already which complies with this paragraph 2.2, develop and adopt,
its own Climate Transition Plan, which:
(c) may be created or updated in consultation with the Customer; and
(d) shall be implemented in accordance with the timescales set out within the Climate Transition Plan.
[Drafting note: users should consider whether requiring consultation on the Supplier’s Climate Transition Plan is desirable. If a standard like the Transition Plan Taskforce is followed then consultation would likely happen as part of the stakeholder engagement required by the Disclosure Framework.]
2.3 The Sustainability Requirements may be amended from time to time by agreement between the Parties in writing.
2.4 Upon reasonable advance notice, the Supplier shall be required by the Customer to attend meetings with the Customer and any of its stakeholders, with respect to any proposed amendments to the Sustainability Requirements.
3. Part 3: Reporting of Carbon Targets and Sustainability Requirements
3.1 The Supplier warrants that any reports the Supplier provides to the Customer in accordance with this Agreement are in all material respects complete, and are true, accurate and not misleading as at the time that they are given.
3.2 The Supplier shall maintain and retain up-to-date, full and complete records of any data it uses for the purposes of its reporting obligations under this Agreement and shall provide such data to the Customer within a reasonable time of the Customer’s request, subject to confidentiality requirements.
3.3 Within 12 (twelve) months of the Commencement Date and each year thereafter (each period being an Emissions Reporting Period), the Supplier shall provide a report to the Customer (in a form approved by the Customer, acting reasonably) in respect of the relevant Emissions Reporting Period which contains the following:
(a) the Supplier Carbon Footprint and any differences between it and the Annual Carbon Target for the Emissions Reporting Period;
(b) details of industry best practices on managing and reducing the Supplier Carbon Footprint that the Supplier has applied during the Emissions Reporting Period;
(c) the steps the Supplier intends to take during the next Emissions Reporting Period with a view to achieving, at a minimum, the Term Carbon Target by the end of the Term; and
(d) report on the Supplier’s progress against each of the Sustainability Requirements, including:
(i) confirmation of the number of targets that have been achieved as at the Emissions Reporting Date;
(ii) progress against the metrics set out in the Climate Transition Plan; and
(iii) confirmation of any Sustainability Requirements that were achieved during the last Emissions Reporting Period but have not been maintained in the current Emissions Reporting Period,
(the Annual Emissions Report).
3.4 The Customer shall, insofar as is reasonably practicable and subject to any confidentiality restrictions, provide to the Supplier any information it reasonably requests to allow the Supplier to comply with its obligations in paragraph 3.3.
3.5 Within 5 (five) Business Days of receiving the Annual Emissions Report the Customer shall review the Supplier Carbon Footprint contained therein and provide notice to the Supplier stating that it either:
(a) agrees with the Supplier Carbon Footprint (and considers it is supported by verifiable evidence); or
(b) rejects the Supplier Carbon Footprint, providing reasons.
3.6 Within 10 (ten) Business Days of the Customer rejecting the Supplier Carbon Footprint in accordance with paragraph 3.5(b) (or such longer period as is reasonably agreed between the Parties), the Parties shall meet in an attempt to agree the Supplier Carbon Footprint.
3.7 If, within 5 (five) Business Days of the meeting referred to in paragraph 3.6 above, the Parties do not agree the Supplier Carbon Footprint, the Customer may notify the Supplier that it is independently verifying the Supplier Carbon Footprint reported in accordance with clause 3.3(a), by referring the matter to a Climate Expert in accordance with the procedure set out in Part 8 of this Schedule (a Supplier Carbon Footprint Determination).
4. Part 4: Early warning and circumstances of breach
4.1 The Supplier and the [Customer OR Project Manager OR [other]] shall each notify the other [within [●] Business Days] of becoming aware of any matter or circumstance which is reasonably likely to adversely affect the achievement of the Carbon Targets or the Sustainability Requirements. [Drafting note: reference to Customer OR Project Manager (or other) to be determined based on who represents the Customer under the broader contract.]
4.2 Notwithstanding paragraph 4.1, the Supplier shall notify the Customer in writing on each Annual Emissions Reporting Date (or sooner, at any time it becomes aware or ought reasonably to have become aware) if there has been or is reasonably likely to be:
(a) a breach of this Schedule in the immediately preceding (or, where relevant, current) Emissions Reporting Period; or
(b) any material breach of this Schedule at any time,
(together or each, a Climate Breach).
4.3 Breach of the following provisions of this Schedule shall be considered a material breach of this Agreement if there is:
(a) a failure to achieve the Annual Carbon Target in a given Emissions Reporting Period; or
(b) no reasonable prospect of the Supplier meeting the Term Carbon Target, having regard to the Supplier’s progress.
[Drafting note: contract user to specify any other provisions which shall be material breaches. The drafting of these provisions assumes that the contract would contain a general termination event for material breach, which arises upon a failure to remedy the breach within a period of time or where the breach is not capable of remedy, within a specified period of the breach occurring.]
4.4 The Supplier’s notification to the Customer of a Climate Breach pursuant to paragraph 4.2 (a Climate Breach Report) shall set out:
(a) if applicable, the amount by which the Supplier Carbon Footprint exceeds the Annual Carbon Target for the Emissions Reporting Period or details of any other breach of this Schedule;
(b) the cause(s) of the Climate Breach and any steps taken by the Supplier to mitigate such cause(s);
(c) a remedial plan for how the Supplier will:
(i) mitigate the impact of the Climate Breach; and
(ii) if applicable, reduce its Supplier Carbon Footprint in future Emissions Reporting Periods to achieve the Annual Carbon Target in respect of those Emissions Reporting Periods; and
(d) if the Supplier reasonably believes that the cause of the Climate Breach is in whole or in part due to a Contributing Matter, the Supplier’s notice shall also identify:
(i) the relevant obligation(s) and/or requirement(s) and the impact each has had on the Supplier’s obligations under this Schedule and refer specifically to the same as being Contributing Matters for the purposes of this paragraph (d); and
(ii) if applicable, the amount the Supplier reasonably believes its Supplier Carbon Footprint would have been but for the Contributing Matters.
4.5 If paragraph 4.4(d) applies, the Parties shall meet [within [●] Business Days] (remotely, if reasonably practicable) to discuss the Climate Breach and if applicable to agree the extent to which the Contributing Matters have caused or contributed to the Climate Breach.
4.6 Following receipt of a Climate Breach Report (or, if paragraph 4.4(d) applies, following agreement on the matters to be discussed pursuant to paragraph 4.5) or upon the Customer otherwise becoming aware of a Climate Breach, the Customer shall be entitled to serve a written notice on the Supplier which shall:
(a) (only if the Climate Breach was not notified by the Supplier by prior written notice), set out the details of any identified or suspected Climate Breach(es);
(b) suggest actions the Supplier may take to ensure the Climate Breach is corrected before, and not repeated during, the next Annual Emissions Reporting Date (which may, but is not required to, confirm those remedial actions proposed by the Customer in its Climate Breach Report);
(c) confirm any actions that the Customer will take; and
(d) (only if the Climate Breach was notified by the Supplier by prior written notice) invite the Supplier’s Chief Executive Officer (or elected replacement senior executive) to present the Climate Breach Report to the Customer at a location of the Customer’s choosing (including remotely, if required by the Customer),
(a Climate Remediation Notice).
5. Part 5 – Remedies for breach
5.1 Emissions Payment
(a) If the Supplier is unable to mitigate the Climate Breach to the Customer’s reasonable satisfaction within [60 (sixty)] Business Days (or such other period as reasonably agreed between the Parties having regard to the nature of the breach) of receipt of a Climate Remediation Notice, the Customer shall notify the Supplier as soon as practicable thereafter and either:
(i) the Customer shall be entitled to withhold an amount equal to the relevant Emissions Payment from the next payment the Customer owes the Supplier under this Agreement; or
(ii) if there is a net amount owing to the Customer following any withholding or there are no further payments to be made to the Supplier, the Supplier shall pay the Emissions Payment to the Customer within 15 (fifteen) Business Days of the Customer’s notice given in accordance with paragraph 5.1(a).
(b) Mitigation under paragraph 5.1(a) shall not include the purchasing of offsetting credits.
(c) Without prejudice to any other claims, rights or remedies under this Agreement, the Parties agree that, in respect of any Climate Breach, damages payable by the Supplier to the Customer may not be an adequate remedy for the Customer’s loss in the wider context of damage to the climate, the environment and the Customer’s reputation (all of which the Supplier accepts for the purpose of this Agreement as being losses incurred by the Customer).
(d) The Parties agree that any Emissions Payment payable by the Supplier shall be reasonable and proportionate to the legitimate interests of the Customer in mitigating, counteracting or repairing the damage to the extent possible (and preventing future damage) arising from or in relation to the Supplier’s breach of this Schedule.
(e) Each Party agrees that it has been properly advised regarding the negotiation of this Agreement, and in particular regarding the inclusion of the Emissions Payment as a remedy for Climate Breaches.
5.2 Termination for Greener Supplier
(a) Without affecting any other right or remedy available to it, if the Customer identifies a Greener Supplier it may, subject to this paragraph 5.2, serve written notice on the Supplier to terminate this Agreement in accordance with this paragraph 5.2 (the Notice of Greener Supplier).
(b) The Notice of Greener Supplier must:
(i) describe:
(A) the features of the Green Supplier’s [goods OR services] which make that supplier a Greener Supplier; and
(B) the objective measure of performance the Greener Supplier has achieved in respect of such features (such as, for example, the Greener Supplier’s carbon emissions arising from its good or services),
(the Green Improvement);
(ii) reasonably demonstrate that the [goods OR services] provided by the Greener Supplier are at least Equivalent to [the Goods OR Services] provided by the Supplier; and
(iii) warrant that:
(A) the Greener Supplier can provide its [goods OR services] on commercial terms (except the price) that are no worse for the Customer than the commercial terms in this Agreement; and
(B) the price of the [goods OR services] provided by the Greener Supplier are at least Equivalent to the price of the Supplier’s [Goods OR Services].
(c) The Supplier shall, within [14 (fourteen) Business Days] of the Notice of Greener Supplier, inform the Customer if it can achieve changes which are substantially the same as the Green Improvement:
(i) on commercial terms that are no worse for the Customer than the terms set out in the Notice of Greener Supplier; and
(ii) no later than [[●] Business Days] of the date of the Notice of Greener Supplier.
(d) If the Supplier can demonstrate to the Customer’s reasonable satisfaction that the Supplier can achieve the Green Improvement within the period stated in paragraph 5.2(c)(ii), the Parties shall use all reasonable endeavours [acting in good faith] to agree within a further [7 (seven) Business Days] the amended terms on which the Supplier shall supply the [Goods OR Services] incorporating the Green Improvement.
(e) If the Parties agree the amendment in paragraph 5.2(d):
(i) the specifications of the [Goods OR Services] will be deemed to incorporate a requirement to comply with the Green Improvement; and
(ii) if the Green Improvement relates to the Supplier Carbon Footprint, each of the Carbon Targets will be adjusted, by a factor commensurate to the degree by which the Green Improvement exceeds:
(A) the Initial Measurement, in respect of the revised Term Carbon Target; and
(B) the most recently assessed Supplier Carbon Footprint, in respect of the revised Annual Carbon Target,
from the date of that amendment.
(f) If the Supplier:
(i) does not respond to the Notice of Greener Supplier within [14 (fourteen) Business Days] of the date of the Notice of Greener Supplier; or
(ii) cannot demonstrate to the Customer’s reasonable satisfaction within [14 (fourteen) Business Days] of the Notice of Greener Supplier that it can achieve the Green Improvement:
(A) on terms as good for the Customer as those set out in the Notice of Greener Supplier; and
(B) no later than [number of Business Days] of the date of the Notice of Greener Supplier,
then the Customer may terminate this Agreement.
(g) If terminating this Agreement, the Customer shall give the Supplier not less than [10] (ten) [Business Days] written notice.
5.3 Termination for Material Default
[Drafting note: most supply contracts will contain a general provision addressing termination for material default. However, if not, please include the provisions below.]
The Customer may terminate this Agreement with 10 (ten) Business Days’ notice if the Supplier commits a material breach of this Agreement which has not been remedied by the Supplier within 30 (thirty) Business Days of notice from the Customer to do so.
5.4 Obligations on Termination
[Drafting note: most supply contracts will deal with the general obligations on termination within the terms and conditions of the agreement. However, if not, please include the provisions below]
Within 10 (ten) Business Days of the termination date of this Agreement under paragraph 5.2(g):
(a) the Supplier shall repay to the Customer any amount which the Customer may have paid in advance in respect of [Goods OR Services] not provided by the Supplier as at the termination date; [and]
(b) the Customer shall pay all of the Supplier’s unpaid invoices and any applicable interest. Where no invoice has been submitted for [Goods OR Services] supplied, the Supplier may submit an invoice [relating to all Goods OR Services supplied up to the date of termination] which will be payable in accordance with [refer to clause in the main Agreement that relates to payment of invoices.]; [and]]
(c) [insert other standard provisions relating to obligations on termination, for example the return of documents, materials, equipment, software or intellectual property licences, as applicable.]
6. Part 6 – Performance Incentivisation
6.1 Achievement of the Sustainability Requirements
(a) Within 5 (five) Business Days of the Supplier Carbon Footprint reported in accordance with the Annual Emissions Report being confirmed or determined in accordance with paragraph 3 of this Schedule (the Assessment Date), the Customer shall calculate any adjustment to the Prices in accordance with paragraph 6.1(b) below.
(b) The revised Prices arising from meeting the Achieved Targets in a given Emissions Reporting Period shall be calculated using the following equation:
Prices = Prices as at the date of this Agreement x (1 + the Price Factor).
(c) The adjustment to the Prices is determined in accordance with the table below, based on the number of Achieved Targets applicable to that Emissions Reporting Period:
| Achieved Targets | Price Factor [Note: this shall be a decimal – if you are proposing that there be a 25 percent increase in the Prices, the Price Factor here will be 0.25, based on the equation above] |
|---|---|
| < 2 | 0 |
| 2 | [●] |
| 3 | [●] |
| 4 | [●] |
| 5 | [●] |
| 6 | [●] |
| 7 | [●] |
(d) If the Supplier meets an Achieved Target but fails to maintain such Achieved Target in the subsequent Emissions Reporting Period, the Prices shall be reduced in the subsequent Emissions Reporting Period by the difference in Price Factor attributable to each of the Achieved Targets, arising from such failure.
6.2 Achievement of the Annual Carbon Target
(a) Where the Supplier Carbon Footprint is less than the Annual Carbon Target in an Emissions Reporting Period (as set out in the Annual Emissions Report or otherwise determined by a Climate Expert in accordance with Part 8 of this Schedule), the Prices may be adjusted in accordance with paragraph 6.2(b) below.
(b) If the Supplier Carbon Footprint is less than the Annual Carbon Target by more than [1 (one) percent] of the Annual Carbon Target, the Prices will increase by [2 (two) percent] and such adjustment will take effect on the subsequent [payment application date]. [Drafting note: parties to amend according to (1) the payment mechanics, (2) the terminology used within the underlying agreement and (3) in a manner commensurate to the quantum of the supply contract itself.]
7. Part 7 – Miscellaneous
7.1 The Supplier shall ensure that any of its subcontracts with suppliers or subcontractors contain provisions requiring its suppliers or subcontractors to:
(a) set a Supplier Carbon Footprint target applicable to their operations;
(b) comply with any relevant Sustainability Requirements (as the Customer considers reasonable, having regard to the relevant subcontractor); and
(c) provide all reasonable assistance and information to the Supplier to enable it to comply with its reporting requirements set out in Part 3 of this Schedule.
7.2 The Parties shall each appoint an appropriately qualified and sufficiently senior representative to the Greenhouse Gas and Carbon Emissions Group (a GHG Representative) who may be substituted from time to time by giving the other Party reasonable written notice of the substitution.
7.3 The Supplier shall:
(a) if such committee is not already established within its organisation, establish and maintain throughout the Term, a sustainability committee as a subcommittee of its board of directors; and
(b) establish and maintain throughout the Term, a Greenhouse Gas and Carbon Emissions Group and invite the Customer’s GHG Representative to regular meetings (remotely at the Customer’s request) to [insert purpose of the group].
8. Part 8 – Determination by Climate Expert
8.1 The identity of the Climate Expert and the terms of appointment are to be agreed between the Parties.
8.2 If the Parties are unable to agree on the identity of a Climate Expert and their terms of appointment within 20 (twenty) Business Days of (as applicable):
(a) the rejection under paragraph 1.1(c)(ii) or 1.1(d) of Part 1 of this Schedule;
(b) the Supplier’s notice under paragraph 1.3(e) of Part 1 of this Schedule; or
(c) the Customer’s notice under paragraph 3.7 of Part 3 of this Schedule,
either Party can apply to CEDR who will appoint the Climate Expert and decide the terms of the appointment.
8.3 Within 2 (two) Business Days of the Climate Expert’s appointment:
(a) in relation to a Proposed Measurement Determination, the Supplier shall provide the Climate Expert with the Proposed Measurement together with the information specified in paragraph 1.1(a) of Part 1 of this Schedule;
(b) in relation to a Target Amendment Proposal Determination:
(i) the Supplier shall provide the Climate Expert with the Target Amendment Proposal together with its supporting evidence and calculations; and
(ii) the Customer shall provide the Climate Expert with a copy of the rejection notice under paragraph 1.3(e) of Part 1 of this Schedule together with any supporting evidence; and
(c) in relation to a Supplier Carbon Footprint Determination:
(i) the Customer shall provide the Climate Expert with the Supplier Carbon Footprint together with the Supplier’s supporting evidence and calculations; and
(ii) the Customer shall provide the Climate Expert with a copy of the rejection notice under paragraph 3.5(b) of Part 3 of this Schedule,
(the Climate Expert Supporting Documents).
8.4 The Parties are entitled to make submissions to the Climate Expert and will provide (or procure that others provide) the Climate Expert with such assistance and documents as the Climate Expert reasonably requires for the purpose of reaching a decision, in addition to the Climate Expert Supporting Documents.
8.5 The Parties shall use reasonable endeavours to procure that the Climate Expert provides their written decision in accordance with paragraph 8.6 within 10 (ten) Business Days of receiving the information referred to in paragraph 8.3 or 8.4 (if applicable).
8.6 The Climate Expert is required to carry out an assessment of:
(a) in relation to a Proposed Measurement Determination, whether [the Proposed Measurement has been carried out in accordance with the Reporting Standard]. The Climate Expert shall either:
(i) confirm the Proposed Measurement has been carried out in accordance with the Reporting Standard; or
(ii) confirm that the Proposed Measurement has not been carried out in accordance with the Reporting Standard, in which case they shall provide an alternative assessment of the Supplier Carbon Footprint in accordance with the Reporting Standard and based on the information the Supplier has provided in paragraph 1.1(a) of Part 1 of this Schedule;
(b) in relation to a Target Amendment Proposal Determination, whether the Target Amendment Proposal complies with, and is justified on the basis of, the factors set out in paragraph 1.3(b) of Part 1 of this Schedule. The Climate Expert shall either:
(i) determine that the Target Amendment Proposal does comply with the paragraph 1.3(b) requirements in which case the Annual Carbon Target or Term Carbon Target (as amended by the Target Amendment Proposal) shall apply; or
(ii) determine that the Target Amendment Proposal did not so comply and determine that the Annual Carbon Target or Term Carbon Target (as applicable) shall not be amended; and
(c) in relation to a Supplier Carbon Footprint Determination, whether the Supplier Carbon Footprint is supported by the Supplier’s evidence and if not, what an accurate Supplier Carbon Footprint is, based on the information available. The Climate Expert shall either:
(i) determine that the Supplier Carbon Footprint appears accurate based on the information provided, in which case the Supplier Carbon Footprint as reported by the Supplier shall apply; or
(ii) determine that the Supplier Carbon Footprint did not so comply and determine an alternate Supplier Carbon Footprint that should be applied in its place.
In each case the Climate Expert shall give reasons for their determination.
8.7 In making a determination the Climate Expert shall act as an expert and not as an arbitrator and their decision will (in the absence of manifest error) be final and binding on the parties, such that:
(a) in relation to a Proposed Measurement Determination, the amount of the Proposed Measurement confirmed or determined by the Climate Expert (as the case may be) shall be the Initial Measurement for the purposes of this Agreement;
(b) in relation to a Target Amendment Proposal Determination, the Term Carbon Target or Annual Carbon Target confirmed or determined by the Climate Expert (as the case may be) shall apply; and
(c) in relation to a Supplier Carbon Footprint Determination, the Supplier Carbon Footprint confirmed or determined by the Climate Expert (as the case may be) shall apply.
8.8 If the Climate Expert does not provide their assessment within 20 (twenty) Business Days of their appointment (or such other period agreed in writing between the parties), the determination set out in paragraph 8.6(a)(i), paragraph 8.6(b)(ii) or paragraph 8.6(c)(i) (as applicable) shall be deemed to apply.
8.9 Subject to paragraph 8.10, the Climate Expert’s fees are to be shared equally between the Parties. Each party agrees to bear its own costs in relation to the referral to the Climate Expert.
8.10 If the Climate Expert confirms that:
(a) in relation to a Proposed Measurement Determination, the Proposed Measurement is accurate in accordance with paragraph 1.1(j)(i) of Part 1 of this Schedule;
(b) in relation to a Target Amendment Proposal Determination, the Target Amendment Proposal did comply with the requirements of paragraph 1.3 of Part 1 of this Schedule; or
(c) in relation to a Supplier Carbon Footprint Determination, the Supplier Carbon Footprint did comply with the requirements of paragraph 3 of Part 3 of this Schedule,
the Customer shall be solely liable for the Climate Expert’s fees.
[Drafting note: insert each of these definitions in order within the existing definitions of the agreement. We have assumed that the following terms will already be defined within the agreement, so have not included the definitions below: Agreement, Business Days, Commencement Date, Customer, Goods, Parties, Services, Supplier, Term. In addition, each of the notice periods contained within this super clause are to be considered on a case-by-case basis, having regard to the size and complexity of the relevant contract.]
Achieved Target means, as at the Assessment Date, each Sustainability Objective that has been, and continues to be, satisfied by the Supplier.
Annual Carbon Target means the Supplier Carbon Footprint to be achieved in a given Emissions Reporting Period, as determined in accordance with paragraph 1.3(d) of Schedule [●].
Annual Emissions Report has the meaning given in paragraph 3.3 of Schedule [●].
Annual Emissions Reporting Date means the date on which the Annual Emissions Report is provided in accordance with paragraph 3.3 of Schedule [●].
Assessment Date has the meaning given in paragraph 6.1 of Schedule [●].
Carbon Disclosure Project means the organisation by that name, which is a global, not-for-profit environmental disclosure platform.
Carbon Target means:
or either one of them as the context requires and referred to collectively as the Carbon Targets.
Carbon Trust means the organisation by that name, which is a consultancy driven business whose primary aim is to accelerate decarbonisation.
Carbon Trust Standard means The Carbon Trust’s Route to Net Zero Standard which helps organisations measure and manage their emissions, inform carbon-reduction strategies, and align targets for the future.
CEDR means the Centre for Effective Dispute Resolution whose registered office is located at [100 St Paul’s Churchyard London EC4M 8BU].
Climate Advocacy means a carbon-reduction and educational programme put in place by the Supplier within its organisation, to:
(a) encourage its employees to utilise schemes such as, but not limited to, carpooling and cycling to work; and
(b) provide its employees with training regarding climate change and how to reduce individual greenhouse gas emissions.
Climate Breach has the meaning given in paragraph 4.2 of Schedule [●].
Climate Breach Report has the meaning given in paragraph 4.4 of Schedule [●].
Climate Expert means an experienced and impartial individual not affiliated with either party who is competent to provide climate impact assessment and emissions reporting services.
Climate Expert Supporting Documents has the meaning given in paragraph 8.3 of Schedule [●].
Climate Transition Plan means a plan which meets the standards set out in the [Transition Plan Taskforce Disclosure Framework].
Contributing Matter means:
(a) a failure by the Customer to comply with any of its obligations under Schedule [●]; or
(b) a requirement by the Supplier to comply with [Applicable Law]* which conflicts with the Supplier’s obligations under Schedule [●].
*[Drafting note: terminology to be amended based on the equivalent defined term used in the Supply Contract].
Emissions Payment means a payment of the amount [equal to [●] OR set out in Schedule [●]]. [Drafting note: users to consider how the Emissions Payment shall be commercially structured where the Supplier fails to comply with its sustainability obligations. Depending on the structure of the Emissions Payment, users may wish to set out the methodology for calculating the Emissions Payment in a separate schedule to the agreement, as opposed to in the body of this definition. The Customer shall ensure that the amount of this Emissions Payment is proportionate to its legitimate interests related to the Supplier’s failure to comply with its obligations, to avoid the clause being unenforceable as a penalty. Legal advice shall be sought if this is unclear. The drafting assumes it will apply to all Climate Breaches. Whether this is appropriate depends on the nature of the contract itself and legal advice shall be sought if this is unclear.]
Emissions Reporting Period has the meaning given in paragraph 3.3 of Schedule [●].
Equivalent means:
(a) If assessing the [goods OR services] of a Greener Supplier, [goods OR services] that are [comparable OR identical OR similar in all material respects] (including in terms of [scope,] complexity, specification, volume and quality [of performance], supporting technology, compliance with standards, and in terms of ancillary obligations such as delivery terms) to the Supplier’s [Goods OR Services] under this Agreement.
(b) If assessing the pricing of a Greener Supplier, pricing for equivalent [goods OR services] that is [within the lower quartile OR less than or equal to the mean price over a previous 12- (twelve-) month period] of the pricing for the Supplier’s [Goods OR Services] under this Agreement.
GHG Emissions means [see TCLP Glossary: Greenhouse Gas Emissions].
GHG Representative has the meaning given in paragraph 7.2 of Schedule [●].
Green Improvement has the meaning given in paragraph 5.2(b)(i) of Schedule [●].
Greener Supplier means a supplier who can supply [goods OR services that are Equivalent to the Supplier’s [Goods OR Services]] with:
(a) a lower carbon footprint when compared to the Supplier Carbon Footprint; [and/or]
(b) reduced adverse environmental impacts measured in accordance with [insert appropriate standard for measuring environmental impacts] when compared to the Supplier; [and/or]
(c) increased sustainability outcomes measured in accordance with [insert appropriate standard for measuring sustainability outcomes] when compared to the Supplier; [and/or]
(d) [other].
Greenhouse Gas and Carbon Emissions Group means a forum comprised of the GHG Representative from each of the Supplier and the Customer, and any other suitably qualified representatives from each organisation.
Greenhouse Gases means [see TCLP Glossary: Greenhouse Gases (GHGs)].
Initial Measurement means the assessment of the Supplier Carbon Footprint at, or as soon as is reasonably practicable after, the commencement of this Agreement determined in accordance with the process set out in paragraph 1.1 of Schedule [●].
Paris Agreement Goals means [see TCLP Glossary: Paris Agreement Goals].
Price Factor means the multiple by which the Prices are adjusted, determined by the Supplier’s Achieved Targets, as set out in paragraph 6.1(c) of Schedule [●].
Proposed Measurement has the meaning given in paragraph 1.1(a) of Schedule [●].
Proposed Measurement Determination has the meaning given in paragraph 1.1(e) of Schedule [●].
Reporting Standard means the [GHG Protocol Corporate Accounting and Reporting Standard OR the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard]. [Drafting note: users to amend as applicable.]
Supplied Products means [●]. [Drafting note: to include outputs relating to the nature of supply the contract relates to. To ensure that the Carbon Footprint can be compared year on year we suggest referring to a specific number of products or services supplied. Otherwise, the Carbon Footprint may be influenced by simply producing fewer goods.]
Supplied Service means [●]. [Drafting note: to include outputs relating to the nature of supply the contract relates to. To ensure that the Carbon Footprint can be compared year on year we suggest referring to a specific number of products or services supplied. Otherwise, the Carbon Footprint may be influenced by simply providing less of a service.]
Supplier Carbon Footprint means the total annual GHG Emissions associated with the raw materials and services purchased by the Supplier in order to deliver the [Supplied Products or Supplied Service (as applicable)].*
*[Drafting note: users of this clause may also choose to monitor:
However, the Supplier Carbon Footprint has been chosen as the primary measure because this is something which the Supplier themselves can directly control and it relates directly to the specific product OR service being procured under the relevant contract.]
Supplier Carbon Footprint Determination has the meaning given in paragraph 3.7 of Schedule [●].
Supplier Code of Conduct means [●]. [Drafting note: if the Customer has a specific Code of Conduct which the Supplier must comply with, which includes obligations in respect of environmental, greenhouse gas emissions or similar, this should be referred to here.]
Sustainability Requirements has the meaning given in paragraph 2.1 of Schedule [●].
Target Amendment Proposal has the meaning given in paragraph 1.3(b) of Schedule [●].
Target Amendment Proposal Determination has the meaning given in paragraph 1.3(e) of Schedule [●].
Target Date means the date set by the Company’s Board to achieve its [Emissions Target], with such date being no later than [2035 OR 2050].
Term Carbon Target means the reduced Supplier Carbon Footprint to be achieved by the end of the Term which is at least equal to the Initial Measurement as reduced by [15 (fifteen)] percent (as may be adjusted in accordance with paragraph 1.3 of Schedule [●]). [Drafting note: users to confirm an appropriate reduction percentage having regard to what can be reasonably achieved during the Term.]