Introduce Right to Terminate for Greener Supplier
This clause gives customers a right to switch supplier if their existing supplier is unable to match a ‘greener’ offer made by an alternative supplier.
What this clause does
This clause gives a customer the right to terminate an agreement with an existing supplier if it can get the goods or services with lower greenhouse gas emissions from an alternative supplier.
Recitals
Additional recital
(A) The parties acknowledge their common intention in the fulfillment of their obligations under this agreement to minimize their impact on climate change.
Insert into preliminary obligations:
The parties agree that the information provided by the Supplier before the effectiveness of this agreement concerning measures of the impact on climate change by the Supplier and the goods and services form the baseline environmental credentials* of the Supplier for the purpose of this agreement ('Green Baseline'). The Green Baseline may only be amended by the parties' written agreement or otherwise in accordance with this agreement. The Supplier will provide, promptly at the Customer’s request from time to time [but no more than [●] times per calendar year] and in any event within [7 (seven)] calendar days, reasonable written evidence of its compliance with the Green Baseline.
* [Consider defining a more specific standard or scope of what should constitute these ‘baseline environmental credentials’ to be referenced here.]
Clauses
In this clause, 'equivalent' or 'equivalence' means:
(a) If assessing the [goods OR services] of a Greener Supplier (as defined below), [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 [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 [goods OR services] under this agreement.
* [Consider listing a catch-all alternative as another pricing mechanism.]
Termination for Greener Supplier
1.1 Without affecting any other right or remedy available to it under this agreement, in law or in equity, the Customer may serve written notice ('Notice of Greener Supplier') to the Supplier that the Customer has identified a third-party supplier (the 'Greener Supplier') that is able to provide [goods OR services] at least equivalent to the [goods OR services], except that the Greener Supplier’s equivalent [goods OR services] achieve:
1.1.1 lower GHGs emissions relating to the production or delivery of the [goods OR services], as measured in accordance with [the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard, Revised Edition 2015 or its successor][insert appropriate standard for measuring environmental impacts or sustainability outcomes depending on the areas of concern to the business]; or
1.1.2 reduced environmental impact or increased sustainability outcomes, as measured in accordance with [insert appropriate standard for measuring environmental impacts or sustainability outcomes depending on the areas of concern to the business] [or];
1.1.3 [other impact],
in each case as compared to the Supplier’s Green Baseline.
1.2 The extent to which a Greener Supplier can improve upon the Supplier’s Green Baseline (measured as described in clause 1.1 above) is referred to as the ‘Green Improvement'. The Notice of Greener Supplier must reasonably demonstrate that the Greener Supplier’s alternative [goods OR services] are at least equivalent to those of the Supplier (including written confirmation by the Customer of overall quality and price equivalence) and set out the Green Improvement.
1.3 The Supplier shall, within [30 (thirty)] days of the Notice of Greener Supplier notify the Customer [in writing] whether it is able to achieve the Green Improvement [on terms no worse for the Customer than those set out in the Notice of Greener Supplier and] within [●] months of the Notice of Greener Supplier. If:
1.3.1 the Supplier is able to demonstrate to the Customer’s reasonable satisfaction that it is able to match the Green Improvement within that period, the parties shall use all reasonable efforts acting in good faith to agree within a further [30 (thirty)] days the amended terms on which the [goods OR services] shall be provided incorporating the Green Improvement. Once an amendment becomes effective, the relevant specifications of the [goods OR services] will be deemed to incorporate a requirement to comply with the Green Improvement (and the Green Baseline will be replaced by the Green Improvement effective from the date of that amendment); or
1.3.2 the Supplier:
(a) does not respond to the Notice of Greener Supplier [in writing] within the required period; or
(b) is unable to demonstrate to the Customer’s reasonable satisfaction that it can at least match the Green Improvement within the required period [on terms at least as favorable for the Customer as those set out in the Notice of Greener Supplier],
then the Customer may terminate this agreement by giving the Supplier not less than [●] months’ [written] notice.
1.4 Termination in accordance with this clause shall be considered a termination [for cause OR convenience] notwithstanding any other provision in this agreement. Other than the agreed consideration for [goods OR services] provided in accordance with the terms and conditions of this agreement prior to the termination of this agreement, and despite any conflicting provisions in this agreement to the contrary, no payments will become due to the Supplier solely as a result of termination by the Customer pursuant to this clause. For the avoidance of doubt, the Supplier’s failure to respond to the Notice of Greener Supplier or to demonstrate its ability to match the Green Improvement within the required period shall be deemed a termination event but shall not be deemed a breach of this Agreement.
Definitions
GHGs means the natural and anthropogenic gasses which trap thermal radiation in the Earth’s atmosphere, specified by the United Nations Framework Convention on Climate Change (UNFCCC) in Annex A to the Kyoto Protocol and as may be periodically updated from time to time.
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