Model clause

Supplier Environmental Threshold Obligations

Teddy's Clause

Insert at purchase warranties for environmental performance and continuous improvement obligations. This will build in long term environmental improvements and transparency into supply agreements.

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Why use this?

Currently the carbon costs of producing goods or delivering services are not internalised to the contract and therefore there is no incentive to reduce carbon emissions.

There is a lack of legally enforceable environmental improvement standard in mainstream supply contracts, particularly in government procurement contracts.

Using this clause will mean that from the recitals, to contract terms and conditions and remedies, supply contracts will become a vehicle for setting environmental performance and helping drive the transition to net zero emissions.

How it promotes a net zero future

Development of a wider market for new carbon reducing technologies, as well as accreditation/audit companies.

Auditable transparency of an organisation’s environmental impact, emissions and supply chain. Ultimately to filter down from Government, and to/through local authorities and the private sector contractual obligations to achieve the net zero target(s).

Disclaimer - please read

The clauses on this website (and published in our Climate Contract Playbook) have been prepared in good faith on a pro bono basis and are free to download and use. The clauses have been drafted and edited by a variety of lawyers and, as such, the approaches to drafting may not conform to any particular drafting norms. We acknowledge this as a consequence of the collaborative drafting process.

The clauses on this website (and published in our Climate Contract Playbook) are provided on an ‘as is’ basis and without any representation or warranty as to accuracy or that the clauses will achieve the relevant climate goal or any other outcome.

This website (and the Climate Contract Playbook) does not comprise, constitute or provide personal, specific or individual recommendations or advice of any kind, and does not contain legal or financial advice. The clauses are precedents for legal professionals to use, amend and negotiate using their professional skill and judgement and at their own risk.

While care has been taken in the drafting of these clauses, neither The Chancery Lane Project nor any of its contributors owe a duty of care to any party in relation to their preparation and do not accept any liability for any errors or omissions, nor for any loss incurred by any person relying on or using these clauses or any other person. Users should use their own professional judgement in the application of these clauses to any particular circumstance or jurisdiction or seek independent legal advice.

At present, all the clauses are based on the laws of England and Wales. We encourage the conversion of these precedent clauses for use in other jurisdictions.

The clause

Recital

The parties acknowledge that the UK Government has committed to bring all greenhouse gas emissions to net zero by 2050 pursuant to the Climate Change Act 2008 (2050 Amendment) Order 2019.

The parties have undertaken assessments of their respective carbon emissions and [the supplier][the parties] have undertaken an assessment of the carbon footprint of [the product/service] to be supplied pursuant to this contract.

 

At Purchase Warranty

Add these definitions:

Carbon Footprint”: the amount of [carbon dioxide equivalent emissions] that will be released into the atmosphere as a result of the [manufacture/supply/use] of [the Product/Service/Business Operation/ Project] [determined in accordance with international carbon reporting practice, being the accepted practice from time to time in relation to reporting for the purposes of the protocols to the United Nations Framework Convention on Climate Change].

As a Condition of this Agreement the Supplier Warrants that:

1.1 it has undertaken an assessment of the Carbon Footprint;

1.2 [so far as it is aware,] the Carbon Footprint projected to be incurred as set out in [the Schedule] is true and accurate as at the date of this Agreement.

The Supplier Undertakes:

2.1 to develop and implement a plan of continuous improvement with the objective of reducing the Carbon Footprint [throughout the [Contract Term]] [by [set reduction target] [per Contract Year]] [and shall provide a copy of that plan to the Purchaser on request]

2.2 to re-assess the Carbon Footprint every [one][three] [Contract Years];

2.3 to provide the Purchaser with a written confirmation of the results of each assessment within one month of the completion of each assessment under clause [2.2];

3. The Supplier shall at the Purchaser’s request arrange for [the Carbon Trust] to undertake an independent assessment and verification of the Carbon Footprint and make a copy of the results of that assessment and verification available to the Purchaser as soon as reasonably practicable after receipt [(but no more than once in any period of [ ] Contract Years)].

[Note on Remedies – consider mechanism akin to liquidated damages in Jessica’s Clause]

Glossary references: Carbon Footprint

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