Climate clause

Green Supplier Agreement Terms

Zoë and Bea’s Clause

Green procurement clauses and a checklist to make a standard supplier agreement focus on emissions across a value chain.

This is a net zero clause

This clause aligns with Paris Agreement goals, Race to Zero requirements and the Oxford Principles for Net Zero Aligned Carbon Offsetting. For tools and support to use this clause, use our toolkit or join one of our events.

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Why use this?

To encourage parties to supply agreements to focus on driving down greenhouse gas emissions across the value chain through collaboration, target setting and reporting.

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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

Additional Recitals

(A) Insert Eddie’s Recitals (Climate Recitals) here.

 

Additional Definitions

(It is assumed that Supplier, Principal and Supplied Products will already be defined in the Agreement)

Carbon Footprint Standards means, for Organisational Carbon Footprints and Supply Chain Carbon Footprints, [the GHG Protocol Corporate Accounting and Reporting Standard/ The GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard/  ISO 14064] and for Product Carbon Footprints, [the GHG Protocol Product Life Cycle Accounting and Reporting Standard/ ISO 14064]. 

GHG Emissions means [the Parties’] emissions of GHGs from all sources [related to this Agreement], categorised as scope 1, 2 and 3 emissions by The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, Revised Edition 2015 as updated from time to time [Drafting note: Scope 1, 2 and 3 emissions are defined on page 27 of the GHG Protocol].

GHG Report means a report prepared by the Supplier in accordance with the requirements set out in Clause [4]

Greenhouse Gases (GHGs) means the natural and anthropogenic gases which trap thermal radiation in the earth’s atmosphere and are specified in Annex A to the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) [or otherwise specified by the UNFCCC at the date of this agreement], as may be amended from time to time[, which include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6), and nitrogen trifluoride (NF3),] each expressed as a total in units of Carbon Dioxide Equivalent (CO2e). 

Product Carbon Footprint means total GHG Emissions over the whole life of the Supplied Products, from the extraction of raw materials and manufacturing through to its use and final re-use, recycling or disposal, including including those associated with the raw materials and services purchased by the Supplier in order to deliver the Supplied Products.

Supply Chain Carbon Footprint means total annual GHG Emissions associated with the raw materials and services purchased by the Supplier in order to deliver the Supplied Products 

 

Additional Clauses

Greenhouse Gas and Carbon Emissions 

1. Measure, Manage, and Report GHG Emissions

1.1. The Supplier shall measure, manage and report its GHG Emissions in accordance with the provisions of this clause and the Carbon Footprint Standards.

1.2. The Supplier  shall  formally adopt the Carbon Footprint Standards and appoint an employee to the Greenhouse Gas and Carbon Emissions Group (the GHG Representative) who will be responsible to their board of directors for delivering compliance with such Carbon Footprint Standards and the requirements of this clause. Each Party shall have the right to substitute its GHG Representative on a temporary or permanent basis by giving the other Party written notice of the change for any reasons including planned and unplanned leave, sickness, parental leave or if the GHG Representative ceases to be employed by the relevant Party for any reason.

1.4 The Supplier and the Principal shall cooperate and collaborate on the reduction of the GHG Emissions associated with the performance of the Services/supply of the Goods, the preparation of each GHG Report and other obligations under clause [2 to 6] and to identify appropriate strategies for the improvement of the Total Carbon Footprint and their respective Organisational Carbon Footprint, (the Cooperation Obligation).

1.5 Subject to the terms of this Agreement and Applicable Law, the Supplier and Principal [may][shall] share environmental data, best practices and industry know-how with the other Party for the purpose of reducing the Product Carbon Footprint.

2. Emission Reduction Targets

2.1. Commencing from the first anniversary of the date of this Agreement: 

2.1.1 the Supplier shall reduce the Product Carbon Footprint by no less than the percentages shown at Annex 1 to this Agreement in each period to which a GHG Report relates (the Product Emission Reduction Target).

2.2 [If, in accordance with clause 2.1.1, the Supplier does not meet the Product Emission Reduction Target, the Greenhouse Gas and Carbon Emissions Group will meet and review the Supplier’s practices as outlined in clause 3.1] 

2.3 [Drafting note: The Principal to consider the following options / consequences if the Supplier does not meet the Product Emission Reduction Target by reference to Schedule ⧫: (i) bare minimum % reduction in charges; (ii) graded bonus awarded to the Supplier for overachieving on percentage reduction of Product Emission Reduction Target; (iii) termination for greener alternative; or (iv) green service credits to the Principal or a nominated charity for failure to meet bare minimum reduction. See The Chancery Lane Project’s other supply chain clauses including Ming’s Clause (Target Product Carbon Footprint (Schedule for Consumer Goods Contracts)), Agatha’s Clause (Termination for Greener Supplier) and Jessica’s Clause (Carbon Contract Clauses for Environmental Performance, and Associated Incentives and Remedies) for example drafting options.]

2.3 The Supplier shall ensure that each of its subcontractors shall be bound in writing by terms equivalent in all respects to those set out in clauses [1-6]. The Supplier shall provide evidence in writing of the Supplier’s compliance with this clause promptly on the Principal’s request.

3. Greenhouse Gas and Carbon Emissions Group

3.1 The Principal will provide a forum [annually] (the Greenhouse Gas and Carbon Emissions Group) to ensure strong communication is maintained regarding GHG Emissions, the Product Emission Reduction Target and the Cooperation Obligation. The GHG Representative of each Party will have the opportunity to: 

3.1.1 agree, discuss and review the Product Emission Reduction Target;

3.1.2 review the contents of the GHG Report; and

3.1.3 review the Product Carbon Footprint and Supply Chain Carbon Footprint  and strategies to improve them.

3.2 Where the Greenhouse Gas and Carbon Emissions Group agrees to an amendment to the Product Emission Reduction Target, such variation shall be documented and signed by both Parties.

4. GHG Report

4.1. Within [3]/[6] months after each anniversary of the date of this Agreement, the Supplier shall submit a GHG Report (in a format to be agreed between the Parties) to the Principal, detailing (and, where appropriate, explaining) as a minimum the following matters:

4.1.1. What industry best practices on managing and reducing GHG Emissions have been applied by the Supplier in the previous contract year, and how these have been applied;

4.1.2. the Supplier’s measured Scope 1, Scope 2 and Scope 3 Emissions;

4.1.3. the measured Product Carbon Footprint;

4.1.4. the measured Supply Chain Carbon Footprint;

4.1.5. the reduction in GHG Emissions achieved measured against the [Scope 1, Scope 2 and Scope 3 Emissions] stated in the preceding reports and in accordance with clause 2.1; and

4.1.6. [insert additional requirements].

5. Verification

5.1. The Supplier shall cooperate and collaborate with the Principal on its GHG Emissions, the preparation of each GHG Report and other obligations under this clause [●].

5.2. [Should the Principal at any time reasonably require it, the]/[The] Supplier shall appoint an external auditor or verification authority [(such as the Carbon Trust)] to certify its GHG Report.

5.3. The Supplier shall meet all costs associated with external auditing and verification of the GHG Reports that is required in accordance with this agreement.

 

Head of Terms for the drafting of other contracts:

Green Procurement Checklist

[Note: The following checklist contains heads of terms / bullet points for headline clauses to include in contracts mandating measurement of emissions, reductions, reporting.]

a) The Supplier will measure all greenhouse gas emissions associated with its delivery of [goods/services] under this agreement [in accordance with an internationally recognised standard] approved by the principal.

b) The Supplier will reduce its emissions by [10]% per year.

c) [Bare minimum % reduction plus graded bonus commensurate to percentage reduction. Termination tied to failure to meet bare minimum reduction]

d) [Best practice related to implementation]

e) [Reporting: timing, best practice reference standards, any other ESG reports]

f) [Audit: allocate responsibility and costs or tie audit to dispute over achievement of goals]

g) [Cooperate and collaborate: standard provisions]

h) [Other elements applied from The Chancery Lane Project’s Net Zero Drafting Checklist].

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