Climate clause

Termination for Greener Supplier

Agatha's Clause

The clause gives customers a right to switch supplier if the existing supplier is unable to match a ‘greener’ offer made by an alternative supplier.

This is a climate clause

This clause brings climate considerations to your drafting. It is not yet net zero aligned. To align this clause with net zero, use our toolkit or join one of our events.

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Why use this?

The clause embeds assessment of green credentials into the procurement process and allows parties to meet their net zero targets. The clause incentivises and supports suppliers to benefit from continuously improving their green performance with the corresponding increase in competitiveness.

The clause

Termination for Greener Supplier: Contractual Provisions

Additional Recital

(A) The parties acknowledge their common intention in the fulfilment of their obligations under this agreement to minimise their impact on climate change.

Insert into preliminary obligations:

The parties agree that the information provided by the Supplier before the start date of the agreement concerning measures of the impact on climate change by the Supplier and the products and services will form the baseline environmental credentials of the Supplier for the purpose of this agreement (“Green Baseline”). The Green Baseline may be amended by written agreement or otherwise in accordance with this agreement. The Supplier will provide at the Customer’s request reasonable evidence of its compliance with the Green Baseline.

 

Additional Definitions

In this clause, “equivalent” or “equivalence” means:

(a) If assessing the [goods OR services] of a Green 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 [goods OR services] under this agreement.

(b) If assessing the pricing of a Green 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-month period] of the pricing for [goods OR services] under this agreement.

 

Additional Clauses

1.1 Without affecting any other right or remedy available to it, 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 Green Supplier’s equivalent [goods OR services] achieve:

1.1.1 lower greenhouse gas 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

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],

in each case as compared to the Supplier’s Green Baseline.

1.2 The extent to which a Greener Supplier exceeds the Supplier’s Green Baseline (using the measures described in this clause) is 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 price equivalence) and set out the Green Improvement.

1.3 The Supplier shall, within [30] days of the Notice of Greener Supplier notify the Customer 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 [NUMBER] 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 endeavours acting in good faith to agree within a further 30 days the amended terms on which the [goods OR services] shall be provided incorporating the Green Improvement. Once an amendment is agreed, 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 from the date of that amendment); or

1.3.2 the Supplier;

1.3.2.1 does not respond to the Notice of Greener Supplier within the required period; or

1.3.2.2 is unable to demonstrate to the Customer’s reasonable satisfaction that it is able to at least match the Green Improvement within the required period [on terms as good for the Customer as those set out in the Notice of Greener Supplier],

1.4 The Customer may terminate this agreement by giving the Supplier not less than [NUMBER] months’ notice. Other than the agreed consideration for [goods OR services] provided in accordance with the agreement before the date of termination, and despite any conflicting provisions in this agreement, no payments will become due to the Supplier as a result of termination under this clause.

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