Model clause

Green Supply Agreement

Zoë and Bea’s Clause

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

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Why use this?

Many companies such as Microsoft are pledging to be Carbon Negative by 2030. In order to achieve this, they will have to work across their value and supply chains to align them with this target.

How it promotes a net zero future

The clauses and checklist should encourage existing suppliers to “up their climate change game” and thus accelerate a greater number of businesses in their transition to net zero.

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

Additional Definitions

Supplier” [Insert Supplier’s Name]

Principal” [Insert Principal’s Name]

Supplied Products” [Insert description of products]

Carbon Footprint Standards” means, for Organisational Carbon Footprints and Supply Chain Carbon Footprints the GHG Protocol Corporate Accounting and Reporting Standard, [or ISO 14064?], and for Product Carbon Footprints the GHG Protocol Product Life Cycle Accounting and Reporting Standard, or [ISO 14064].

GHG Emissions” means emissions of the greenhouse gases listed at Annex A of the 1998 Kyoto Protocol to The United Nations Framework Convention on Climate Change, as may be amended from time to time including: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6), each expressed as a total in units of carbon dioxide equivalent (CO2e).

GHG Report” means a report prepared by the Supplier in accordance with the requirements set out in Clause [1].

Organisational Carbon Footprint” means total annual worldwide GHG Emissions from all the activities across the organisation, including energy used in buildings, industrial processes and company vehicles and including [Scope 1 and Scope 2] [Scope 1, Scope 2, and Scope 3] [DELETE AS APPROPRIATE] activities.

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 [Scope 1 and Scope 2] [Scope 1, Scope 2, and Scope 3] [DELETE AS APPROPRIATE] activities, as described in the Greenhouse Gas Protocol.

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.

1.2. The Supplier shall formally adopt the Carbon Footprint Standards and appoint an employee with primary responsibility to the Supplier’s board of directors for delivering compliance with such Carbon Footprint Standards and the requirements of this clause.

1.3. At all times during the term of this Agreement the Supplier shall measure and manage its GHG Emissions in accordance with the Carbon Footprint Standards.

1.4. Within 3 months after each anniversary of the date of this Agreement, the Supplier shall submit a GHG Report to the Principal, detailing as a minimum the matters listed at clause 3.

2. Emission Reduction Targets

2.1. Commencing from the first anniversary of the date of this Agreement, the Supplier shall reduce its GHG Emissions by no less than the percentages shown at Annex 1* to this Agreement in each period to which a GHG Report relates.

* [Drafting note: Annex 1 is separate to the Green Procurement Checklist and is to be drafted by the parties]

3. Contents of GHG Report

3.1. The GHG Report shall, as a minimum, report and, where appropriate, explain:

3.1.1. 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;

3.1.2. the Supplier’s measured [Scope 1, Scope 2 and Scope 3 emissions;]

3.1.3. the measured Product Carbon Footprint;

3.1.4. the measured Supply Chain Carbon Footprint;

3.1.5. 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;

3.1.6. [insert additional requirements].

4. Verification

4.1. 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 [●].

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

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


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 carbon 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]

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