Revising the standard of care to require Contractors and Service Providers to adhere to "Best Industry Practice" in mitigating climate risk and to ensure that the Project meets its "Green Objectives".Skip to clause
Why use this?
The proposed amendments will:
- ensure the Contractor or Service Provider is kept accountable to implement the Best Industry Practice throughout construction, and implements practices towards achieving the Green Objectives upon completion; and
- allow a Developer to terminate the contract if standard of care is not met.
The requirement of good faith and reasonableness ensure that the clause is only used to meet climate goals and not for commercial convenience.
How it promotes a net zero future
Projects will be:
- designed and constructed in a manner that does not exacerbate climate risks generally throughout the term of the contract (which could ultimately compromise developments in the future); and
- delivered to withstand climate risks which may emerge in the future.
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Add new Definitions
Best Industry Practice means design, supply, construction, installation, commissioning and repair practices which are carried out:
(a) with the standard of skill, care and diligence which may reasonably be expected of a skilled and experienced professional carrying out design, supply, construction, installation, commissioning and repair work similar to the delivery activities;
(b) with adequate levels of resources, including personnel, materials and supplies; and
(c) in a manner which maximises the prospects of achieving the Green Objectives. Green Objectives means the following shared objectives:
(d) to carry out the Project responsibly, sustainably, ethically and in accordance with all applicable laws and good business practice;
(e) in relation to the construction phase and the undertaking of the construction activities:
(A) the use of sustainable materials;
(B) the use of materials which result in lower emissions of greenhouse gasses throughout the supply chain;
(C) the protection of the natural environment;
(A) emissions of greenhouse gases;
(B) the use of environmentally harmful materials;
(C) the use of water;
(D) the generation of waste;
(E) the generation, emission or transmission of pollution (without diminishing any obligation to avoid pollution in particular circumstances);
(f) in relation to the Employer’s circumstances:
(i) maximising the prospect of achieving the Employer’s Net Zero Target;
(ii) ensuring, insofar as is relevant to the matters the subject of this definition, that the terms of [the Employer’s sustainability linked loan/terms of the Green Loan] are complied with and satisfied;
(iii) [the achievement of or improvement to the achievement of sustainability performance targets of the Employer’s sustainability linked loan];
(iv) [the improvement of the Project’s performance under the terms of the [Employer’s Green Loan]];
(v) [the prevention of a default under the terms of the Employer’s Green Loan]; or
(g) in relation to the occupation, operation and utilisation of the Project during its operating life:
(i) minimising greenhouse gas emissions;
(ii) maximising energy efficiency;
(iii) maximising resilience to the impacts of climate change in a concentration pathway RCP8.5 future or other runaway climate change scenario.
- Contractor’s Obligations
1.1 The [Contractor/Service Provider] must carry out all of its obligations under the Contract in accordance with:
(a) the Project Documents;
(b) all applicable laws and standards; and
(c) Best Industry Practice.
1.2 The [Contractor/Service Provider] warrants that, subject to using Best Industry Practice, the Project will be fit for purpose and achieve Green Objectives on Practical Completion and during its [operating life]. [Drafting note: consider whether the Contractor/Service Provider should be liable for the asset achieving the Green Objectives into the future, as this is potentially a very onerous obligation on current drafting.]
- Reporting obligations
2.1 The [Contractor/Service Provider] must provide to the Employer a report on the last day of each [quarter] that describes conduct or actions taken to satisfy the Green Objectives (Green Report).
2.2 The Employer must notify the [Contractor/Service Provider] within [10 Business Days] of receiving the Green Report if the Employer:
(a) accepts the Green Report; or
(b) considers that the [Contractor/Service Provider’s] is not meeting the Green Objectives, setting out reasons.
2.3 If the Employer issues a notice under clause 2.2(b), the [Contractor/Service Provider] must promptly comply with the requirements set out in that notice, and within [10 Business Days] notify the Developer of the changes which have been implemented.
[Drafting note: It may be more feasible to require the Contractor/Service Provider in this situation to prepare a rectification plan, detailing how it plans to correct any failure to achieve the Green Objectives as set out in the Employer’s notice. The termination right in cl 2.4 would then arise if the Contractor/Service Provider either (a) doesn’t actually submit a rectification plan, or (b) fails to diligently pursue and/or adhere to the plan.]
2.4 If the [Contractor/Service Provider] does not comply with clause 2.3, this will be deemed a [substantial breach of the Contract] and the default clause [X] will apply.