Model clause

Net Zero Target Supply Chain Cascade

Owen's Clause

Clauses that “back to back” or align a business’s net zero target with its supply chain and business partners, thus enabling the business to achieve its target or take control to achieve it.

Skip to clause

Why use this?

Many businesses and organisations have publicly committed to a net zero target across their value chain. Their supply chains and business partners contribute to their emissions and thus whether they achieve their net zero target.

The clauses require the supplier to set a net zero target that aligns with the customer’s. This puts energy efficiency and the net zero transition front and centre in the commercial relationship.

If the obligations are not achieved, then the customer can terminate or offset the carbon emissions of the supplier, at the supplier’s expense. This allows the customer to be in control of achieving their publicly stated net zero target.

How it promotes a net zero future

The clause will ensure that business and organisations have the greatest chance of achieving their net zero targets. Cascading net zero obligations through a value chain should accelerate the rate of change in the economy and mean that net zero targets become common place.

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

Carbon Reporting” reporting of an organisation’s greenhouse gas emissions and extraction to a standard not less than that required by the UK government’s Streamlined Energy and Carbon Reporting (SECR).

Contract Target” the proportion of the Customer’s [Net Zero/Gross Zero] Target which will be achieved under this Contract.

Greenhouse Gas” gases that contribute to or accelerate the greenhouse effect by absorbing infrared radiation, including but not limited to: carbon dioxide, methane, nitrous oxide, sulphur hexafluoride, hydrofluorocarbons, perfluorocarbons and chlorofluorocarbons.

Gross Zero Target” an absolute reduction in Greenhouse Gas emissions from all operations [including value and supply chains] to zero by a specified date and for each subsequent year thereafter.

Net Zero Target” a net reduction of Greenhouse Gas emissions from all operations [including value and supply chains] to zero by a specified date so there is a balance between sources and sinks of Greenhouse Gases in a calendar year and for each subsequent year thereafter.

“[Net Zero/Gross Zero] Target Date” the first year by which the Customer aims to achieve the Net Zero Target, being 1 January [2050]. [Note: Define as per customer specific target for example if using a Gross Zero Target or other Science-Based Target]

Native Trees” those species of trees that are native to the United Kingdom since the last ice age and listed as such on the Forestry Commission Website.

Clauses 

Supplier Net Zero Obligations

8.1 The Supplier acknowledges and understands the Customer’s Net Zero Target. Accordingly, the Supplier shall:

a) set its own [Net Zero/Gross Zero] target (the “Supplier NZ Target”) with a target achievement date the same as or earlier than the Net Zero Target Date (the “Supplier NZ Date”);

b) agree the Contract Target with the Customer;

c) achieve the Contract Target;

d) ensure that this clause 8 will be copied into any and all of its supply chain contracts that relate to its obligations under this agreement;

e) introduce emission reduction technologies, processes and policies as well as offsetting and, where technologically and commercially feasible, carbon removal initiatives, to achieve the Supplier NZ Date;

f) undertake and keep up to date full and complete records of Carbon Reporting activity and data and provide the same to the Customer each year and more frequently as the Customer may reasonably request;

g) attend, on reasonable notice, meetings with the Customer’s Sustainability Manager or other nominated representative to present the Supplier’s plan to achieve, and current progress towards, the Supplier NZ Date;

h) not do or omit to do anything which could reasonably be expected to cause the Customer to miss its Net Zero Target Date, whether pursuant to this contract or otherwise.

8.2 If:

a) the Supplier fails to comply with any of the obligations in clause 8.1; or

b) the Customer, having reviewed the Carbon Reporting and discussed with the Supplier its progress to achieve the Supplier NZ Date, determines (acting reasonably) that the Supplier is making insufficient progress towards achieving the Supplier NZ Date; or

c) the Supplier fails to achieve the Supplier NZ Target by the Supplier NZ Date, the Customer may, without affecting any other right or remedy available to it:

d) terminate this agreement by giving one month’s written notice to the Supplier;

e) require the Supplier to plant a number of Native Trees in the UK sufficient to compensate for the Customer’s shortfall in progress towards the Supplier NZ Date attributable to the [production of the Goods/ delivery of the Services]; and/or

f) recover from the Supplier any costs reasonably incurred by the Customer in achieving the Contract Target to the extent by which that Contract Target is missed by the Supplier by:

  • obtaining carbon credits to offset the Supplier’s net Greenhouse Gas emissions footprint [attributable to the [production of the Goods/ delivery of the Services]]; or
  • planting, or arranging for the planting of, Native Trees to offset the Supplier’s net Greenhouse Gas emissions footprint attributable to the [production of the Goods/ delivery of the Services].

8.3 [The Supplier shall, at its own cost, submit a report to the Customer within 20 Business Days of each anniversary of the date of the agreement identifying the emergence of new and evolving relevant technologies and processes which could accelerate the achievement of the Supplier NZ Date. Such report shall provide sufficient detail to enable the Customer to evaluate properly the benefits of the new technology or process.]

8.4 The Supplier warrants to Customer that:

a) it has sufficient resources, infrastructure and materials to achieve the Contract Target by the date of the expiry of the contract;

b) none of the [Goods/Services] supplied under this agreement will be of lower quality as a result of working towards the Contract Target;

c) it will not offer preferential terms to those other customers who do not require a Contract Target or similar obligations in their contracts.

Join hundreds of lawyers fighting climate change

Help us and take part