Climate Contract Playbook Edition 3
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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. If used it would be useful to have corresponding messaging in any procurement policies for the relevant businesses or organisation. Depending on the customer’s target, Gross Zero or Net Zero can be deleted as appropriate. This clause includes obligations where customers wish to back-to-back net zero targets in their suppliers’ own value chains. This may be too onerous for some suppliers, who may be only willing to commit to a net zero target within their company’s or group’s operations. The clauses do not deal with a change in a Net Zero Target Date. It is possible that businesses setting 2050 targets today will bring these forward to align with more ambitious Paris Agreement goal to keep global average temperature rise to 1.5°C above pre-industrial temperatures. These clauses are drafted to be customer-friendly and short form for use in Standard Supply Terms and Conditions. The precedent could easily be adapted for joint ventures, outsourcing and other commercial contracts. It may be a good idea to set milestone dates for carbon reduction as net zero dates will maybe 10 plus years away and a customer may want to see improvements earlier and on a regular basis e.g. every 2 years. The Supplier may wish to have a clause requiring the Customer to share information with them on how they are planning to meet their NZ Target Date so that the Supplier understands their role and proportion in that. Users should ensure that this clause is embedded or dovetails with any remedial process and/or persistent breach clauses in the contract.
Application
Notes for users
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.
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