Climate Contract Playbook Edition 3
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The key stakeholders that need to be engaged to deliver this Impact are: 1. Procurement and buying professionals and their trade bodies 2. In house legal teams 3. Precedent and know how providers 4. Private practice firms and their professional support lawyers
Stakeholders
This clause has been drafted for a supply contract. However, the principles of “Climate Risk Sharing” can be applied to a variety of contractual agreements. The definitions of Adverse Climate Outcomes and Adverse Social Outcome should be tailored to fit the potential adverse outcomes of non-performance of the contract in question.
Application
The wording of the definition of Force Majeure is flexible. Parties may use their preferred wording, so long as the carve out below for Pandemic and Climate Change Event is added. There are many forms of Liquidity Ratio and the financial teams of a client will need to input into this drafting. The idea is to bring a climate lens to the drafting and to think about what happens if there are climate events that have the same outcome as a Pandemic.
Notes for users
Additional Definitions
Adverse Climate Outcome (ACO) : where non-performance of an affected obligation, or the enforcement of this clause [FORCE MAJEURE] in relation to that non-performance, directly leads to: a) reduced air quality; b) an increase in Greenhouse Gas Emissions; c) dumping of stock that was created using natural capital; d) wasted Embedded Carbon; or e) [INSERT OTHERADVERSE EFFECTS]. Adverse Social Outcome (ASO) : where non-performance of an affected obligation, or the enforcement of this clause [FORCE MAJEURE] in relation to that non-performance, directly leads to: a) the insolvency of a party; b) redundancies over and above [x]; c) an increase in poverty, deprivation or hunger; or d) [INSERT OTHERADVERSE EFFECTS].
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