Climate Contract Playbook Edition 3
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This clause gives either party the right to request contract alterations to reduce the carbon footprint associated with the performance of the contract. This includes both changes to the notifying party’s actions and the notified party’s actions. The provisions are generally applicable and can be used in many types of agreements but will be particularly relevant in supply chains. Because it is a mutual right, it may be easier to include in agreements. The parties to an agreement should be familiar with the issues in their sector that could increase their carbon footprint. They should consider carving out or clarifying potentially contentious issues (see clause 7.4). Parties may have other reasons for invoking the clause (for example, cost savings). Nevertheless, if the requested change does not harm the notified party and also has a material positive impact on the environment, then the burden shifts to the notified party to demonstrate why the notifying party should not be able to impose the change requested in the carbon reduction notice. If the notified party does not have reasonable grounds to reject the request, the contract change would take effect and the change would be enforceable. Drafting will need to be added in the event of a disagreement. For example, where the notified party believes it will incur additional costs owing to the change. The clause may impose an obligation to consider the amendment in good faith but if an agreement is not reached, the contract would continue in force. The parties will need to consider whether termination is the correct solution or whether to include third party adjudication or some other remedy such as carbon offsetting.
Application
Notes for users
Additional Definitions
Carbon Dioxide Equivalent (CO2e or CO2eq) means the standard metric measure used by the UN’s Intergovernmental Panel on Climate Change (IPCC) to compare the emissions from various GHGs on the basis of their global warming potential over a specified timescale in order to express a Carbon Footprint that consists of different GHGs as a single number. Carbon Footprint means the amount in tonnes of Carbon Dioxide Equivalent of Greenhouse Gas Emissions that is released into the atmosphere as a result of the [manufacture/supply/use] of [the Product/Service/Business Operation/Project] determined in accordance with international carbon reporting practice, being the accepted practice from time to time in relation to reporting for the purposes of the protocols to the United Nations Framework Convention on Climate Change (UNFCCC). Greenhouse Gases (GHG or GHGs) means the natural and anthropogenic gases which trap thermal radiation in the earth’s atmosphere and as specified in Annex A to the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) or otherwise specified by the UNFCCC, and which currently include: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6), and nitrogen trifluoride (NF3). Greenhouse Gas Emissions (GHG Emissions) means emissions of Greenhouse Gases over a specified area and period of time, each expressed as a total in units of carbon dioxide equivalent (CO2e) [and calculated in accordance with the GHG Protocol Corporate Accounting and Reporting Standard or such other equivalent and generally recognised greenhouse gas emissions calculation methodology].
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