Climate Contract Playbook Edition 3
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1. Contracting parties (in-house counsel, directors) 2. Legal advisors 3. Risk managers 4. Procurement and Sustainability Teams
Stakeholders
These clauses would be particularly relevant for multinational companies contracting with suppliers in jurisdictions with fewer environmental laws. Some suppliers may have limited access to the resources required to address climate change (for example, renewable energy or alternative technologies) and additional financial resources and technical assistance may be required to help such suppliers change behaviour or to measure their GHG emissions and carbon footprint. For instance, a supplier may have imposed on it (i) requirements for CO2 monitoring, (ii) a requirement to implement a policy to address climate change, or (iii) targets to cut emissions and to report on its progress. It is intentional that the obligations imposed on the Parties under both clauses are mutual rather than unilateral. This is based on research studies which observed that parties are less likely to incorporate a SCC if it imposes unilateral obligations 28 . Additionally, it helps to ensure that the clauses are suitable for use not only in circumstances where the ‘customer is calling the shots’ (as may often be the case), but also in other scenarios, where the bargaining power between parties may be more equal, or other considerations are at play. This clause differs from TCLP’s other SCCs (i.e. Agatha’s, Annie’s, Teddy’s, Jessica’s, Owen’s, Iris’ and Zoë and Bea’s clauses) as it provides mutual sustainability obligations for a Buyer and its Supplier. Clause 2.3 and 2.4 provide the non-breaching Party with the right to suspend and then terminate the Agreement where a material breach occurs. If drafters think that termination is too draconian, they can delete these provisions.
Application
Notes for users
Definitions Corrective Action Plan means a corrective or mitigation plan agreed between the Parties, including a cost breakdown, allocation of responsibilities, and an implementation schedule, which, once initiated, will enable the Supplier to correct and remediate the damage and adverse effects resulting from any failure to comply with the Environmental Action Plan, the Sustainability Policy, the Environmental Standards and Guidelines, or the Environmental Legislation, or to correct or mitigate the adverse effects of any Serious Environmental Incident.
28 P age 52 of Sustainability Clauses in Contracts: the Key to Corporate Responsibility: 2018 Study of CSR Contractual Practices Among Buyers and Suppliers by EcoVadis and Affectio Mutandi. https://resources.ecovadis.com/news-press/landmark-study-on-sustainability-clauses-in- commercial-contracts-released ; https://ecovadis.com/library/sustainability-clauses-in-commercial-contracts-the-key-to-corporate-responsibility/
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