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According to our latest research, the supply chain is the area most in need of improvement when it comes to sustainability in retail.
In a bid to address this, almost half (48%) of retailers say they are including sustainability obligations in their contracts with third parties – which can be done through a climate-aligned contract clause or a policy that becomes a binding part of the ongoing relationship.
While it can take years for climate legislation to take effect, contract clauses are a quick and straightforward way for retailers to work with suppliers on reducing the environmental impact of their business operations. It helps to reduce the retailer’s scope 3 emissions and shows they are taking proactive steps towards achieving their net zero and other sustainability commitments.
Contract clauses can also be quickly amended if there is a change in the law or the company’s ambitions, for example.
The need for climate-aligned contracts has given rise to The Chancery Lane Project’s (TCLP’s) playbook of over 100 clauses, which are drafted and reviewed by a global community of over 1,300 legal professionals, including lawyers from TLT.
Below are a number of freely available clauses that can be easily used or adapted by any retailer to improve sustainability in their supply chain.
Matilda’s Annex is a simplified and consolidated version of TCLP’s existing supply chain clauses and can be annexed to any supply agreement, across all sectors and industries.
A retailer could readily adapt Alice’s Clause to require suppliers to use fewer single use plastics (SUPs). It would allow retailers to continuously reduce the volume of SUPs (and the corresponding embedded greenhouse gas emissions) used in their operations, providing a framework for measurement and payment deductions that will incentivise their suppliers.
A retailer might use Ming’s Clause to reduce scope 3 emissions by incentivising parties to meet emissions targets through a selection of alternative payment adjustments, to be tailored to requirements. While the continuous emissions reduction is consistent with a 1.5℃ pathway the parties may temporarily pause the reductions if they are unable to meet this pace.
Alex’s Clause uses ‘repair, reuse and recycle’ concepts to ensure the design and manufacture of sourced products is sustainable. It incentivises suppliers with a bonus for using recycled materials and circular manufacturing, and resulting products will ultimately be more competitive.
With Runa’s Clause, the parties acknowledge there are opportunities to reduce food waste in the supply chain and agree to work together to identify food waste reduction opportunities. This promotes fairness for the producer whilst supporting the customer. The financial benefits of properly considering food waste in the supply chain are also considerable.
Raphael’s Procurement DDQ asks potential suppliers to provide information regarding a wide range of climate change-related issues going beyond the standard questions.
Rowen’s Clause is a self-assessment questionnaire to make businesses aware of adverse environmental impacts relating to land use within their supply chain.
Search for clauses for supply contracts and other contractual relationships on the TCLP website
Read our report, Sustainability Matters – putting the ‘eco’ in retail economics
To find out more about TLT’s work with TCLP, please contact
06 December 2021