ESG (Environmental, Social and Governance) and Legal Compliance Clause

ESG (Environmental, Social & Governance) is more and more being seen as a top priority for businesses and, in view of this, they need to tackle ESG issues relevant to them.

As part of their efforts to do so, businesses might take steps to try to ensure that their suppliers also do so.

Use this clause to require suppliers to meet ESG requirements

A business can create an appropriate ESG policy or code of conduct that it wishes its suppliers to adhere to.

It can then include a suitable clause in purchase contracts with its suppliers, under which the supplier undertakes to meet the ESG requirements of that policy or code.

Linking ESG commitments to legal and other requirements

The clause can also set out specific laws and other legal measures which the business requires the supplier to meet in addition to ESG requirements.

Such a contract clause can increase the likelihood and degree of compliance by suppliers with the business’s ESG and legal requirements.

Demonstrating ESG standards to stakeholders

This clause can help demonstrate to a business’s customers, staff, investors and other stakeholders that the business is serious about ESG.

It can also show that, wherever possible, the business only deals with suppliers who are prepared to meet stringent contract requirements relating to ESG and other requirements of the business.

Policy or code of conduct and tailoring

This ESG contract clause assumes that a business will have an ESG supplier policy or code of conduct that can be attached to the contract.

The clause will need to be tailored to each business’ own needs and circumstances, and the content adopted in each case will also depend on what the business is able to negotiate with any particular supplier.

ESG (Environmental, Social and Governance) and Legal Compliance Clause is part of Corporate. Just £38.50 + VAT provides unlimited downloads from Corporate for 1 year.