---
title: Encourage Sourcing of Greener, Fairer Renewable Energy
excerpt: 
date: 2024-08-22T10:00:21Z
modified: 2025-07-23T11:29:54Z
file_type: md
permalink: clauses/encourage-sourcing-of-greener-fairer-renewable-energy.html
wpid: 5845
status: publish
type: clause
jurisdiction:
  - USA
maintenance-status:
  - Not maintained
practice-area:
  - Commercial
  - Construction
  - Corporate, mergers and acquisitions (M&amp;A)
  - Real estate and property
  - Supply chain
sector:
  - Construction and infrastructure
  - Energy and natural resources
  - Manufacturing and industrials
eleventyComputed:
  clause_child_name: "Miko's Clause"
  clause_summary: A clause obliging stakeholders in renewable energy technology supply chains to lower their carbon emissions, minimize their environmental impact and safeguard against modern slavery.
  clause_last_updated_date: 2024-09-10
layout: layouts/clause.njk
---

# Encourage Sourcing of Greener, Fairer Renewable Energy

## Child’s name

Miko's Clause

## Summary

A clause obliging stakeholders in renewable energy technology supply chains to lower their carbon emissions, minimize their environmental impact and safeguard against modern slavery.

## What this clause does

This clause helps businesses and their lawyers to promote the use of best-in-industry renewable energy generating assets, meet net zero and ESG commitments, improve renewable energy generating asset supply chain transparency, reduce their Scope 3 emissions, protect their ESG credentials and reputation, and minimize negative social and environmental impacts associated with their energy installations.

## Clause Content

**1. Minimum social safeguards and mitigation of environmental impacts**

1.1 The Supplier shall not, and shall \[use commercially reasonable efforts to\] ensure that its Personnel shall not, use or benefit from Forced Labor Practices or use or benefit from Conflict Minerals in any Energy Equipment Activities.

1.2 Notwithstanding Clause \[2.1\], the Supplier agrees, and shall ensure that its Personnel agree, to cooperate with the Company and the Company’s contractors to\[:\]

1.2.1 minimize Environmental Issues and Resource Issues in connection with the Energy Equipment Activities\[.\]\[; and\]

1.2.2 \[do no significant harm (interpreted in accordance with Article 17 of the EU Taxonomy Regulation) to any of the \[six\] Objectives.\]\*

\* \[*Drafting note: The taxonomy has been included as an exemplary standard to follow even where it is not directly applicable in the jurisdictions where the agreement operates (for example, the US). This will need to be reviewed in the context of any local law equivalent or conflicting provisions.*\]

1.3 \[The Supplier shall, and shall \[use reasonable efforts to\] ensure that its Personnel shall, implement procedures into all Energy Equipment Activities to ensure they align with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights , including the principles and rights set out in the eight fundamental conventions identified in the Declaration of the International Labour Organization on Fundamental Principles and Rights at Work and the International Bill of Human Rights.\]

**2. Supply chain carbon footprint**

2.1 The Supplier agrees, and shall ensure that its Personnel agree, to cooperate in good faith with the Company and the Company’s contractors to ensure that the Carbon Footprint of the Energy Equipment Activities does not exceed the Carbon Budget \[by more than \[10 (ten) OR \[*other number*\] percent\]\].

2.2 The Supplier agrees to measure the Carbon Footprint of the Energy Equipment Activities in accordance with a Carbon Footprint Standard approved by the Company and \[if at any time reasonably required to do so by the Company,\]\* appoint an external verification authority \[(such as the Carbon Trust)\] to certify the Carbon Footprint of the Energy Equipment Activities at the Supplier’s cost.\]\*\*

\* \[*Drafting note: Consider removing the bracketed text. Good practice would be independent verification of the Carbon Footprint as a matter of course, rather than only on Company request.*\]

\*\* \[*Drafting note: Consider including an obligation to notify of results and set out consequences for non-compliance.*\]

2.3 The Supplier shall use reasonable endeavors to minimize the Carbon Footprint of the Energy Equipment Activities by designing the Energy Equipment to minimize the GHG Emissions associated with its installation, construction, operation, and use.

**3. Due diligence and environmental assessment reporting**

3.1 On or before the \[execution\] date of this Agreement, the Supplier shall provide the Company with a completed Due Diligence Questionnaire and Environmental Assessment Report.

3.2 The Supplier shall provide the Company with an updated Environmental Assessment Report within \[90 (ninety) OR \[*other number*\]\] days of each Reporting Period.

3.3 The Company may from time to time (but no more than \[once OR \[*other frequency*\]\] a year) request that the Supplier provide an updated Due Diligence Questionnaire and/or Environmental Assessment Report. On receipt of such a request, the Supplier shall promptly and in any event within \[28 (twenty-eight) \[*other number*\] days\] of the request provide an updated Due Diligence Questionnaire and/or Environmental Assessment Report.

3.4 The Supplier represents and warrants that each Due Diligence Questionnaire and each Environmental Assessment Report provided to the Company in accordance with this Clause \[3\] is true and accurate in all material respects as at the date thereof and that no material fact or matter has been omitted that would result in such Due Diligence Questionnaire or Environmental Assessment Report (as the case may be) being misleading in any material respect.\*

\* \[*Drafting note: Consider dispute resolution terms to apply if findings are disputed.*\]

3.5 If the Supplier becomes aware of any fact or matter that would result in a Due Diligence Questionnaire or Environmental Assessment Report provided to the Company not being true and accurate in all material respects, the Supplier shall notify the Company immediately with full details of the change in circumstances.

**4. Audit**

4.1 The Supplier agrees that the Company or the Company’s authorized representative may from time to time during the term of this Agreement, on reasonable \[written\] notice, inspect and audit the Supplier’s records to evaluate the Supplier’s compliance with Clauses 1 \[to 3\] (inclusive).

4.2 The Supplier will provide all assistance reasonably requested by the Company for the purpose of inspecting and auditing the Supplier’s records pursuant to this Clause \[4\] titled 'Audit.'

**5. Breach and remedies**

5.1 Each of the following events or circumstances is a Breach of this Agreement:

5.1.1 Forced Labor Practices or use of Conflict Minerals in any of the Energy Equipment Activities;

5.1.2 a violation of Environmental Laws or other significant\* Environmental Issue or Resource Issue arising from the Energy Equipment Activities;

\* \[*Drafting note: Parties may wish to define what 'significant' means in this context to minimize the risk of disputes arising out of the Company’s decision to terminate for Breach under 5.1.2. Leaving the meaning of 'significant' ambiguous risks exposing the parties to a judge or alternative dispute resolution process ruling on what 'significant' means, with the associated wasted time and costs of that process.*\]

5.1.3 \[a significant harm\* to any of the Objectives from the Energy Equipment Activities;\] or

\* \[*Drafting note: Parties may wish to define what 'significant harm' means in this context, for example, agreeing thresholds that determine what amounts to a 'significant harm' to any of the Objectives from the Energy Equipment Activities.*\]

5.1.4 where the Carbon Footprint has exceeded the Carbon Budget by \[50 (fifty) OR \[*other number*\] percent\] or more during two consecutive Reporting Periods.

5.2 The Supplier shall, within \[10 (ten) OR *other number*\]\] business days of becoming aware of the same, notify the Company in writing of any Breach, setting out:

5.2.1 the nature, severity, and duration of the Breach;

5.2.2 the cause(s) of the Breach and any steps already taken by the Supplier to mitigate such cause(s); and

5.2.3 a remedial plan as to how the Supplier will further investigate and remedy the Breach (a Remedial Plan).

5.3 The Company may comment on the Remedial Plan and provide reasonable suggestions for investigating and remedying the reported Breach. The Company may also request (acting reasonably) that the Supplier remedies the reported Breach within a specified period.

5.4 The Supplier shall provide the Company with an updated Remedial Plan \[monthly\]. Each updated Remedial Plan shall detail the progress the Supplier has made towards remedying the Breach since the most recent updated Remedial Plan was provided to the Company.

5.5 If a Breach is capable of remedy and not remedied to the reasonable satisfaction of the Company within \[30 (thirty) OR 60 (sixty) OR 90 (ninety)\*\] days of the occurrence of the Breach or such longer period as may be agreed pursuant to Clauses \[5.1 to 5.4\] above, the Company shall be entitled to:

5.5.1 terminate this Agreement by giving \[30 (thirty) OR *other number*\] days' written notice to the Supplier; and

5.5.2 recover from the Supplier any costs reasonably incurred by the Company as a result of the Breach, including but not limited to:

(a) the costs of replacing the Energy Equipment (from a supplier that complies with the terms of this Agreement);

(b) the costs of procuring and engaging a new supplier for the Energy Equipment Activities;

(c) the costs of purchasing carbon credits to offset the Carbon Footprint in excess of the Carbon Budget;

(d) the cost of remedying any Environmental Issues or Resource Issues caused by the Breach (where these can be remedied by the Company);\*\* and/or

(e) Company's reasonable attorney fees and court costs incurred in remedying the Breach.

\* \[*Drafting note: Consider adding a 30 (thirty)-day period in which remedy has to commence, with a longer period for such remedy to be completed.*\]

\*\* \[*Drafting note: Consider if there should be a cap here, which may increase the likelihood of the Supplier agreeing to the clause.*\]

5.6 \[If the Company terminates this Agreement under this Clause \[5\], the Supplier shall at the Company’s request provide all reasonable assistance to facilitate the appointment of a replacement supplier by the Company to carry out the Energy Equipment Activities, including but not limited to novating any contracts in respect of the Energy Equipment Activities to the replacement supplier nominated by the Company.\]\*

\* \[*Drafting note: Amend as relevant in the context of any similar or duplicative clauses in the main contract.*\]

5.7 Nothing in this Agreement shall limit Company's rights or recourse under applicable law, including but not limited to in the event of illegal activity by Supplier or its Personnel.

**Appendix A**

\[*Drafting note: Append an appropriate Due Diligence Questionnaire (for example,* [*Raphael’s DDQ*](https://chancerylaneproject.org/climate-clauses/climate-change-due-diligence-questionnaire-for-suppliers/) or [*Gordon’s DDQ*](https://chancerylaneproject.org/climate-clauses/capital-markets-esg-due-diligence-questionnaire/) *published by The Chancery Lane Project) and adapt to include specific questions regarding Forced Labor, Conflict Minerals, Environmental Issues or other areas of specific interest linked to the Energy Equipment Activities and to disclose the names of companies in the supply chain, the location of mining in the supply chain and the production workforce in the supply chain.*\]
