Prepare contract obligations
Prepare contract obligations

Prepare contract obligations

Translating sustainability into contract obligations

Once sustainability criteria have been clearly established, it should be translated into contract obligations. This includes establishing how implementation will be monitored, and what are the consequences in case of non-compliance. In order to draft effective contract clauses, these decisions should be openly discussed and agreed upon by the procurement authority and the relevant suppliers. This section introduces some of the key features of successful contract clauses.

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Engaging with suppliers, and openly discussing sustainability obligations, will lead to more effective contract clauses, increasing the positive impact of the contract, and minimizing non-compliance risks. However, this process should also be used to ensure that the overall contract is user friendly, and that key responsibilities are understood by all relevant stakeholders.

Key features of contract clauses

Often, contract clauses that make reference to sustainability obligations are not effective, or considered less important than other business clauses. An analysis carried out by two consultancies, EcoVadis and Affectio Mutandi, shows that this is often due to factors such as the unrealistic monitoring expectations set on suppliers, or even the contradictions that sometimes emerge between sustainability and business clauses. They suggest six features against which the effectiveness of contract clauses can be measured. We include an explanation of these below.

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Precision - Setting specific requirements
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Verifiability - Ensure requirements are verifiable
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Enforceability - Establish progressive consequences of clause breaches
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Coverage depth - Go beyond tier-1 suppliers
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Contextualisation - Adapt sustainability requirements to your context
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Consistency - Align sustainability and business obligations
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Have clear continuous improvement standards

As it has been introduced in the previous section, what sustainability criteria to introduce in public procurement contracts should be decided according to different factors, including existing market capability. However, market capability against sustainability standards can increase over the course of a contract. To ensure that contracted suppliers keep progressing against sustainability standards, you can include clear continuous improvement standards in contract clauses. This can include, for example, establishing progressive CO2 minimisation targets throughout the duration of the contract, or progressive fuel saving standards.

Including these clauses can be crucial for ensuring good quality and value for money throughout the lifecycle of a contract. It can also be useful to establish continuous improvement as a condition of contract extension or re-procurement. Finally, you can consider introducing additional financial incentives to reward this behavior.