What happens if sustainability commitments are not met?
Depending on how sustainability-related content is defined in the contract (for example, whether there are obligations or only expectations, whether the obligations relate to processes or outcomes, and whether the content forms part of the binding contract), a failure to comply may or may not be treated as a breach of contract.
Typical remedies for breach of contract include:
- Repair
- New delivery
- Price reduction
- Damages
- Contract termination (in cases of fundamental breach)
In relation to sustainability, contracts may also provide for different kinds of compliance, corrective, and enforcement mechanisms, such as:
- prevention action plans (in the case of a potential adverse impact)
- corrective action plans (in the case of an actual adverse impact)
- suspension of payments until appropriate remedial action has been taken
- refusal to accept non-conforming goods in accordance with the contract and applicable law
If a contract includes sustainability obligations and they are not fulfilled, there might be consequences.