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Updated: 3 hours ago Ask ACE

Ask ACE: Do we need to update vendor contracts when committing to supply chain sustainability?

Q: We plan to feature our supply-chain sustainability commitments in marketing. Do we need to update our vendor contracts?

ACE advises: As more companies embrace sustainability, their commitments increasingly extend beyond internal operations and into their supply chains. This shift has legal consequences — particularly in how supplier contracts are negotiated, drafted, and enforce

Businesses are beginning to tie environmental, social and governance (ESG) standards directly into vendor agreements. These may include requirements around carbon emissions reporting, or use of recycled or ethically sourced materials. or labor practices. While these clauses reflect genuine sustainability goals, they must also be clearly defined and legally enforceable.

Vague language such as “sustainable sourcing” or “eco-friendly operations” can create confusion or lead to disputes. Instead, contracts should include specific, measurable benchmarks — such as compliance with ISO 14001 environmental standards or adherence to defined emissions thresholds.

Companies should also consider including audit rights, reporting obligations, and remediation timelines. For instance, a contract might require quarterly sustainability disclosures or allow for third-party verification. In some industries, failure to meet ESG terms may trigger penalties or even termination of the agreement.

However, businesses must be careful not to overpromise or impose standards they don’t Clauses that look impressive on paper but go unmonitored can expose a company to accusations of greenwashing.

In short, as sustainability becomes a competitive imperative, supplier contracts are becoming strategic legal tools. Aligning these agreements with your environmental values — while ensuring legal clarity and enforceability — is key to minimizing risk and maintaining credibility.

Carrie Green Yardley, founder of Yardley Esq. PLLC, is an ACE board member, contributing writer to Mainebiz, and member of the ClimateWork Maine Sustainability Council. Her firm represents small business clients from formation through succession. Carrie can be reached at carrie@yardleyesq.com

About ACE

The Association for Consulting Expertise (ACE) is a nonprofit association of independent consultants who value “success through collaboration.” The public is welcome to attend its regular meetings to share best practices and engage with industry experts. For more information go to www.consultexpertise.com.

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