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Life-Cycle Based Climate Regulation Through Supply Chain Contracts

21 Pages Posted: 26 May 2017  

Katerina Peterkova Mitkidis

Aarhus University, Department of Law, INTRAlaw centre

Date Written: May 26, 2017

Abstract

Environmental action is a necessary component of any corporate sustainability efforts. While companies address many environmental issues, climate change belongs to the most pressing ones for them. Companies report on their scope 1 and 2 emissions, set ambitious reduction goals and adopt policies how to achieve those goals. However, reporting on scope 3 emissions, being methodologically demanding, is still in its infancy, despite the fact that in most industries scope 3 emissions and namely emissions from upstream supply chains represent the largest portion of companies’ emissions. An urgent question thus arises what can we do to reduce emissions in global supply chains without having a clear knowledge on their distribution among the supply chain tiers.

The paper proposes that commercial contracting can be a viable tool. It provides a brief theoretical account for, some empirical evidence and simple numerical models all pointing towards the fact that there is a large potential for emissions reduction by using supply chain contracts, but that this potential is for now only latent due to, among others, the prevailing vagueness in the contractual language and a lack of regulatory drivers to that end. The paper concludes with a discussion on that this big but dormant potential of commercial contracting could be triggered through policy, law and amended contract drafting style.

Suggested Citation

Mitkidis, Katerina Peterkova, Life-Cycle Based Climate Regulation Through Supply Chain Contracts (May 26, 2017). University of Oslo Faculty of Law Research Paper No. 2017-21. Available at SSRN: https://ssrn.com/abstract=2975292 or http://dx.doi.org/10.2139/ssrn.2975292

Katerina Peterkova Mitkidis (Contact Author)

Aarhus University, Department of Law, INTRAlaw centre ( email )

Nordre Ringgade 1
Aarhus C, DK-8000
Denmark

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