ESG stands for Environmental, Social, and Governance. ESG in commercial contracts under Dutch law (but also abroad), ESG refers to the principles and practices related to sustainability, social responsibility, and ethical governance that companies agree to follow in their business relationships. ESG clauses in contracts can include provisions related to reporting, disclosure, and implementation of ESG-related actions.
These clauses can help to ensure that companies are held accountable for their impact on the environment and society, and can also help to promote more sustainable and responsible business practices. Our attorney in the Netherlands shall explain the most important aspects. Our team also advises on suspension payment under Dutch law.
How Can Businesses Stay Ahead in ESG Compliance and Strategy?
Why Does ESG Matter More and More in Business Today?
Environmental, Social, and Governance (ESG) criteria have moved from the periphery to the core of business strategies. Investor expectations, consumer demands, and evolving regulations are fueling this shift. At MAAK Advocaten, we assist a broad range of clients, from startups to global corporations, across all sectors in working through the complex web of ESG-related legal issues and ESG in commercial contracts under Dutch law. These include but are not limited to ESG due diligence, risk assessments, and sustainable energy solutions. We regularly assist clients with early termination commercial agreements under Dutch law.
What does an ESG clause look like?
Here is a template for ESG contract clauses that can be used as a starting point for drafting ESG clauses in commercial contracts governed by Dutch law:
- ESG principles. Parties wish to shape their business relationship in a way that takes into account the interests of the environment and the people affected by their business relationship, with the aim to optimize positive impact and minimize negative impact. To do so, Parties shall (i) comply with the provisions of this clause (ESG), (ii) comply with applicable laws and regulations, (iii) comply with their respective codes of conduct, and (iv) to the extent not provided for by items (i) through (iii), use reasonable efforts to do all such things that may be reasonably required to mitigate actual and potential negative environmental and social impact through their business relationship.
- Governance. Each Party shall designate one or more persons who will serve as their contact points for ESG-related aspects of this agreement. These contact persons must (i) attend to the execution of this clause (ESG), (ii) be reasonably knowledgeable on the ESG topics that are material to this agreement, (iii) have regular meetings with each other, at least once per month, and (iv) be in close contact with colleagues who execute this agreement at an operational level, to obtain relevant ESG-related information and to procure implementation of ESG-related actions.
- Reporting. Parties acknowledge that laws and regulations may require them to disclose ESG-related aspects of their businesses, including this agreement. To this effect, each Party shall provide to the other Party within reasonable time all information reasonably requested by the other Party in relation to the ESG-related aspects of this agreement, in such a format and level of detail that the requesting Party can use the information to comply with its disclosure obligations. The requesting Party shall not use the information for any other purpose and shall limit the storage of the information to the minimum requirements of the relevant laws and regulations.
- Due diligence. Parties shall use reasonable efforts to identify and assess actual and potential negative environmental and social impact of their business relationship, and to take appropriate measures to mitigate such impact. Parties shall also use reasonable efforts to identify and assess actual and potential negative impact of their business relationship on human rights, and to take appropriate measures to prevent or mitigate such impact.
- Enforcement. If a Party does not comply with its obligations after having been given a reasonable opportunity by the other Party to correct any non-compliance, (i) it shall be liable for all losses incurred by the other Party as a result of that non-compliance, including any indirect or consequential damages resulting from the other Party not being able to comply with its reporting or due diligence obligations under laws and regulations, and (ii) the other Party may terminate this agreement with immediate effect and without any compensation (other than payment of any amounts outstanding at the moment of termination).
It is important to note that the specific provisions of ESG contract clauses under Dutch law may vary depending on the nature of the business relationship and the ESG risks and opportunities associated with it. Therefore, it is recommended to consult a legal expert to adapt ESG contract clauses to the specific needs of the parties involved.
Why Does Multidisciplinary Expertise Matter in ESG Matters?
In today’s interconnected world, ESG concerns run through every part of a business. That’s why our dedicated ESG practice combines insights from diverse legal disciplines. Unlike one-trick ponies, we bring together experts specialized in various areas related to ESG compliance, risk, and strategy. This rich mix of insights ensures an all-round approach to solving your ESG dilemmas.
How Does Sector-Specific Knowledge Add Value?
While ESG norms are universally applicable, their impact varies across sectors. MAAK Advocaten has an impressive track record advising clients across multiple industries on a wide range of sustainability issues affecting their current and future strategies. Our deep sector knowledge lets us anticipate changes in ESG regulation and offer fresh solutions suited to your business needs.
How Do We Stay Up to Date in the Constantly Changing Field of ESG?
The fast-changing nature of ESG regulations makes it essential to stay up to date. To that end, we invest significantly in continuous education. MAAK Advocaten’s in-depth ESG educational programs equip our team with the up-to-date knowledge needed to keep you ahead of regulatory changes.
How Do We Share ESG Knowledge with Our Clients?
Knowledge is most effective when shared. MAAK Advocaten offers tailor-made ESG training to keep our clients abreast of legal changes. Our thought leadership in ESG is also reflected in a range of publications aimed at demystifying this complex subject for businesses.
Why Choose MAAK Advocaten for Your ESG Needs?
As Dutch specialist attorneys in the field, we offer outstanding expertise and fresh solutions. Whether it’s guiding you through ESG due diligence, helping you meet legal compliance, or building future-proof strategies, MAAK Advocaten is your partner in working through the complex world of ESG.
If you have any questions or require legal assistance, please don’t hesitate to reach out to our knowledgeable and dedicated team at MAAK Advocaten, our specialized Dutch law firm.
