Supply Chain Contracts are obligations that suppliers have to their customers and are usually enforced by the customer.
Modifying supply chain contracts to meet climate goals is an important part of Private Climate Governance. Companies can engage their supply chain in many ways to promote climate friendliness. This can include reporting, mitigation, or sourcing requirements. Third-party certification systems like the Forest Stewardship Council and FairTrade International enforce sourcing standards on certified companies, so those that want to be certified are incentivized to have certain provisions in their supply chain contracts.
Supply chain contracting allows corporations to leverage their size and international reach. This enables private companies to enforce higher environmental standards than local law mandates, meaning suppliers in places with relatively lax environmental rules are held to a standard that is consistent with more stringent climate change mitigation. Supply chain contracting can have cascading benefits that extend far beyond what the company themselves can accomplish.
