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DWT Monthly CLE Series

DWT Monthly CLE Series. Greening the Supply Chain January 11, 2012 Haeryung Shin and Stephen Ellis. Why are we here?. Pop Quiz.

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DWT Monthly CLE Series

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  1. DWT Monthly CLE Series Greening the Supply Chain January 11, 2012 Haeryung Shin and Stephen Ellis

  2. Why are we here?

  3. Pop Quiz At __________, we know that being an efficient and profitable business and being a good steward of the environment are goals that can work together. Our broad environmental goals are simple and straightforward: • To be supplied 100 percent by renewable energy; • To create zero waste; • To sell products that sustain people and the environment. • REI • Dell • Amazon • Exxon Mobil • Walmart • Proctor & Gamble • REI • Dell • Amazon • Exxon Mobil • Walmart • Proctor & Gamble

  4. Trends 2011 Number of publicly traded U.S. companieswith a chief sustainability officer 29 2004 Number of publicly traded U.S. companieswith a chief sustainability officer 1 “[W]e estimate that half of all shareholder resolutions in 2011 will center on social and environmental issues.” Ernst & Young

  5. How’s Walmart Doing? • To be supplied 100 percent by renewable energy 65% improvement in truck fleet efficiency Installed LED lighting in 350 store parking lots in Central America Pledge to remove 20 million metric tons of GHGs from supply chain by 2015

  6. Walmart from 2005 to 2010: • To create zero waste Eliminated > 80% of landfill waste from operations in California Reduced 47.95 million pounds of plastic bag waste globally

  7. Walmart from 2005 to 2010: • To sell products that sustain people and the environment: Pledge to sell $1 billion of food sourced from 1 million small- to medium-sized farms To train 1 million farmers in sustainable techniques

  8. Can I Ignore this?

  9. ANSWER:

  10. Integrated Manufacturing Model

  11. Supply Chain Management Model

  12. Common Fact Pattern Acme uses two principal suppliers: Buster, a US company and Chen, a Chinese OEM Chen supplies 90% of the Widgets. Acme then assembles the Widgets in the U.S. by combining one or two critical components supplied by Buster with Chen’s output. Buster Widget Acme makes Widgets … Chen … which it sells to Big Boxretailer.

  13. Green Supply Chain Contracts:A Few Practical Legal Provisions

  14. Define Your Terms • Goals of contract are to allocate risk and define obligations. • Clearly define terms such as “Sustainable,” “Green,” and “Recycled.” For example: • To do otherwise is to ensure ambiguity.

  15. Rules of Construction The default rule of contractual construction is that it is construed against the drafting party. Consider providing your own contract construction rule.

  16. Technical Specifications and Performance Standards • OEMs are accustomed to meeting technical specifications. • Use specifications to require finished goods to meet client’s sustainability requirements. • Examples • Require that lead is not be included anywhere within the product or its accessories (power cords, etc.) • Require that finished products to contain stated percentages of recycled materials • Require paperless ordering • Require suppliers to minimize packaging or to use recyclable packing materials • Require supplier to recycle or compost excess or waste material

  17. Improving Sustainability

  18. Language for Sustainability Profile

  19. Inspection and Audit Rights

  20. Relief for Breach – Part 1 • The question of remedies is the most difficult legal issue. • Contract termination is always a possiblity, but is it desirable? • Specific performance may be possible in some jurisdictions. • If a supplier’s breach causes Acme to lose the Big Box contract, there are measurable damages but be careful with usual limitation of liability clauses customarily used in the US.

  21. Relief for Breach – Part 2

  22. Is This Far Fetched? California Transparency in Supply Chains Act of 2010 Funny honey?

  23. General environmental benefit claims Green certifications and seals of approval Degradable Recyclable Made with renewable energy Notes on the FTC Green Guides

  24. When you get back to the office …

  25. Thank you! Stephen C. (Steve) Ellis Partner stephenellis@dwt.com 206.757.8040 direct Haeryung Shin Of Counsel Chair, Clean Technology Group haeryungshin@dwt.com 206.757.8144 direct

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