ESG clauses in contracts: how to draft them under Dutch law

An ESG clause is a contract term that binds your counterparty to environmental, social and governance standards and gives you a remedy if those standards are not met. Dutch law has no separate statute for ESG clauses, so their force comes from ordinary contract law in Book 6 of the Dutch Civil Code (Burgerlijk Wetboek, BW); the main exception is a clause that only states an aspiration, such as a promise to “promote sustainability”, which gives you almost nothing to enforce.

A clause that states a defined obligation, an evidence requirement and a consequence for breach is as enforceable as a delivery term. Since Omnibus I (Directive (EU) 2026/470), far fewer companies must report or carry out due diligence, but the rules on misleading environmental claims still apply to every business.

Below we explain what makes an ESG or sustainability clause binding under Dutch law, which regulatory duties it supports, how to build obligation, evidence and remedy, and where these clauses go wrong. For the general framework, see our guide to Dutch business law and our notes on navigating Dutch contract law.

Why do ESG clauses now carry legal weight?

Because three regulatory strands meet in your contracts: sustainability reporting, due diligence and the rules on environmental claims. Knowing which of them applies to you tells you how far your clauses need to reach, and prevents you from imposing on suppliers a duty you do not have yourself.

What changed for sustainability reporting after Omnibus I?

Far fewer companies now have to report. The Corporate Sustainability Reporting Directive (CSRD), as amended by Directive (EU) 2026/470 (approved by the Council in February 2026), now applies only to undertakings with more than 1,000 employees on average and a net turnover above EUR 450 million, with separate rules for non-EU groups. Member States must transpose the CSRD amendments by 19 March 2027.

Companies in scope still need data from their value chain, and companies outside scope are asked for that data by customers who are in scope. Omnibus I limits how far a reporting company may push requests down to smaller counterparties: no further than the voluntary reporting standard covers. That makes proportionality in your clauses a legal point. See our overview of ESG regulation and what Dutch companies should prepare for.

What is left of due diligence after Omnibus I?

The Corporate Sustainability Due Diligence Directive (CSDDD) survives in a much smaller form: it applies only to the largest companies, and the harmonised European civil liability regime has been removed. Member States must set a maximum fine of 3% of net worldwide turnover, transpose by 26 July 2028 and apply the obligations from 26 July 2029.

Liability is therefore a matter of national law; in the Netherlands, the ordinary rules on tort and contract. Our article on the Corporate Sustainability Due Diligence Directive sets out the position. The Child Labour Due Diligence Act (Wet zorgplicht kinderarbeid) was adopted in 2019 but has never been brought into force by royal decree, so a clause should not cite it as the source of a duty. If you want supply-chain diligence, create the duty in the contract.

Why do the rules on greenwashing matter for your contracts?

Because they apply regardless of size, and your contracts must produce the evidence behind your claims. Under the rules on unfair commercial practices in Articles 6:193a and following BW, a sustainability claim you cannot substantiate is a misleading practice.

The Netherlands Authority for Consumers and Markets (Autoriteit Consument & Markt, ACM) has published guidance on sustainability claims and has acted against companies whose messaging went further than their evidence. EU legislation now blacklists generic environmental claims and claims based on offsetting. If your marketing says a product line is climate neutral, your supplier contracts must generate the evidence; see our article on greenwashing and ESG compliance risks.

What makes an ESG clause enforceable under Dutch law?

Three things: the right type of obligation, a determinable standard and wording that will be read the way you intend. Dutch contract law starts from freedom of contract, so an ESG obligation is as valid as any other term.

Is it an obligation of result or of best efforts?

This decides who has to prove what. Dutch law distinguishes an obligation to achieve a defined result (resultaatsverbintenis) from an obligation to make a defined effort (inspanningsverbintenis).

If your supplier undertakes to cut the carbon intensity of its goods by a stated figure by a stated date and misses it, that is a breach, and the supplier must show why it should not bear the consequences (Article 6:74 BW). If it only promises “reasonable efforts”, you must prove its efforts were unreasonable, which is very difficult.

Compliance with the law, the absence of child and forced labour, a valid permit and delivery of agreed information are obligations of result; draft them as such. Long-term decarbonisation that depends on third parties is often realistically an obligation of effort. Then specify the effort: a plan, a budget, a named responsible person, a reporting rhythm and external verification.

Is the obligation determinable?

It must be, or a court has nothing to order (Article 6:227 BW). A clause that requires a party to “act sustainably” gives a court nothing concrete to enforce.

Determinability comes from a defined standard, a defined measurement and a defined moment. Referring to an external standard solves most of this, if you name the version and say what happens when it is revised. Your own supplier code of conduct only works if it is attached, identified by version and expressly incorporated; a code on a website you can change on your own is a weak foundation.

How will a Dutch court read the clause?

Not by its wording alone. Under the Haviltex standard (Supreme Court, 13 March 1981, ECLI:NL:HR:1981:AG4158), Dutch courts ask what the parties could reasonably infer from each other and expect, taking into account the negotiations, the nature of the parties and the commercial context.

In a negotiated contract between professional parties, the wording carries considerable weight. ESG clauses often sit in general terms imposed on a smaller supplier, and there vague obligations tend to be read against the drafter. Under Article 6:248 BW, reasonableness and fairness can both add to the contract and set aside a term. In general terms and conditions, the rules on unreasonably onerous clauses and the duty to make the terms available (Articles 6:233 and 6:234 BW) apply. Our guides to drafting Dutch agreements and to general terms and conditions cover the mechanics.

How do you build a workable ESG clause?

As a short chain of six provisions, each doing one job. Leaving out a link is what turns the clause into decoration.

• The standard. Named legislation, a named external standard with its version, and the code of conduct attached as an annex.
• The representation and undertaking. The position at signing, a continuing obligation to maintain it, and a duty to tell you promptly if it stops being true.
• The flow-down. An obligation to impose materially the same terms on subcontractors and suppliers, and to enforce them.
• The information duty. What data, in what format, by when and with what assurance, expressly usable in your own reporting.
• The verification right. Audit rights: who, how often, on what notice, at whose cost, and what happens if the counterparty refuses.
• The consequence. A graduated remedy: notice, cure period, corrective plan, price adjustment or penalty, suspension and, finally, termination.

Proportionality runs through all six links. An unlimited audit right over a small supplier will meet resistance and, if enforced, be tested against Article 6:248 BW. Scale the obligations to the risk, value and size of the counterparty. Our overview of types of commercial agreements shows where these provisions sit, and our contract advisory practice deals with the negotiation.

Why do information rights deserve particular care?

Because the information clause creates most value and most friction. First, say what the data will be used for, including disclosure in your own reporting and to your auditor. Second, deal with confidentiality and, for supply-chain audits touching working conditions, the legal basis under the GDPR (Article 6 GDPR). Third, set the assurance level: a self-declaration, a management certification and third-party verification differ greatly in reliability and cost.

What should you require on E, S and G?

Start with the obligations the law already imposes, because those are objective and easy to check. Add targets and reporting duties only where you can measure them.

Which environmental obligations work best?

The most useful one is compliance with the environmental legislation that applies to the counterparty, brought together in the Environment and Planning Act (Omgevingswet) since 1 January 2024. Combine it with a duty to hold the required permits and to notify you of any enforcement action or revocation; that gives you a clean exit when a supplier loses its permit.

Beyond compliance, use requirements you can check: a stated measurement method and scope for emissions data, a reporting frequency, disclosure of offsetting rather than actual reduction and, where relevant, take-back or recycling duties under producer responsibility rules. See our article on circular economy legal hurdles and our environmental law practice.

Which social obligations should you include?

Follow the lines Dutch statute already draws. Under the chain liability rules of Article 7:616a BW, a principal can be liable for the wages of workers further down the chain, so requiring wage compliance with information rights to check it protects you as well as the workers. Health and safety follow the Working Conditions Act (Arbeidsomstandighedenwet).

For agency labour, the Act on the admission of labour providers (Wtta) enters into force on 1 January 2027, with enforcement from 1 January 2028; from then on, a hirer using an agency without admission can be fined. Contracts running past that date should require the agency to hold admission.

Draft prohibitions on child labour, forced labour and discrimination as absolute obligations of result, with an immediate duty to notify and a right to terminate. For workers posted to the Netherlands, make compliance with the notification and terms-of-employment rules of the WagwEU a contractual warranty. Our pages on Dutch employment law and labour conditions set out the underlying duties.

Which governance obligations have a legal anchor?

Governance has the clearest anchors. Bribery of public officials is a criminal offence under the Dutch Criminal Code (Wetboek van Strafrecht, Sr), and so is private-sector bribery under Article 328ter Sr. The Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft) applies to a defined group of institutions, and under the Whistleblowers Protection Act (Wet bescherming klokkenluiders) employers with 50 or more workers must operate an internal reporting channel.

Sanctions and export controls deserve their own clause, because a breach has consequences no indemnity can repair. The Dutch Corporate Governance Code binds listed companies on a comply-or-explain basis; referring to it in a contract with a listed group is meaningful. See our guides to the Dutch Corporate Governance Code, the corporate governance framework and types of legal compliance.

What happens when a party breaches an ESG clause?

That depends on the remedy you built in. Dutch law offers four instruments: damages, a contractual penalty, suspension and termination, and the contract should say which applies to which failure.

Damages or a contractual penalty?

Under Article 6:74 BW you can claim damages for loss caused by a failure to perform, but ESG loss is hard to quantify: what is the euro value of late emissions data? A penalty clause under Article 6:91 BW fixes the consequence in advance and removes the need to prove loss.

The penalty replaces damages unless the contract says otherwise (Article 6:92 BW), and a court may reduce it under Article 6:94 BW where full application would be clearly unacceptable. A penalty that bears a defensible relation to the seriousness of the breach protects the clause.

When can you suspend or terminate?

When the counterparty fails to perform, Article 6:262 BW lets you suspend your own obligations, for example payment or acceptance of new orders. It is faster than litigation; the contract should state which obligations count as reciprocal.

Under Article 6:265 BW you can terminate the contract for a failure to perform, unless the failure is too minor to justify it. The right usually arises only once the counterparty is in default after a written notice giving a reasonable period to remedy (Article 6:82 BW). That is why a cure mechanism belongs in the clause. List serious breaches, such as forced labour or a criminal conviction, as grounds for immediate termination where performance can no longer be remedied.

Why design the escalation, not just the exit?

Because terminating a supplier with a child labour problem removes it from your contract but not from the world, and regulators expect engagement before exit. A defensible escalation runs from notification, through a dated corrective plan with verification, to a price adjustment or penalty, suspension of new orders, and only then termination. Keep a record of each step.

Add an indemnity for fines, third-party claims and remediation costs arising from the counterparty’s ESG failure, and a survival clause that keeps information, audit and confidentiality duties alive after termination. Our contract protection checklist and contract law overview are useful references.

Can you still be liable outside the contract?

Yes. An ESG clause allocates risk between the parties, but it does not shield either of them from liability towards third parties under the general tort provision of Article 6:162 BW and the unwritten duty of care Dutch courts apply to the environmental and human rights consequences of corporate conduct.

The best-known example is the climate case against Shell. The Court of Appeal in The Hague set aside the 2021 reduction order on 12 November 2024 (ECLI:NL:GHDHA:2024:2099), but accepted that a company owes a duty of care in relation to dangerous climate change. Cassation proceedings are pending before the Supreme Court, which held its hearing on 22 May 2026. Our articles on how Dutch courts are shaping corporate responsibility and on Dutch climate litigation follow that development.

The Dutch collective action regime (Article 3:305a BW) gives interest groups a route to court that does not depend on any contract, so ESG risk cannot be fully contracted away. Directors can also be held personally liable where their conduct amounts to serious personal blame. See our article on when directors become personally liable and our corporate law guide.

Does a foreign choice of law help in cross-border contracts?

Only for the private-law side. Dutch environmental permits, health and safety rules, wage legislation and criminal prohibitions apply to activity carried out in the Netherlands, whatever the contract says; a choice of law under the Rome I Regulation affects only interpretation, remedies and limitation periods.

In a cross-border supply chain, align the ESG article with the standard that applies where the work is performed, and state that the stricter standard must be met. In public contracts, tender conditions add a further layer; our public procurement guide covers sustainability criteria in tenders.

Where do ESG clauses go wrong?

Five patterns recur, and each has a straightforward fix.

• The clause imposes a duty you do not have. A company outside CSRD scope demands reporting-grade data because its template says so. Start from your own obligations under Directive 2026/470 and work outwards.
• The standard is a moving target. The clause refers to a website code you can change at will. Attach the version and provide a change mechanism with notice and a right to object.
• There is no measurement. A reduction without baseline year, scope or calculation method turns every dispute into arithmetic. Fix the method in the contract.
• The remedy is all or nothing. If termination is the only consequence, nothing happens, because no one terminates a critical supplier over a late report. Graduate the remedies.
• The public claim goes further than the contract. Marketing promises what procurement never required, which is the classic exposure under Article 6:193c BW. Align the two.

How do you update existing contracts?

Use the review or change-of-law clause; Omnibus I is exactly such a change. Without such a clause, the renewal date is the moment to act. Do not add ESG obligations by unilateral notice under a general terms clause: against a smaller supplier, that invites a challenge under Article 6:233 BW.

Should you link money to performance?

Yes, where you can: the most effective ESG clauses touch the invoice. Sustainability-linked pricing, with a discount or bonus based on verified performance, changes incentives more reliably than a penalty nobody wants to invoke; the same logic drives sustainability-linked loans. Both need an agreed measurement method and verifier fixed before the first measurement.

An example to illustrate: a Dutch distributor buys packaging from a mid-sized supplier. The contract sets a recycled-content percentage per product line, measured each year by a named external verifier using a fixed method. If the target is met, next year’s price includes a small bonus; if it is missed, the supplier must submit a corrective plan within 30 days, and a price reduction applies only if the plan is not delivered.

What should you check as the customer imposing ESG terms?

Start from your own duties and make sure every obligation can be measured and enforced. Check:

• whether you are in scope of the amended CSRD or CSDDD, and which supplier data you therefore actually need;
• whether each obligation is drafted as a result or as a specified effort, with a named standard and version;
• whether the information clause allows use of the data in your own reporting and covers GDPR and confidentiality;
• whether your public sustainability claims are backed by evidence your contracts let you demand;
• whether the remedy ladder (notice, cure, penalty, suspension, termination) works with a supplier you cannot easily replace.

What should you check as the supplier asked to accept ESG terms?

Accept only what you can deliver and prove. Check:

• whether the requested data goes beyond the voluntary reporting standard that Omnibus I sets as the limit for smaller companies;
• whether the code of conduct is attached by version, and whether changes need your consent;
• who pays for audits, how often they may take place and on what notice;
• whether penalties are proportionate and capped, given the court’s power to reduce them under Article 6:94 BW;
• whether the flow-down duty to your own suppliers is realistic for your supply chain;
• whether the terms were made available to you before signing (Article 6:234 BW) if they sit in general terms.

What can we do for you with ESG clauses?

We draft and negotiate ESG provisions for customers and suppliers in Dutch commercial contracts; see also our corporate lawyer page.

• We map which reporting and due diligence duties apply to you after Omnibus I.
• We draft the six-link ESG chain for your contract templates and supplier code of conduct.
• We review ESG terms a customer asks you to accept and propose proportionate alternatives.
• We check whether your public sustainability claims are supported by your contracts.
• We send the notice of default and conduct the escalation when a counterparty breaches its ESG obligations.

Summary

• An ESG clause is enforceable under ordinary Dutch contract law (Book 6 BW) if it states a defined obligation, a way to prove compliance and a consequence for breach.
• After Omnibus I (Directive (EU) 2026/470), CSRD reporting applies only above 1,000 employees and EUR 450 million net turnover, and the CSDDD applies from 26 July 2029 without a European civil liability regime.
• Draft compliance, labour prohibitions and information duties as obligations of result; specify the effort where you agree best efforts.
• Build a graduated remedy ladder: notice of default, cure period, corrective plan, penalty, suspension (Article 6:262 BW) and termination (Article 6:265 BW).
• Make sure your contracts produce the evidence behind your public sustainability claims.

Frequently asked questions