The U.S. Federal Government just proposed a new rule that would drive greater disclosure of climate change information in the Federal Government’s supply chain. The proposed regulation, entitled the Federal Acquisition Regulation: Public Disclosure of Greenhouse Gas Emissions and Reduction Goals Representation, would require those who provide products or services to the Federal Government to report whether and where they publicly disclose information concerning their greenhouse gas emissions and emission reductions goals. The requirements would apply to all vendors who received $7.5 million or more in Federal contract awards in the preceding fiscal year, while reporting would be voluntary for all other vendors. The rule leverages the Federal Government’s purchasing power (including a $400 billion per year supply chain) and seeks to:
- assess supplier GHG management practices;
- identify opportunities to reduce supply chain emissions;
- develop and implement procurements that incorporate consideration of those emissions; and
- assist agencies in developing strategies to engage with contractors to reduce supply chain emissions as directed in O. 13693, Planning for Federal Sustainability in the Next Decade.
In addition to these requirements, the administration is also considering ways to enable agencies to assess and reduce climate change-related risks in their supply chains, real property investments and capital equipment purchases (in furtherance of E.O. 13653, Preparing the United States for the Impacts of Climate Change). Approaches could include similar requirements that vendors report whether they assess and disclose climate change-related risks, such as the physical risks and impacts of extreme weather events.
According to a Bloomberg article, “a range of companies that do business with the U.S. could be affected” by the proposed regulation, including aircraft manufacturers, ship makers, weapons suppliers and even oil companies such as Royal Dutch Shell Plc, Valero Energy Corp. and Exxon Mobil Corp., who are “among the top fuel suppliers to the Pentagon”.
The administration’s proposal, subject to public comment through July 25, complements the already growing demand for better emissions and climate-related risk data from shareholders, investors and industry associations and would ensure such data would be available government-wide.