The Biden administration Thursday proposed a rule that would require federal contractors to disclose their greenhouse gas emissions and resulting financial risks from these emissions. The Federal Supplier Climate Risks and Resilience Rule would also require contractors to set targets to reduce their emissions.
Last year, the US was the largest purchaser of goods and services in world, spending over $630 billion. Citing the multiple supply chain disruptions since 2020, the Biden administration claims this rule will “strengthen the resilience of vulnerable Federal supply chains, resulting in greater efficiencies and reduced climate risk.”
Only major federal contractors would need to comply with the rule’s greenhouse gas emission disclosure, financial risks and emissions targets requirements. Major federal contractors are defined as those obtaining more than $50 million in annual contracts. “Significant” federal contractors also face requirements. Federal contractors receiving more than $7.5 million but less than $50 million annually from contracts will have to disclose Scope 1 and Scope 2 emissions. Scope 1 emissions are direct greenhouse gas emissions the organization emits, such as from fuel combustion in furnaces. Scope 2 emissions are indirect greenhouse gas emissions, such as those that occur from the electricity the organizations may purchase. These Scope 1 and Scope 2 disclosures will also apply to small businesses with annual contracts over $7.5 million. According to the White House, more than half of all federal contractors currently disclose some form of climate data.
This rule builds on the administration’s Federal Sustainability Plan, which seeks to reduce US greenhouse gas emissions and global temperatures. Public comments are invited on this rule and more information is available at the Federal Register.