Biden Unveils Rule Obligating Federal Suppliers to Disclose Emissions and Establishes Climate Object

The Biden administration revealed its new proposed Federal Supplier Climate Risks and Resilience Rule, which would require federal government suppliers to publish emissions and climate-related financial risk data, as well as to establish science-based emission reduction goals.

The new initiative is part of the administration's Federal Sustainability Plan, which was introduced by President Biden in December and outlines a series of goals and initiatives for the U.S. federal government to achieve net zero emissions by 2050, including a goal to reduce emissions from federal procurement to net zero by that date.

The U.S. government is the greatest purchaser of goods and services in the world, with $630 billion in purchases last year. According to a White House statement introducing the new plans, the supply chain is a significant contributor to the federal government's carbon footprint, accounting for more than twice as much emissions as the government's 300,000 buildings and 600,000 cars combined.

The White House asserted that the regulations "would increase the resilience of fragile Federal supply chains, resulting in higher efficiencies and decreased climate risk," citing the impact supply chain interruptions had on the government and its contractors over the last year.

All federal contractors with annual contracts exceeding $7.5 million would be required to report Scope 1 and 2 emissions, or those under their direct control, while contractors with annual contracts exceeding $50 million would also be required to disclose relevant categories of Scope 3 emissions, or those occurring across their value chains, as well as climate-related financial risks. The contractors with contracts exceeding $50 million would also be obliged to provide science-based carbon reduction goals.

According to the White House, the proposals would leverage disclosure and target-setting standards and systems already in use by many suppliers, such as the CDP environmental reporting system, the Task Force on Climate-Related Financial Disclosures (TCFD) Recommendations, and the Science Based Targets Initiative (SBTi) criteria.

CDP North America Head of Corporations and Supply Chains, Simon Fischweicher, commented on the administration's decision as follows:

"Like any significant enterprise, the U.S. government requires high-quality information from its suppliers in order to fully comprehend its environmental impact. The Federal Supplier Climate Risks and Resilience Rule will follow the paradigm that CDP pioneered in its sustainable supply chain work, showcasing the power of procurement by requiring federal suppliers to publish key environmental data and set aggressive decarbonization goals.