White House Would Require Supply Contractors to Disclose Climate Risks

Proposed rule seeks to measure vendors' greenhouse gas emissions.

The Obama administration’s procurement chief has teamed up with White House environmental officers on a proposal to require more reporting on climate risks from agency supply-chain contractors.

In a blog post highlighting a proposed rule published May 25 by the Federal Acquisition Regulatory Council, three officials said the idea is to “drive greater disclosure in the federal government’s supply chain to indicate if and where contractors and vendors publicly disclose greenhouse gas emissions, greenhouse gas reduction goals or targets, and climate-related risks—such as physical risks to operations associated with extreme weather events.”

Citing the more than $400 billion agencies spend on supplies annually, the officials said, “The idiom that ‘you don’t manage what you don’t measure’ holds when it comes to greenhouse gas emissions and climate-related risk.” 

By understanding the disclosures from larger contractors and vendors that sell goods and services to the government, “we’ll be able to better assess supplier greenhouse gas management practices, manage direct and indirect greenhouse gas emission, address climate-risk in the federal government’s supply chain, and engage with contractors to reduce supply chain emissions,” wrote Anne Rung, U.S. chief acquisition officer; Ali Zaidi, associate director for natural resources, energy, and science at the Office of Management and Budget; and Christine Harada, the federal chief sustainability officer at the Council on Environmental Quality.

As examples, they referenced the Navy Department’s request this April that its 100 largest suppliers disclose their greenhouse gas emissions and strategies for cutting them, as well as the General Services Administration’s move in 2014 to factor in “greenhouse gas intensity (paired with estimated damages from those emissions) to make multi-million-dollar contract awards for domestic delivery services for both air and ground shipments.” 

Demands for such disclosure have been heard from investors, insurers and the international advisory body called the Financial Stability Board, the White House officials said. “Today’s announcement sends another clear market signal that there is strong interest for disclosure of greenhouse gas emissions and climate-related risk data governmentwide,” they wrote.