The US Government has taken historic action to address greenhouse gas emissions and protect its supply chains from climate-related financial risks.

Companies around the world are set to be impacted by the US Government’s proposed Federal Supplier Climate Risks and Resilience Rule, which requires major federal government contractors to publicly disclose their greenhouse gas emissions and climate-related financial risks and set science-based emissions reduction targets.

Through this action, the United States would become the first national government to strengthen its supply chain by requiring major suppliers to set Paris Agreement-aligned emissions reduction goals.

The inclusion of Scope 3 emissions reporting means organisations supplying goods or services to a major contractor will need to provide emissions data of their own.

The US Federal Government is “the world’s single largest buyer of goods and services—purchasing over $630 billion in the last fiscal year alone”, according to the Office of the Chief Federal Sustainability Officer.

Therefore, the US Government faces significant financial risks from climate change. Supply chain disruptions over the past year have impacted every sector, including the Federal Government and its critical contractors and subcontractors. The new Federal Supplier Climate Risks and Resilience Rule would strengthen the resilience of vulnerable Federal supply chains, resulting in greater efficiencies and reduced climate risk.

Under the proposed Federal Supplier Climate Risks and Resilience Rule, ‘major’ Federal contractors receiving more than $50 million in annual contracts would be required to publicly disclose Scope 1, Scope 2, and relevant categories of Scope 3 emissions, disclose climate-related financial risks, and set science-based emissions reduction targets.

Additionally, ‘significant’ Federal contractors with more than $7.5 million in annual contracts but less than $50 million would be required to report Scope 1 and Scope 2 emissions. Federal contractors with less than $7.5 million in annual contracts would be exempt from the Federal Supplier Climate Risks and Resilience Proposed Rule.

The 60-day public comment period for the proposed rule is scheduled to close on 13 January  2023.

For more information go here.