Biden Administration Proposes Strategy to Protect Federal Supply Chain from Climate Related Threats

The Biden Administration on Nov. 10 proposed the Federal Supplier Climate Risks and Resilience Rule at the 27th Conference of the Parties to the U.N. Framework Convention on Climate Change (COP 27), which would necessitate key federal contractors to publicly disclose their greenhouse gas emissions and climate related financial risks and establish science centred emission reduction goals.  The proposal will assist in tackling greenhouse gas emissions and shield the federal government from climate linked financial risks.

The proposal supports Biden’s Executive Orders on Climate Related Financial Risk and Catalysing Clean Energy Industries and Jobs Through Federal Sustainability. Supply chain disruptions have been a common theme over the past 12 months, and the impact has been felt across the majority of the sectors, including the federal government and its critical contractors. The new rule would reinforce the resistance of susceptible federal supply chains, resulting in more efficiencies and diminished climate risk.

The proposed resilience rule provides a focused, risk centred approach by focusing predominantly on major federal suppliers. As part of the proposal, the major suppliers, as well as federal contractors who obtain more than $50 million in yearly contracts would be obliged to publicly disclose Scope 1, Scope 2 and applicable groupings of Scope 3 emissions. Moreover, it would be mandatory for them to make known climate linked financial risks and establish science centred emission reduction targets.

The intended rule impacts extensively implemented third party standards and systems that a number of federal contractors currently employ when disclosing their emissions and establishing emission reduction goals. As it stands, more than 50 percent of major federal contractors are disclosing climate related information.

The Federal Acquisition Regulatory Council is issuing the proposed rule and if approved would modify the Federal Acquisition Regulation to account for these changes. The Biden administration seeks public comment on the proposal, in an attempt to get a well-rounded viewpoint from the various stakeholders. Comments are due by Jan. 13, 2023.