Global supply chains harbor major climate-related risks and impacts. Purchasers face complex challenges tracking these risks and impacts, and reducing suppliers emissions.
The US federal government — the world’s biggest buyer — is no exception.
The Biden-Harris Administration has taken a critical step, announcing during COP27 a new Federal Suppliers Climate Risks and Resilience Rule (Rule). This will provide the Federal Government with the data it needs to protect its supply chains, while harnessing its $630 billion purchasing power to decarbonize major parts of the global economy and reach net-zero procurement by 2050.
Who does the Rule apply to?
- Significant Federal contractors, defined as those receiving between $7.5 million USD and $50 million USD
- Major Federal contractors, defined as those receiving above $50 million USD in annual contracts
The Rule does not apply to contractors with under $7.5 million USD in annual contracts.
What does the Rule involve?
Major Federal contractors will need to:
- Publicly disclose Scope 1 and Scope 2 GHG emissions through CDP in line with the GHG Protocol;
- Publicly disclose Scope 3 GHG emissions through CDP, in line with the GHG Protocol’s guidance on relevant Scope 3 categories;
- Scope 3 emissions are emissions from sources that aren’t owned or controlled by the reporting entity, but are a consequence of operations of that, including supply chain emissions;
- Publicly disclose climate-related financial risks through CDP in line with the Task Force on Climate-Related Financial Disclosures (TCFD);
- Set science-based emissions reduction targets through the Science Based Targets initiative (SBTi).
- Targets will need to be in line with limiting global warming to 1.5°C (the minimum target ambition that the SBTi now accepts, as of July 2022), and will need to cover Scope 3 emissions if these emissions form more than 40% of the organization’s total emissions.
Is the Rule now law?
The Rule is currently proposed, and there’s a 60-day public comment period ending January 13th, 2023.
Benefits of the Rule for Federal suppliers
Federal suppliers who start disclosing and target-setting will unlock a range of benefits, from stakeholder trust to efficiencies, and from regulatory compliance to commercial opportunities, while contributing to accelerating the transition to a net-zero economy.
How to prepare
Start measuring your Scope 1, Scope 2 and Scope 3 emissions, as the fundamental first step for carbon disclosure and science-based target setting.
Need help? CarbonChain can take care of your most complex carbon accounting needs, filling critical data gaps in your GHG emissions inventory, such as:
- Commodity supply chain emissions from end-to-end (mine to port and beyond)
- Individual asset emissions in metals, mining and energy
- Supplier emissions and supplier screening to find lower-carbon options
- Logistics emissions
CarbonChain is a CDP silver software accredited solutions provider and our carbon accounting methodology is third-party verified and validated as aligned with the GHG Protocol.
Get in touch today to book a demo and get a sample report for your needs.