US will require Federal suppliers to disclose emissions and set science-based targets

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?

Significant Federal contractors will need to publicly disclose Scope 1 and Scope 2 greenhouse gas (GHG) emissions through CDP in line with the GHG Protocol.

Major Federal contractors will need to:

1. Publicly disclose Scope 1 and Scope 2 GHG emissions through CDP in line with the GHG Protocol;
2. Publicly disclose Scope 3 GHG emissions through CDP, in line with the GHG Protocol’s guidance on relevant Scope 3 categories;
3. 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;
4. Publicly disclose climate-related financial risks through CDP in line with the Task Force on Climate-Related Financial Disclosures (TCFD);
5. Set science-based emissions reduction targets through the Science Based Targets initiative (SBTi).
6. 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.

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