The US Biden-Harris Administration is proposing the ‘Federal Supplier Climate Risks and Resilience Rule’, which will require major federal contractors and suppliers to publicly disclose their greenhouse gas emissions, climate-related financial risks, and commit to emission reduction targets approved by the Science-Based Targets Initiative (SBTi).
The move is one of the most significant supply chain rules in US history, given the federal government is the largest purchasing organization in the world. The White House’s new proposed rule is the latest development in the Administration’s sustainability initiatives, following the Federal Buy Clean Initiative, as part of the wider goal to achieve a 50% reduction in greenhouse pollution by 2030.
Since setting its own climate goals, the US government has reduced energy use from its own buildings and vehicles by 32%, saving $11.8 billion annually. This proposed rule will dive deeper into its Scope 3 emissions from suppliers, enabling further reductions in costs and emissions at the same time as increasing resilience.
The proposed rule requires suppliers to use the following four standards: the GHG Protocol Corporate Accounting and Reporting Standards and Guidance, the 2017 Recommendations of the TCFD, the CDP Climate Change Questionnaire, and the SBTi criteria.
Heather Moore, LRQA Technical Director for Sustainability, said:
“The Supplier Climate Risks and Resilience Rule is a significant and positive step forward. It sets a high bar for how companies interact with their suppliers, as focus on reduction opportunities moves toward the more complex Scope 3 emissions from supply chains. This announcement is a strong endorsement of where the future of corporate sustainability is headed. However, to demonstrate real actions in supply chains, I ask for one step further – third-party verification of data to prove targets are met and reductions are achieved.”
As seen across multiple sectors and industries, climate risk is becoming a priority for investors. Investment decisions increasingly rely on transparent and high-quality data from all levels of global supply chain.
In the past, approaches to supply chain due diligence simply involved yearly checks, but as contracts and reputations are at stake, the approach is shifting from a basic compliance to verified data, risk-based monitoring and mitigation programs.
As demonstrated by the Biden-Harris Administration’s announcement, this deeper level of engagement is the new norm and companies must build capacity in the supply chain for more responsible practices. Verified targets and data are critical, and LRQA – as a CDP verification partner – looks forward to supporting suppliers on that journey.
For information on how LRQA can support CPD verification, get in touch: