The Biden administration has just unveiled details about the Federal Supplier Climate Risks and Resilience Rule, scheduled to be added to the Federal Acquisition Regulation (FAR) this month.
Being the largest buyer of goods and services– over $600 billion last year, the government has a high chance of financial problems that may stem from climate change. Supply chains have been disrupted, and every sector has felt this, including the federal contractors and subcontractors.
If you are a “major” contractor with more than $50 million in annual contracts, you need to take note of the Federal Supplier Climate Risks and Resilience Rule. You must publicly disclose Scope 1, Scope 2, and the categories of Scope 3 that apply to you. This will include financial risks that are climate-related and set a science-based reduction process and targets. Contractors below $50 but still above $7.5 million in contracts will need to report Scope 1 and 2 emissions. Only those below $7.5 million in yearly contracts would be exempt from this regulation.
If you’re a contractor that falls under these categories, we can help you out with these tools:
First, the White House announcement about the Proposed Federal Supplier Climate Risks and Resilience Rule
Next, a free beta tool, made in excel, from the Greenhouse Gas Protocol (GHG). This has step-by-step instructions on how companies can estimate their emissions. It includes samples and complete instructions.
If you qualify for scope 3, you’ll need the Scope 3 evaluator.
If you need to delve into this deeper, you can go through the “Recommendations of the Task Force on Climate-related Financial Disclosures”
https://assets.bbhub.io/company/sites/60/2021/10/FINAL-2017-TCFD-Report.pdf
You may also need the How-to Guide For Setting Near-term Targets This Science-Based Targets Initiative shows how to submit for validation a science-based target to make reductions in your GHG emissions.
When the time comes, and you would need to disclose your information on GHG, you can read through the CDP Climate Change Disclosure 2022
These outstanding proposals show the federal government’s commitment to the environment and federal contractors. By allowing contractors to report their GHG emissions and a chance to reduce them, the current Administration assures that both the supply chain and the welfare of the contractors are taken care of. If these regulations sound new to you or are still a bit confused, contact Peter Witts CPA PC, we’ll be glad to clarify if this new rule applies to you or if you should not be worried.