We submitted comments to the Federal Acquisition Regulatory Council (FAR Council) regarding a proposed rule that would require certain categories of federal contractors to disclose their greenhouse gas emissions and climate-related financial risk, and in some cases set science-based targets to reduce their greenhouse gas emissions.
Our comments offer the following observations and recommendations:
• Requiring companywide (as opposed to product- or service-specific) risk disclosures is a pragmatic, readily implementable means of managing climate risk in the federal supply chain.
• The FAR Council should offer a more granular discussion of the rule’s benefits. In particular, its final Regulatory Impact Analysis should distinguish between direct and ancillary benefits and should independently assess how each required disclosure can be expected to reduce federal agencies’ exposure to climate risk.
• The FAR Council should be careful not to understate baseline levels of climate risk disclosure (and thus overstate the incremental compliance costs of this rule). In particular, the Council should consider the extent to which new policies from other regulators will increase risk disclosure among federal contractors even in the absence of this rule.
• The FAR Council should establish a system for periodically reviewing the reporting and verification regimes that contractors can use to comply with the Proposed Rule.