US Federal Supplier Climate Risks and Resilience Rule

The Biden-Harris Administration has placed considerable emphasis on combating climate change and promoting sustainable practices. As a result, businesses and contractors working with the federal government must be prepared to adapt and comply with new climate regulations.

One such regulation is the proposed Federal Supplier Climate Risks and Resilience Rule, which aims to protect the federal government's supply chains from significant climate-related financial risks. In this article, we will provide an overview of the Rule, outline its requirements, and discuss the steps companies need to take to ensure compliance.

About the Federal Supplier Climate Risks and Resilience Rule

The Federal Supplier Climate Risks and Resilience Rule was proposed on November 10, 2022, as part of the Biden Administration's goal to achieve net-zero emissions procurement by 2050.

This Rule requires large federal government contractors to disclose their greenhouse gas (GHG) emissions, climate-related financial risks, and set science-based emissions reduction targets.

Who is in scope of the Rule?

The Rule applies to federal contractors who receive the highest volumes of annual federal agency contract obligations. The regulation differentiates between two types of contractors:

• Significant contractors: those who received between $7.5 million and $50 million in federal contract obligations during the previous federal fiscal year.
• Major contractors: those who received more than $50 million in federal contract obligations during the previous federal fiscal year.


Contractors that are not subject to the Rule include higher education institutions, non-profit research entities, and state or local governments.

What are the requirements for the companies falling under the scope?

1. Complete a Greenhouse Gas Emissions inventory, which applies to both significant and major contractors. This inventory should include annual Scope 1 and Scope 2 GHG emissions following the GHG Protocol Corporate Accounting and Reporting Standard.
2. Submit annual climate disclosures, which apply only to major contractors that are not small businesses. These disclosures should align with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and be completed through relevant portions of the CDP Climate Change Questionnaire.
3. Set Science-Based Targets for GHG emissions reduction, applicable to major contractors that are not small businesses. These targets must be validated by the Science Based Targets initiative.

When will companies have to start reporting?

• The proposed rules have not yet been finalized or implemented, with a final rule expected within 2023.
• Companies will need to publish a GHG inventory and disclosure of total annual Scope 1 and Scope 2 emissions within one year after the publication of the final Rule.
• The requirement to disclose annual climate disclosures and Science Based Targets will apply beginning two years after the final Rule's publication.

As the US Federal Supplier Climate Risks and Resilience Rule moves closer to implementation, businesses and organisations should stay informed and prepare to adapt to the new requirements. Compliance with this Rule will not only reduce climate-related financial risks but also contribute to a more sustainable and resilient economy. Business leaders must proactively embrace these changes and lead their organisations toward a greener and more environmentally responsible future.

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