Leading Environmental and Allied Organizations Champion Emissions Reporting Rules for Federal Purchases

WASHINGTON, D.C. — Last week, environmental and allied organizations announced public support for the finalization of the proposed Federal Supplier Climate Risks and Resilience Rule and Sustainable Products Procurement Rule.

The Supplier Climate Risk and Resilience Proposal mandates contractors with $50 million or more in annual contract obligations to disclose comprehensive greenhouse gas inventories and emissions reduction targets, while the Sustainable Products Procurement Proposal requires federal agencies to prioritize sustainable products unless justified otherwise in writing. These amendments signal a commitment to transparency, sustainability, and environmental stewardship within federal procurement practices.

Following the delivery of the letter, the White House announced that updates to the Federal Sustainable Products Procurement rule have been finalized. This is a welcome and positive development. Building on this development, the Federal Supplier Climate Risks and Resilience Rule would make possible further sensible policies that leverage public purchasing power and a host of other policies to address climate change. It represents a vehicle without which the government cannot fulfill its commitment to sustainability and environmental stewardship in its fullest.

In response to the announcement, organizations issued the following statements:

“With greenhouse gas emissions not falling fast enough to meet U.S. commitments under the Paris Agreement, public policy will be essential to accelerating the decarbonization of our economy. There are many creative and ambitious policies being studied by both federal and state-level agencies – but all require better data to implement. The new proposed rules with the Federal Acquisition Regulation Council offer a way of gathering that data,” said Yong Kwon, Senior Policy Advisor at the Sierra Club.

“Contractors who seek profitable deals with government agencies should advance our climate goals and national security – not undermine them. We join in urging the DoD, GSA, and NASA administrators to finalize their proposed procurement rules and move us towards a more secure and resilient future,” said Hanna Homestead, Director of the Climate and Militarism Program at the Center for International Policy.

“Federal procurement policy must urgently address the climate crisis. The Sustainable Products Procurement Rule marks an important step, but it is vital the Biden administration finalizes the Supplier Climate Risks and Resilience Rule as well. Disclosure is essential for the federal government and taxpayers to fully understand federal climate-related risks and opportunities. Pressure to abandon this rule must not prevail— the profits of large contractors and the fossil fuel industry cannot be prioritized over science-based climate policy,” said Elyse Schupak, climate and financial regulation policy advocate with Public Citizen’s Climate Program.

“The federal government has tremendous purchasing power, and thus a tremendous ability to shape the adoption of cleaner materials. These rules will help solidify emissions data transparency and Buy Clean principles for much of the government’s purchasing. The government cannot ignore this critical tool to align markets toward climate mitigation and help set the curve on the innovation and opportunities that will come from setting up cleaner markets and industries,” said Christina Theodoridi, Policy Director for Industry at the Natural Resources Defense Council (NRDC).

READ THE LETTER:

April 18, 2024

The Honorable Lloyd J. Austin III
Secretary of Defense
U.S. Department of Defense
1000 Defense Pentagon
Washington, DC 20301-1000

The Honorable Robin Carnahan
Administrator
General Services Administration
1800 F Street NW
Washington, DC 20405

The Honorable Robin Carnahan
Administrator
General Services Administration
1800 F Street NW
Washington, DC 20405

Re: FAR Case 2021-015; FAR Case 2022-006

Dear Secretary Austin, Administrator Carnahan, and Administrator Nelson,

We, the undersigned environmental and allied organizations, write to support your agencies’ proposed Federal Supplier Climate Risks and Resilience Rule and Sustainable Products Procurement Rule. We urge you to finalize these critical regulations as soon as possible.

Federal Supplier Climate Risks and Resilience Rule 

By collecting information on climate risk posed to federal supply chains, the Federal Supplier Climate Risks and Resilience Rule will reduce contracting costs, and can also help inform the development and adoption of tools and strategies that mitigate climate change. Those strategies in turn stand to amplify successes of existing public procurement programs like Buy Clean and reward investments to decarbonize emissions-intensive sectors. By enhancing the government’s approach to mitigating climate risks, these rules will also ensure the responsible use of public resources while minimizing disruptions to contractors that supply the government.

The federal government spends roughly $700 billion annually on procurement, making it the world’s single largest buyer of goods and services. Its purchases include industrial goods that have an outsized impact on climate change. For instance, the global cement and steel industry combined account for approximately 15 percent of global greenhouse gas emissions. In 2018, the public sector purchased 46 percent of total cement consumed in the United States. About 18% of total steel employed in the United States went toward public construction projects with more going towards other public uses.

Given the government’s large consumption of goods from a wide-range of high-emitting industries, requirements and specifications around its purchasing decisions will play an outsized role in shaping investments in the manufacturing sector. The urgency for such actions is high as domestic greenhouse gas emissions fell by a mere 1.9 percent in 2023 while the latest estimates suggest the United States must reduce climate pollution by an average of 6.9 percent every year through 2030 to meet the Paris climate goal.

However, the use of the government’s purchasing power to signal preference for sustainable products and improve resilience is not possible when the climate risks associated with these goods are unknown.

The Federal Supplier Climate Risks and Resilience Rule represents a major step towards the development and implementation of sensible public purchasing policies to tackle climate risk. Under the rule, federal contractors with more than $50 million in annual contracts would be required to disclose their Scope 1, 2, and 3 greenhouse gas emissions, their climate risk assessments, and their science-based emissions reduction targets. Contractors with annual contracts between $7.5 million and $50 million would be required to disclose their Scope 1 and 2 greenhouse gas inventories. By focusing on these large federal contractors, the rule places the onus for compliance on merely 1.2 percent of registered government contractors that, according to the FAR Council, are responsible for 86 percent of federal supply chain emissions.

Sustainable Products Procurement Rule

Under the Sustainable Products Procurement proposal, agencies requiring procurement of products and services would be obligated to procure products and services that are federally recommended as “sustainable” unless those products and services cannot achieve a reasonable performance schedule, performance requirements, or price. Departure from the default rule of procuring sustainable products and services would need to be justified in writing.

For those concerned about the high-emitting industrial sector, this rule cannot be better timed. Pursuant to the Inflation Reduction Act, the EPA is currently developing a low-carbon construction materials ecolabel. The rule would ensure that products with this ecolabel get priority consideration in all federal procurements.

We applaud the administration on its foresight, as establishing procurement standards ahead of data availability would have led to confusion or the establishment of standards that were either too onerous or insufficiently ambitious for domestic manufacturers. Any of these outcomes would have delayed our ability to act on climate change.

In addition to the signal that preferential public procurement favoring sustainable goods sends  to the market, it ensures that complementary public policies aimed at reducing industrial emissions succeed. For instance, the Department of Energy extended $6 billion in cost-sharing grants to industrial facilities that are retrofitting their legacy equipment with new technologies that have proven capacity to curb emissions. When these retrofits are completed, the products that these facilities produce may be more expensive as new manufacturing processes need time to optimize and scale. Public policy favoring these goods in spite of their short-term price premium lowers risk for innovators who would otherwise not commit to these investments for only the private market.

These disclosures will also contribute to ongoing efforts to better understand how emissions from the American manufacturing sector compare with overseas peers, informing where investment needs are the highest and where the government needs to deploy trade policies to curtail the import of climate pollution.

Your agencies’ work to establish strong sustainable procurement and climate reporting rules for federal contractors makes possible further sensible policies that use the public purchasing power and a host of other tools to address climate change. It represents a lever without which the government effort to reduce climate risk cannot function in its fullest. We urge you to finalize these rules in the coming months and as rapidly as possible.

Thank you for your leadership and your attention to this important matter.

CC: Christine Harada, Chair, Federal Acquisition Regulatory Council

Signatories:

American Council for an Energy-Efficient Economy (ACEEE)
Center for International Policy
Earthjustice
Industrious Labs
Institute for Agriculture and Trade Policy
Interfaith Center on Corporate Responsibility (ICCR)
League of Conservation Voters
Mighty Earth
Natural Resources Defense Council (NRDC)
Public Citizen
Rise Economy
Sierra Club
The Sunrise Project