In bold new move, Biden Administration makes CDP’s model the law

Acknowledging the vital role of disclosure around environmental impact, the White House Council on Environmental Quality announced today that major federal suppliers will now be required to disclose their environmental impacts through CDP, the global non-profit that runs the world’s environmental disclosure system for companies, cities, states and regions.

Specifically, under the proposed Federal Supplier Climate Risks and Resilience Rule, major suppliers to the U.S. federal government will be required to publicly disclose greenhouse gas emissions (GHG) and climate-related financial risk. It will also ask these companies to take tangible action by setting science-based GHG reduction targets, the most ambitious decarbonization targets available, which are already deployed by major U.S. corporations like AT&T, Ball Corporation and Johnson Controls.

The U.S. federal government is the largest purchasing organization in the world, making today’s announcement one of the most significant supply chain rules in U.S. history. The White House’s new rule is the next step in the Administration’s federal procurement sustainability initiatives, following the Federal Buy Clean Initiative, announced during UNGA/Climate Week earlier this September. The new mandate will be a critical lever for reducing the federal government’s supply chain emissions as the Biden Administration works urgently to meet its goal of a 50% reduction in GHG pollution by 2030, and continues the Administration’s whole-of-government approach to addressing the climate crisis.

“Environmental impact must be a top priority for all powerful economic actors in their decision-making going forward,” said Simon Fischweicher, Head of Corporations and Supply Chains, CDP North America. “Just like any large corporation, the U.S. government needs quality data from suppliers to see the full picture of its environmental impact. The Federal Supplier Climate Risks and Resilience Rule will follow the model that CDP pioneered in our sustainable supply chain work, demonstrating the power of procurement by ensuring that federal suppliers disclose vital environmental data and set ambitious decarbonization targets. This will give the White House a comprehensive picture of environmental risks as well as opportunities for sustainability action. Moreover, this disclosure data will be useful in informing the Justice40 implementation, helping all companies, municipal governments and investors make greener, more equitable, smarter decisions about where to invest capital.”

For fifteen years, CDP’s Supply Chain initiative has catalyzed the world’s largest purchasing organizations to request environmental disclosure and action from thousands of their suppliers. The initiative has already helped reduce 231 million tons CO2e of emissions from the atmosphere – the equivalent of removing 50 million cars from the road.

Both U.S. as well as global companies will be impacted by the new rule. The aerospace and defense, cement and steel industries will be particularly affected, as they make up a significant part of total federal spend. But 207 companies in these sectors (or 63% of the total number of companies requested to disclose) are already completing CDP’s annual climate questionnaire. On the other hand, this new rule will drive uptake of science-based targets in these high impact sectors, as only 20 companies across these three key sectors have such targets validated.

Companies that currently have federal contracts (or are planning to seek them) and already disclose through CDP are already meeting these new requirements. They are also already disclosing data based on the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) and the Greenhouse Gas Protocol – both of which CDP disclosure has implemented for years – preparing them for potential further regulation.

Those who will be asked to disclose for the first time will join nearly 20,000 organizations that currently disclose through CDP, including 18,700+ companies representing US$60.8 trillion (half of global market capitalization) and over 1,100 cities, states and regions. Earlier this year, the U.S. Securities and Exchange Commission proposed another disclosure rule that would require all U.S. public companies to disclose environmental data – confirming a now-mainstream understanding that disclosure drives environmental action.

“We can’t emphasize enough how gratifying it is to see the federal government wield its enormous purchasing power to further advance environmental impact and the just transition,” said Elizabeth Small, General Counsel and Head of Policy, CDP North America. “We take great pride in the fact that the Biden Administration has now made CDP disclosure the law. The White House’s leadership will undoubtedly send ripple waves of change throughout both U.S. and global supply chains – and signal to the companies that are lagging on their sustainability journeys that it’s time to take action if they hope to be competitive and resilient in the 21st century economy. Ultimately, this is further evidence of the impact CDP has had and will continue to have by raising the bar higher for the major players in the climate crisis.”

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ABOUT CDP 

CDP is a global non-profit that runs the world’s environmental disclosure system for companies, cities, states and regions. Founded in 2000 and working with more than 680 financial institutions with over $130 trillion in assets, CDP pioneered using capital markets and corporate procurement to motivate companies to disclose their environmental impacts, and to reduce greenhouse gas emissions, safeguard water resources and protect forests. Nearly 20,000 organizations around the world disclosed data through CDP in 2022, including more than 18,700 companies worth half of global market capitalization, and over 1,100 cities, states and regions. Fully TCFD aligned, CDP holds the largest environmental database in the world, and CDP scores are widely used to drive investment and procurement decisions towards a zero carbon, sustainable and resilient economy. CDP is a founding member of the Science Based Targets initiative, We Mean Business Coalition, The Investor Agenda and the Net Zero Asset Managers initiative. Visit cdp.net