Addressing climate change has been a priority for President Biden since his first day in office. On December 8, 2021, President Biden continued that focus by issuing Executive Order (EO) 14057, Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability, which includes a number of requirements directed at introducing sustainability to federal acquisitions.
This most recent EO announces an administration policy to achieve net-zero emissions from federal procurement by 2050 and comes on the heels of the public comment period extension to January 13, 2022 in response to EO 14030, Climate-Related Financial Risk. Although the administration will likely be rolling out additional sustainability requirements in the coming months, contractors currently have an opportunity to help shape an initial requirement that may end up effectively establishing an environmental, social, and governance or "ESG" reporting requirement.具体地说,联邦获取管理委员会正征求公众评论,以考虑修改联邦获取规则:
政府当前提案类似于机构一级最近的活动,与美国Securities and Exchange Commission ("SEC") announcing an "all-agency approach" in response to investor demand for ESG-related information. The SEC is also seeking public comment in an effort to determine whether current climate change disclosures adequately inform investors and as of December 7, 2021 has received 5,867 comments.
In light of the rapidly evolving scope, demands, and attention placed on board and management accountability for sustainable business practices, Covington's multidisciplinary ESG and Sustainability team created an ESG and Sustainability Toolkit as an entry point for analysis, understanding, and tailored advice on this wide ranging topic.
As part of an effort to reduce federal supply chain emissions, President Biden additionally ordered the General Services Administration to "track disclosure of greenhouse gas emissions, emissions reduction targets, climate risk, and other sustainability-related actions by major Federal suppliers, based on information and data collected through supplier disclosure" of greenhouse gas emissions (as discussed in consideration (i) above).
With new reporting, tracking, and emissions reduction targets potentially on the horizon, federal contractors should consider taking the opportunity to shape aspects of new requirements, such as the preferred method of tracking and reporting emissions data, including how to evaluate the social cost of such greenhouse gases. For example, there would be a number of ways to measure the "social cost" of greenhouse gas emissions, which is generally an estimate of the monetized damages associated with incremental increases in greenhouse gas emissions. As re-established under EO 13990, the Interagency Working Group on the Social Cost of Greenhouse Gases published interim estimates of the social cost of carbon, methane, and nitrous oxide in February 2021 that reflect one method for evaluating emissions data that could ultimately inform requirements imposed on contractors. Although a coalition of states is currently challenging the administration's use of social cost estimates to calculate regulatory costs and benefits under EO 13990,[1] the notice of public comment for EO 14030 still includes the social cost of greenhouse gases as one potential factor when considering greenhouse gas emissions in federal procurement decisions.
Comments may be submitted on the following questions on or before January 13, 2022 for FAR Case 2021-016 at https://www.regulations.gov/document/FAR-2021-0016-0001:
- How can greenhouse gas emissions, including the social cost of greenhouse gases, best be qualitatively and quantitatively considered in Federal procurement decisions, both domestic and overseas?
- 什么可用并受尊重方法测量所购或租产品或所服务生命周期中的温室气体排放?
- 联邦政府通过国内外采购决策可如何考虑和尽量减少与气候有关的金融风险?
- 贵组织将如何提供温室气体排放数据供建议和/或合同性能使用?
- 联邦政府应如何验证温室气体排放报告?
- 政府应如何优先接受国内外供应商的标书或建议书,以最有效实现减少温室气体排放或降低温室气体排放社会成本? 政府可如何考虑供应商承诺减少或减少温室气体排放?
- 采购决策中考虑温室气体社会成本对小企业产生什么影响? 小企业包括处境不利小企业、妇女拥有小企业、服务性残疾老企业和历史利用不足商业区小企业FAR理事会应如何最优化地将目标与确保小企业机会的努力相匹配?
This blog presents an overview of some of the detailed climate-related disclosure and reporting metrics covered by the ISSB and EFRAG climate prototypes, and highlights critical considerations for companies as more detailed and mandatory ESG and sustainability reporting frameworks begin to take shape.
Global Context & COP26 Pledges
Major developments that emerged from the November 2021 COP26 summit included the announcement of the new Glasgow Climate Pact, a renewed emphasis on the role of the private sector in addressing climate change risks and opportunities, and the launch of the Glasgow Financial Alliance for Net Zero, a coalition of existing and new net zero finance initiatives dedicated to assisting companies realign their business models for net zero.
In addition, a critical adjunct to COP26 was the announcement of the launch of the ISSB and its work towards the development of uniform global environmental, social, and governance ("ESG") reporting standards.ISSB表示努力鼓励全球吸收并合并为现有ESG报告标准(包括框架,如气候相关财务披露工作队和气候披露标准理事会倡议)。ESG报告标准全球基线旨在向投资者、资本市场参与者和各种其他利益攸关方提供关于公司可持续性相关风险和机会的信息类似于姐妹组织国际会计准则理事会,ISSB将由国际财务报告标准基金会管理。
The scope of the Climate Prototype encompasses physical climate-related risks, risks associated with the transition to a lower-carbon economy, as well as climate-related opportunities for the entity.
Pursuant to ISSB's Climate Prototype, an entity shall disclose the following cross-industry climate metrics:
| Greenhouse gas emissions | Scope 1, 2 and 3 in metric tonnes of CO2 equivalent. |
| Transition risks | Amount and percentage of assets and business activities vulnerable to transition risk. |
| Physical risks | Amount and percentage of assets and business activities vulnerable to physical risks. |
| Climate-related opportunities | Proportion of revenue, assets or business activities aligned with climate-related opportunities (in amount or percentage). |
| Capital deployment | Amount of capital expenditure, financing or investment deployed toward climate-related risks and opportunities (in reporting currency). |
| Internal carbon prices | Entity's internal price for each metric tonne of GHG emissions. |
| Remuneration | Proportion of executive management remuneration affected by climate-related considerations in current period. |
Importantly, the Climate Prototype foresees additional industry-specific climate metrics for companies to report on.ISSB气候原型附录B汇总行业报告要求其中包括为每个行业具体确定的多重需求,例如软件服务公司水压区抽取和耗用水或棕榈油供应链报告公司家庭和个人产品销售报告In light of the growing interdependence between the many ongoing ESG regulatory initiatives (especially those originating in the EU), this reporting requirement should, for example, be considered in the context of recently announced national and international deforestation due diligence requirements for specified products being placed on the UK and EU markets.
2. EFRAG's Climate Standard Prototype: Towards Harmonization?
The ISSB's Climate and General Requirements Prototypes are particularly interesting because EFRAG released a similar framework under the Climate Standard Prototype Working Paper in September 2021.EFRAG框架响应欧盟委员会关于s/www.insideEnergyandense.com/2021/05/the-e-Corporate-divity-proposition-what-company-dessb的Climate原型可能直接影响到欧盟规则。
Compaments也可能感兴趣地注意到EFRAG工作文件和Climate原型都覆盖相似水平的报告,侧重于部门不可知性报告、部门专用报告和实体专用报告EFRAG工作文件捕捉约三分之二ISSB气候原型,其余三分之一有可能在未来数月中补充EFRAG部门特有标准。
本分类法是欧洲日益注重提高气候相关活动透明度的又一标志,但它也是一套本已复杂图象中的另一套标准和指标。At a COP26 side event, for example, EFRAG's work was examined in the context of the ISSB and the work of the TCFD.
Key Takeaways
Two main recommendations flow out of the current landscape on sustainability reporting developments.
- Companies should consider which aspects of their current voluntary sustainability reporting could be integrated into mandatory financial and non-financial sustainability reporting requirements in the future. As new standards emerge, companies have an opportunity to actively monitor developments and "best practices" within their industry and to proactively prepare for future mandatory reporting requirements.美联储报表公司还应该考虑ISSB和EFRAG披露原型方面会如何影响美国正在考虑的与气候有关的披露规则证券交易委员会公司应开始识别本行业相关度量值,制定策略和过程识别物风险和机会,并开发必要的报告控制程序以确保信息收集与报告及时准确性。