US tightens supply chain emissions reporting

The US Government is tightening its emissions reporting requirements, with its proposed Federal Supplier Climate Risks and Resilience Rule expanding to include Scope 3 emissions.

The new rule requires major federal government contractors to report their Scope 1, 2 and 3 emissions, in a bid to protect the US Government’s supply chains from climate-related financial risks. The inclusion of Scope 3 emissions means organisations supplying goods or services to a major contractor will need to provide emissions data of their own.

Under the proposed rule, “major” contractors are those receiving more than US$50 million in annual contracts, while those under that threshold will only need to report on Scope 1 and 2.

Tony Yammine, co-founder and CEO of carbon management start-up Avarni, says supply chains around the world are on notice.

“This is a clear message from the US government that if you aren’t already measuring and reporting your emissions, you should be,” Yammine says. “It is the critical first step in reducing emissions and addressing climate change.

“Including Scope 3 emissions reporting will have ramifications far beyond those contracting with the US government. Any supplier to those contractors can expect a request for information on their own emissions. At up to 11 times as large as Scope 1 and 2, tackling Scope 3 emissions must be a priority for government and business – and it’s hugely positive to see the US government showing such leadership through its procurement policies.”

Australian company KPMG is using Avarni to progressively map climate risk in its supply chain. Avarni uses artificial intelligence and a comprehensive emissions dataset to provide insight into emissions profiles of companies and their suppliers.

Since launching at the beginning of 2022, Avarni has analysed more than US$100 billion in corporate spending data and 150 million tonnes of CO₂e in supply chains.

Photo by Marek Piwnicki on Unsplash