U.S. wants federal contracts to reflect climate risk

U.S. President Biden speaks about global transportation supply chain issues
U.S. President Joe Biden delivers remarks about global transportation supply chain bottlenecks from the East Room at the White House in Washington, U.S., October 13, 2021. REUTERS/Leah Millis

October 14, 2021

By Valerie Volcovici

WASHINGTON (Reuters) – The Biden administration on Thursday began a process to amend federal procurement rules to require the U.S. government – the world’s largest buyer of goods and services – to factor the risks of climate change into its contracts.

The administration put out a notice of proposed rulemaking seeking input over 60 days from federal contractors on an amendment to the Federal Acquisition Regulation to ensure it “minimizes the risk of climate change.”

The rulemaking process carries out an executive order by President Joe Biden in May that seeks to help slash greenhouse gas emissions through the supply chain and make it more resilient to the impacts of climate change.

“Today’s action sends a strong signal that in order to do business with the Federal government, companies must protect consumers by beginning to mitigate the impact of climate change on their operations and supply chains,” said Shalanda Young, acting director of the White House Office of Management and Budget.

The executive order called for amendments to federal procurement rules to factor in the “social cost” of greenhouse gas emissions, which is an estimate of the monetized damages associated with increased emissions.

Public input is sought about methodologies for measuring greenhouse gas emissions of products and services; how emissions can be factored into procurement decisions and how the government can standardize greenhouse gas reporting methods.

Young said that changes to public procurement decision making “can shift markets, drive innovation, and be a catalyst for new global standards.” 

(Reporting by Valerie Volcovici; Editing by Cynthia Osterman)