{"id":1402,"date":"2023-05-03T09:58:42","date_gmt":"2023-05-03T13:58:42","guid":{"rendered":"https:\/\/sites.williams.edu\/environmental-justice\/?p=1402"},"modified":"2023-05-03T10:02:10","modified_gmt":"2023-05-03T14:02:10","slug":"bidens-push-to-disclose-climate-risks-hits-wall-of-industry-resistance","status":"publish","type":"post","link":"https:\/\/sites.williams.edu\/environmental-justice\/education\/bidens-push-to-disclose-climate-risks-hits-wall-of-industry-resistance\/","title":{"rendered":"Biden\u2019s disclosure of climate risks hits industry resistance"},"content":{"rendered":"
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The Biden administration is struggling over rules that would force U.S. corporations to disclose more information about their climate risks and greenhouse gas emissions, from pizza deliveries and steel manufacturing to financial services and making cement.<\/p>\n<\/div>\n

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If approved, the rules would affect government contractors, insurance firms and other companies and <\/b>would enable the administration to better track and cap the carbon dioxide and methane emissions that contribute to climate change. It could also transform the purchasing practices of the federal government, which spends about $650 billion<\/a> each year on goods and services, more than any other entity.<\/p>\n<\/div>\n<\/div>\n

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\u201cNumber one, the entire sustainability agenda is built on the premise that we have to lead by example, right?\u201d Brenda Mallory, chair of the Council on Environmental Quality at the White House, said at a recent Washington Post Live event<\/a>. \u201cWe are the largest employer in the nation. We have the most real estate in the nation, and so these all give us tools that are really important for us to take advantage of.\u201d<\/p>\n<\/div>\n

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Yet as the administration leans into the climate disclosure campaign \u2014 led by the Securities and Exchange Commission, the General Services Administration and the Treasury Department\u2019s Federal Insurance Office \u2014 it is facing broad opposition from companies, as well as House Republicans and industry-funded groups that oppose Biden\u2019s climate agenda.<\/p>\n<\/div>\n

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Supporters of the new rules fear that the agencies, facing the likelihood of lawsuits, might end up watering down or delaying their disclosure actions. Robert J. Jackson Jr., a former SEC commissioner and now a law professor at New York University, said Thursday that the SEC might wait months, delaying from April until the fall.<\/p>\n<\/div>\n

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Many companies say the disclosure rules are too expensive, complicated and far-reaching. At the same time, many climate activists fear that federal agencies, swamped by comments, are overreacting to corporate pressure.<\/p>\n<\/div>\n

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\u201cThere\u2019s quite a bit of pushback from the regulated entities on these rules,\u201d said Rich Sorkin, co-founder and chief executive of Jupiter, a firm that analyzes climate risks for organizations looking to strengthen their climate resilience. And with the likelihood that a climate disclosure bill will end up in the courts, federal agencies such as the SEC, he said, are trying to formulate proposals that will \u201cstand up to legal challenges.\u201d<\/p>\n<\/div>\n

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Here\u2019s the state of play for big disclosure rules on the table:<\/p>\n<\/div>\n

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What must federal contractors disclose on climate?<\/div>\n<\/div>\n
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Each year, the federal government purchases about $665 billion in goods and services<\/a> from a range of contractors, including energy intensive industries making steel, asphalt, concrete and other construction materials.<\/p>\n<\/div>\n

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In the past, those contractors did not need to reveal much about their carbon footprints. But in November last year, a group of federal agencies \u2014 including the Pentagon, NASA and the General Services Administration \u2014 proposed far-reaching requirements for contractors to report their climate impacts and risks. In addition, said Alexandra Thornton, senior director of financial regulation at the left-leaning Center for American Progress, it requires contractors \u201cto show how you plan to reduce your emissions.\u201d<\/p>\n<\/div>\n

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Construction workers in Dallas last year. (Shelby Tauber\/Reuters)<\/figcaption><\/figure>\n<\/div>\n<\/div>\n
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Business groups are pushing back. In a February letter<\/a>, the U.S. Chamber of Commerce said the proposed rules would \u201cimpose immense costs on government contractors of all sizes, costs that would be passed on to the government and ultimately to taxpayers.\u201d<\/p>\n<\/div>\n

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It also objected to the cost-benefit analysis performed for the rule and questioned whether the federal agencies need congressional authority to use government contracts \u201cas a vehicle for furthering climate policies.\u201d<\/p>\n<\/div>\n

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Now it appears the federal government may be delaying its final rulemaking, said Kevin Dempsey, president of the American Iron and Steel Institute, whose members sell large amounts of steel for projects such as federally-funded bridge and road construction.<\/p>\n<\/div>\n

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\u201cInitially the GSA <\/b>wanted standards by now,\u201d Dempsey said. \u201cWe pushed back some. There isn\u2019t a new deadline.\u201d<\/p>\n<\/div>\n

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One quandary is how companies should measure their emissions and climate risk. With no governmental tool available, such analyses are performed by small firms that major companies have disparaged.<\/p>\n<\/div>\n

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Even so, the website of one nonprofit data firm, called Building Transparency, has signed up 33,000 users; during March, there were 22,500 searches of its database, its chief executive, Stacy H. Smedley, said. Companies can use the firm\u2019s \u201cEmbodied Carbon in Construction calculator\u201d to estimate emissions from various industrial activities. Concrete and steel products drew the most searches.<\/p>\n<\/div>\n

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The disclosure requirements of Biden\u2019s \u201cbuy clean\u201d call <\/b>come in steps. Major federal contractors \u2014 those receiving more than $50 million in annual contracts \u2014 would be required to publicly disclose three levels of greenhouse gas emissions, including two produced directly from their own operations and suppliers and one calculated from their customers down the supply chain.<\/p>\n<\/div>\n

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Federal contractors with more than $7.5 million in annual contracts but less than $50 million would not need to report their customers\u2019 indirect impacts \u2014 known as Scope 3 emissions. Such contractors with less than $7.5 million in annual contracts would be fully exempt from the requirements.<\/p>\n<\/div>\n

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Not all companies oppose the disclosure requirements. Some hope to use them as a competitive advantage.<\/p>\n<\/div>\n

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One of these is Nucor, a steelmaker that submitted a mandatory \u201cenvironmental product declaration\u201d about the company\u2019s sustainability practices. The company has 99.4 percent recycled steel and has supply lines to hydropower, making it one of the country\u2019s biggest users of renewable energy.<\/p>\n<\/div>\n

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By recycling scrap in electric arc furnaces, Nucor says its energy intensity is 74 percent lower than the global average and its greenhouse gas intensity is less than one-third the global average. The company added that it accounts for more than 25 percent of U.S. steel production but only 8 percent of the domestic steel industry\u2019s greenhouse gas emissions.<\/p>\n<\/div>\n

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Not all companies are willing to evolve in the face of climate change. Contractors and other companies now face the choice of revealing their environmental footprints \u2014 or resisting.<\/p>\n<\/div>\n

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How far must Wall Street go on climate transparency?<\/div>\n<\/div>\n
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For years, U.S. companies have faced pressure to report their climate risks and emissions, but their record of disclosure has been mixed. That is expected to change when the Securities and Exchange Commission finalizes rules it proposed in March of last year.<\/p>\n<\/div>\n

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One key question is how stringent the SEC will be, including whether it will require companies to estimate not just their direct climate consequences, but the indirect impacts of their products \u2014 such as the emissions produced when customers of an automaker drive its vehicles.<\/p>\n<\/div>\n

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Wall Street in New York City. (Spencer Platt\/Getty Images)<\/figcaption><\/figure>\n<\/div>\n<\/div>\n
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Companies as different as BlackRock and United Airlines, whose chief executives are aligned with the Biden administration on the need for greater climate action, are urging the SEC to scale back its ambitions on requiring disclosure of these Scope 3 emissions in annual and quarterly reports.<\/p>\n<\/div>\n

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United, for instance, said that the commission\u2019s final rule should not be \u201cunduly burdensome and prescriptive.\u201d<\/p>\n<\/div>\n

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In an April 14 letter,<\/a> the Chamber of Commerce cited the SEC\u2019s own estimates to declare the new rule would be 2\u00bd times more expensive than the disclosures companies currently make to the SEC, \u201craising the total cost burden associated with its related forms from a total<\/i> of $3.9 billion to $10.2 billion.\u201d<\/p>\n<\/div>\n

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Possibly because of the corporate pushback, the SEC has yet to finalize the rule. But some analysts are still hopeful that strong disclosure requirements will eventually emerge.<\/p>\n<\/div>\n

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\u201cBehind the scenes, we\u2019ve heard that the SEC is quite a strong advocate of getting something done,\u201d said Sorkin, the co-founder and chief executive of Jupiter.<\/p>\n<\/div>\n

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Sustainability advocates say that strong SEC disclosure rules will help inform smarter investment decisions and will aid certain companies by making investors more confident that their money is going to business practices that will not be foiled by climate change or regulations aimed at reducing climate emissions.<\/p>\n<\/div>\n

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For these reasons, climate advocates are growing impatient. On March 5, 50 Democratic lawmakers said<\/a> the rule \u201chas already been delayed enough \u2014 and after that long delay, [the] SEC would be failing its duty to protect investors if it issues a watered-down rule.\u201d<\/p>\n<\/div>\n

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\u201cWhat\u2019s the problem with being more transparent?\u201d said Richard Berner, professor of finance at the Leonard N. Stern School of Business at New York University. \u201cPut simply: There are benefits to disclosure that help investors. It is part of the SEC\u2019s mandate to protect investors and consumers.\u201d<\/p>\n<\/div>\n

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SEC supporters also note that many U.S.-based companies operate in the European Union, which has its own more demanding requirements<\/a> on disclosing climate risks and impacts on emissions. Even if those U.S.-based companies have small footprints in Europe, they will be compelled to share details of their entire operations.<\/p>\n<\/div>\n

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\u201cEurope is way ahead,\u201d Jackson said.<\/p>\n

Read more from Steven Mufson<\/a><\/span><\/span> of The Washington Post<\/em>:\u00a0 https:\/\/www.washingtonpost.com\/climate-environment\/2023\/05\/02\/biden-corporate-climate-change-disclosure\/<\/a>.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Biden administration is struggling over rules that would force U.S. corporations to disclose more information about their climate risks and greenhouse gas emissions, from pizza deliveries and steel manufacturing to financial services and making cement. If approved, the rules would affect government contractors, insurance firms and other companies and would enable the administration to…<\/p>\n","protected":false},"author":1865,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[9],"tags":[],"class_list":["post-1402","post","type-post","status-publish","format-standard","hentry","category-education"],"acf":[],"_links":{"self":[{"href":"https:\/\/sites.williams.edu\/environmental-justice\/wp-json\/wp\/v2\/posts\/1402","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sites.williams.edu\/environmental-justice\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sites.williams.edu\/environmental-justice\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sites.williams.edu\/environmental-justice\/wp-json\/wp\/v2\/users\/1865"}],"replies":[{"embeddable":true,"href":"https:\/\/sites.williams.edu\/environmental-justice\/wp-json\/wp\/v2\/comments?post=1402"}],"version-history":[{"count":3,"href":"https:\/\/sites.williams.edu\/environmental-justice\/wp-json\/wp\/v2\/posts\/1402\/revisions"}],"predecessor-version":[{"id":1405,"href":"https:\/\/sites.williams.edu\/environmental-justice\/wp-json\/wp\/v2\/posts\/1402\/revisions\/1405"}],"wp:attachment":[{"href":"https:\/\/sites.williams.edu\/environmental-justice\/wp-json\/wp\/v2\/media?parent=1402"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sites.williams.edu\/environmental-justice\/wp-json\/wp\/v2\/categories?post=1402"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sites.williams.edu\/environmental-justice\/wp-json\/wp\/v2\/tags?post=1402"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}