Federal agencies will have to find ways to track and report their carbon emissions downstream, down to the level of employee travel and business travel, under a new set of White House instructions.
The Council’s rules on environmental quality, published on August 31, will be particularly difficult for large agencies, according to specialists in the report. Broadly, the guidance requires agencies to set annual goals to reduce greenhouse gas emissions from sources they don’t directly control, known as scope 3 emissions.
This category includes transmission and distribution losses from purchased electricity, solid waste disposal, sewage treatment and many other activities.
Leah Dundon, environmental lawyer at Beveridge & Diamond PC, said indirect emissions will be difficult to measure accurately. This same concern has been raised by critics of the Securities and Exchange Commission’s recent proposed climate rule.
“It’s potentially a complex and huge undertaking, and will be even more so for large organizations, including federal agencies,” Dundon said.
Pentagon at work
Andrew Mayock, the White House’s federal director of sustainable development, said emissions reductions matter because the federal government is “the world’s largest purchaser of goods and services and the nation’s largest employer.”
For Corinne Dougherty, ESG chief government officer at KPMG, the new guidance is a necessary step if the Biden administration is to achieve net zero emissions from federal operations by 2050.
Once agencies have developed their tracking systems, CEQ will work with them to set target dates as part of their 2023 sustainability planning and reporting cycles.
“It is imperative that the federal government be transparent in its plans to achieve decarbonization goals, while measuring and disclosing progress going forward,” Dougherty said.
The instructions stem from a December 2021 executive order that sets broad sustainability goals for the federal government.
But the data needed to perform a Scope 3 emissions assessment is often not under an agency’s control, and the available data can be difficult to verify, according to Dundon.
At the Department of Defense – by far the government’s largest employer with more than 1.3 million active duty military personnel and 750,000 civilian employees – complying with CEQ rules “will be a challenge”, said Richard Kidd, under – Deputy Secretary of Defense for Environment and Energy. resilience.
Nonetheless, the Pentagon “strives to be proactive” on compliance and is particularly focused on reducing scope 3 emissions in its supply chain, rather than the activities of its employees, Kidd said.
“That’s where the greatest amounts of greenhouse gases are, as well as fugitive emissions, and where we get the greatest return on investment,” he said.
To make it a little easier, many Pentagon employees will remain telecommuting, which will reduce their travel and ultimately reduce the floor space of the military, according to Kidd.
HHS, USPS report gains
Meanwhile, the Department of Health and Human Services is mapping its data sources to develop an algorithm to track carbon emissions from employee travel and business travel, and “does not anticipate any accounting and reporting to meet the requirement,” according to an agency spokeswoman. .
HHS has already reduced its Scope 3 emissions from 2008 levels through efforts such as a new policy for accommodating space in a hybrid work environment, the spokeswoman said.
The US Postal Service, another of the largest employers of federal bureaucracy, is not bound by the new rules because it is an independent agency, a USPS spokesperson said.
But the Postal Service is already tracking its Scope 3 emissions, saying in its latest sustainability report that it is reducing business travel by allowing more remote working and reducing the waste it sends to landfills.
A CEQ spokeswoman said the White House is “confident the agencies are up to the challenge” and will provide guidance and support to help agencies report and reduce their Scope 3 emissions.
To simplify some of the reporting work, the Environmental Protection Agency has provided emissions estimates that organizations can use. Even so, agency reports are bound to be at least partially inaccurate, Dundon said.
“For example, if an employee and her spouse drive to work from home and take a detour to drop off a child at school and add another detour to drop off the spouse, and then the employee arrives at the office, how many this trip from home to work, should the organization be considered only its scope 3?” she said. “Knowing the mileage of the vehicle or the mileage of the passenger in this case will not be accurate.
While a reliable figure emerges from this exercise, it’s unclear whether the data is useful in informing emissions reduction strategies, Dundon said.
Model for the private sector
But for Margaret Peloso, a partner at Vinson & Elkins LLP who specializes in environmental disclosures, simply getting agencies to think about their scope 3 emissions is a good way to incentivize them to make cuts.
“When I think of organizations as large and complex as the federal government, it’s not about whether the Pentagon needs to know exactly what kind of car I’m driving and whether I’m going on highways or back roads, but rather that they need to know what kinds of things they could do to get employees to take public transit,” Peloso said. “Or when I sign contracts, what are some of the things I have to see?”
Agencies following the new CEQ guidance could also provide working templates to public companies if and when they must comply with the SEC’s proposed rule, which also sets out Scope 3 requirements, Peloso said.
“I could say to the SEC, ‘Well, when I was thinking about how to do this, I thought that segment of this federal activity was like my operations,'” she said. “It might lend credibility that my approach is objectively reasonable.”