Increasingly, companies are realizing that implementing sound environmental policies can help them meet legal requirements and maintain competitiveness. In the past, only large manufacturers were concerned with environmental laws, but recent developments in both the government and private sectors have made it a mandate for a wide range of businesses to comply with and report on sustainability measures.
Companies and public agencies that are subject to these new requirements must ensure that they are incorporating them into their planning and taking steps to ensure compliance. While there is currently no comprehensive US federal climate regulation or legally binding international agreement, regulatory action and negotiations are ongoing.
In the meantime, businesses should be proactive in implementing environmental policies and preparing for potential future regulations. To get involved, check out the upcoming sustainability summit.
Government Order 13514
On October 5, 2009, President Obama signed Executive Order 13514, which requires all federal agencies to inventory their greenhouse gas (GHG) emissions, set targets for reducing their emissions by 2020, and develop a plan for meeting a range of goals for improving sustainability.
These goals include increasing energy and water efficiency, reducing waste, reducing fleet petroleum consumption, supporting sustainable communities, building and maintaining high efficiency buildings, and leveraging federal purchasing power to promote environmentally-responsible products and systems. The Executive Order also requires that 95% of new federal contracts and acquisitions meet sustainability standards that promote environmentally responsible products and systems.
The government’s large purchasing power, which exceeds more than $500 billion spent on goods and services each year, gives this requirement significant weight. The Executive Order also directs the General Services Administration to explore the feasibility of monitoring vendor GHG emissions and potentially requiring vendors to disclose their efforts to reduce emissions.
The implementation of the principles and reflections on the history of sustainability aim to maintain and protect the environment and natural resources.
The first Green Revolution was deemed a failure due to poor governance and a lack of participation by small farmers, leading to a disparity between the rich and poor.
The Green 2 Revolution, on the other hand, aims to address these issues through the implementation of good governance principles such as accountability, participation and decentralization, predictability, and transparency. It also focuses on redistributing policies to favor the poor, investing in rain-fed agricultural areas, and promoting microfinance for the working poor.
To achieve sustainability, it is important to balance the needs of the environment and society and to work towards policies that are fair for all stakeholders without excessively using up natural resources. In the US, the government has implemented regulations and policies, such as Executive Order 13514, to promote sustainability and environmental responsibility among federal agencies and contractors.
These regulations aim to reduce GHG emissions, increase energy and water efficiency, reduce waste, and promote the use of environmentally-friendly products and systems. It is important for businesses to be aware of these regulations and to implement policies to ensure compliance and success in the transition to a green economy.
SEC Guidance on Local weather Modify Disclosures
The SEC’s Interpretive Release No. 33-9106 provides guidance to public companies on the agency’s disclosure requirements regarding climate change issues. It is intended to clarify existing disclosure requirements, rather than create new ones.
The release addresses four areas that may trigger disclosure obligations under current SEC requirements:
- The impact of proposed or current climate change regulations and laws on the company’s financial condition or operations.
- The impact of international climate change accords or treaties on the company’s business.
- The potential for indirect opportunities or risks arising from legal, technical, political, and scientific developments related to climate change.
- The potential for physical impacts of climate change on the company’s business, such as disruptions to operations due to weather or supply chain interruptions, increased insurance, or water availability and quality. The SEC has indicated that it will focus on climate change disclosures in its review of company filings, and public companies are advised to treat the guidance as binding.
It’s important for companies to be transparent about their potential exposures to climate change risks and opportunities, as well as their efforts to address these issues. This is not only good corporate practice, but it can also help companies protect their reputation, manage potential legal liabilities, and attract investors.
By providing guidance on what types of climate-related disclosures companies should make in their public filings, the SEC is helping to ensure that investors have the information they need to make informed decisions. This is particularly important as the impacts of climate change become more severe and as more investors take into account environmental, social, and governance (ESG) considerations in their investment decisions.
EPA Necessary Greenhouse Gasoline Reporting Rule
Starting on January 1, 2010, a mandatory rule from the Environmental Protection Agency (EPA) went into effect requiring all major greenhouse gas (GHG) emitters to track and report their GHG emissions data using a new system. The rule applies to industries or facilities that emit over 25,000 tons of carbon dioxide equivalent per calendar year, of which there are currently about 10,000 in the United States.
Most emitters are required to install new monitoring equipment or at a minimum develop new GHG measurement protocols. Recognizing that not all of the companies would be able to comply by January 1, 2010, the rule allows them to use their “best available monitoring methods” until April 1, 2010. Affected entities will also need to have a written GHG Monitoring Plan, which should address the methods used to collect GHG data, specify the quality assurance, maintenance, and repair procedures for the GHG monitoring equipment, and assign roles for facility staff to collect data.
In addition, the rule mandates the implementation of GHG monitoring training and documentation methods in accordance with recordkeeping requirements. While the facilities do not have to send their monitoring plans to the EPA, they are required to maintain the plan at their facility and make it available if the EPA requests to review it. This new EPA regulation is just one of many international, federal, state, and local programs already enacted or currently pending to address the issue of GHG emissions. While there is still a great deal of uncertainty surrounding climate change matters and sustainability compliance, it is not a question of whether most organizations will eventually be legally required to monitor, report on, and reduce their GHG emissions – it is only a question of when, and how.