FAR 23.67: Climate Disclosure for Federal Contractors

A proposed change to federal procurement policy that would have mandated climate-related disclosures for many U.S. federal contractors has been withdrawn. The Department of Defense, General Services Administration, and NASA announced the withdrawal of the proposed rule, “Disclosure of Greenhouse Gas Emissions and Climate-Related Financial Risk,” effective January 13, 2025. Introduced on November 14, 2022, the proposal aimed to require contractors to report their greenhouse gas emissions and climate risks.

The withdrawal halts a regulatory effort that was developing for over two years. According to the official notice, the agencies withdrew the rule due to insufficient time to finalize it, citing the large volume of public comments and evolving climate regulations. The rule was designed to implement directives from Executive Order 14030 by amending the Federal Acquisition Regulation (FAR) to provide the government with a clearer view of climate-related risks in its supply chain.

Contractor Applicability Tiers

The withdrawn rule proposed a tiered system based on a contractor’s federal contract revenue from the preceding fiscal year. This framework created two categories: “Significant Contractors” and “Major Contractors.”

A business would have been classified as a “Significant Contractor” if it received between $7.5 million and $50 million in federal contract obligations. The highest level of requirements was for “Major Contractors,” defined as businesses receiving more than $50 million in annual federal contract obligations. Any contractor with total obligations below the $7.5 million threshold would have been exempt from the rule’s requirements.

Disclosure and Reporting Requirements

The regulation detailed specific reporting deliverables for each contractor tier. For “Significant Contractors,” the requirement was to conduct a greenhouse gas (GHG) inventory covering Scope 1 emissions, which are direct emissions from owned or controlled sources, and Scope 2 emissions, which are indirect emissions from purchased electricity, steam, heating, or cooling.

“Major Contractors” faced a more extensive set of tasks. In addition to the Scope 1 and Scope 2 GHG inventory, they would have been required to report on relevant Scope 3 emissions, which are all other indirect emissions that occur in a company’s value chain. These contractors would also have needed to conduct a climate risk assessment, publish an annual climate disclosure report structured according to the Task Force on Climate-related Financial Disclosures (TCFD), and set science-based emissions reduction targets validated by an organization like the Science Based Targets initiative (SBTi).

Information and Systems for Compliance

To comply, contractors would have needed internal processes for data collection. Gathering data for a GHG inventory involves tracking specific operational data, such as fuel consumed by company vehicles for Scope 1 emissions and electricity usage from utility bills for Scope 2 emissions. For “Major Contractors,” this extended to Scope 3 activities, which could involve analyzing procurement records or business travel.

The rule pointed to the GHG Protocol Corporate Accounting and Reporting Standard as the guiding framework for performing these calculations. Beyond the GHG inventory, Major Contractors would have needed to prepare a separate annual climate disclosure following the TCFD framework, which organizes information around governance, strategy, and risk management. Fulfilling these requirements would have demanded dedicated accounting and operational systems.

The Submission Process

The withdrawn rule outlined a two-part submission process. First, contractors subject to the rule would have been required to certify in the System for Award Management (SAM.gov) that they completed the necessary disclosures for their tier. This step would have served as the primary compliance check for contracting officers.

The detailed reports, such as the GHG inventory and the annual TCFD climate disclosure, were not to be uploaded directly into SAM.gov. Instead, the rule mandated that this information be made publicly available. The proposal identified the CDP (formerly the Carbon Disclosure Project) as the designated third-party system for this public disclosure.