ABA urges agencies to rethink proposed climate disclosure rule

A proposed rule to require certain federal contractors to disclose and reduce their greenhouse gas emissions could place impractical requirements on banks and other businesses, the American Bankers Association said today. The association urged federal agencies to retract the rule and resubmit it after making several modifications.

Last year, the Department of Defense, General Services Administration and NASA proposed a rule to require contractors to disclose their emissions and climate-related risks, as well as set targets for reducing emissions. In  a letter to the agencies, ABA raised several concerns about the proposed requirements, noting that regulated banks of all sizes may be considered contractors. The rule may be more onerous than what is intended by the agencies, the association said. It would hand practical regulatory powers to non-governmental organizations. It would confuse investors and government contracting managers. It also misunderstands the practical use of scope 3 financed emission measurements—those emissions not directly controlled by an organization—and significantly underestimates the costs of compliance.

ABA said that at a minimum, the agencies should clarify the scope of companies that would be subject to the rule, explain how the rule would be implemented alongside proposed climate-disclosure rules from the Securities and Exchange Commission, and eliminate requirements for scope 3 financed emission disclosures and detailed results for scenario analysis. “We urge the agencies, therefore, to retract the proposed rule and resubmit a new one, with significant changes, after implementation of the upcoming SEC’s final rule on climate-related disclosure,” ABA said.