Guest essay by Eric Worrall
Companies which took the easy route of paying lip service to climate issues, instead of opposing green lies, may be about to pay a high price for their decades of complacency.
According to the WSJ;
Enlist the Market in the Climate-Change Fight
Standardized disclosure of climate risk will help secure long-term value for investors and taxpayers.
Even before the devastating flooding began in Louisiana last week, and we learned that July 2016 shattered all global temperature records, mounting data had demonstrated the growing risks climate change poses to the global economy. Whether you are an investor assessing the $2 trillion in bonds that Moody’s found carry elevated near-term climate risk, one of the nearly two million U.S. homeowners facing significant risk from climate-related flooding, or a U.S. taxpayer staring at $360 billion in direct government costs from extreme weather over the past decade—these threats are looming, large and increasing.
This year’s World Economic Forum Global Risks Report declared the “failure of climate-change mitigation and adaptation” the “risk with the greatest potential impact in 2016.” Yet financial markets suffer from an alarming lack of standardized and comparable climate-risk information, which keeps investors and policy makers from accurately incorporating these risks into their decisions. Combating climate change requires not only leveraging bold action by governments to cut carbon pollution, but also harnessing the power of market forces with clear, uniformly disclosed assessments of climate-related economic risks.
This starts by changing the way the federal government does business. On Friday, the Federal Emergency Management Agency is proposing the first update to federal flood standards in 40 years. These needed changes will reduce the risks and costs of flood disasters, including lost lives and up to hundreds of millions in taxpayer dollars. In coming months, our Housing and Transportation Departments will issue similar, new standards.
Likewise, the administration recently proposed requiring that all companies doing business with the federal government publicly disclose what they know about their climate-risk exposure. This information will be a factor in taxpayer-funded contracting decisions. The administration is also working to increase disclosure of climate risks that America’s more than 140 million pension beneficiaries face in their investments. And we now require that our agencies consider and publicly disclose climate risk when undertaking other major federal actions, like leases of public resources, issuance of permits, and investment in infrastructure.
The World Economic Forum report;
What are the top global risks for 2016?
From the environment to international security and the coming Fourth Industrial Revolution, the World Economic Forum’s Global Risks Report 2016 finds risks on the rise in 2016.
In this year’s annual survey, almost 750 experts assessed 29 separate global risks for both impact and likelihood over a 10-year time horizon. The risk with the greatest potential impact in 2016 was found to be a failure of climate change mitigation and adaptation. This is the first time since the report was published in 2006 that an environmental risk has topped the ranking. This year, it was considered to have greater potential damage than weapons of mass destruction (2nd), water crises (3rd), large-scale involuntary migration (4th) and severe energy price shock (5th).
The Obama Administration of course is leading the charge, by moving towards requiring private tenders for government contracts to be assessed on how much climate risk information the tenderers submit.
The Federal announcement referenced by the World Economic Forum article;
Making Federal Acquisitions Climate-Smart
MAY 25, 2016 AT 10:00 AM ET BY ANNE RUNG, ALI ZAIDI, CHRISTINE HARADA
Summary: Today, the Administration proposed a rule that would drive greater disclosure of greenhouse gas emissions & climate-related risk data among the Government’s supply chain.
The idiom that ‘you don’t manage what you don’t measure’ holds when it comes to greenhouse gas emissions and climate-related risk.
It’s the responsible thing to do to take steps to understand the sustainability – and challenges – associated with your supply chain; and that’s especially true when you’re the Federal Government and that supply chain exceeds $400 billion per year.
Today’s action does just that.
Today the Federal Acquisition Regulatory Council proposed for public comment a rule that would drive greater disclosure in the Federal Government’s supply chain to indicate if and where contractors and vendors publicly disclose greenhouse gas emissions, greenhouse gas reduction goals or targets, and climate-related risks—such as physical risks to operations associated with extreme weather events. The proposed rule puts even more focus on how we manage the Federal Government’s supply chain and the data we need to do that responsibly, and it leverages the Federal Government’s purchasing power to push for this type of unprecedented disclosure Government-wide.
By understanding where larger contractors and vendors that sell goods and services to the Federal Government disclose this information, we’ll be able to better assess supplier greenhouse gas management practices, manage direct and indirect greenhouse gas emission, address climate-risk in the Federal Government’s supply chain, and engage with contractors to reduce supply chain emissions.
Already, individual Federal agencies have started to manage their supply chains in this way. For example, just last month, the Department of Navy requested that its 100 largest suppliers disclose their greenhouse gas emissions and strategies for cutting them. And in 2014, the U.S. General Services Administration factored in greenhouse gas intensity (paired with estimated damages from those emissions) to make multi-million dollar contract awards for domestic delivery services for both air and ground shipments.
There are significant existing demand drivers for disclosure of greenhouse gas emissions and climate-related risk data, including growing calls from investors, insurers, and institutions like the Financial Stability Board. Today’s announcement sends another clear market signal that there is strong interest for disclosure of greenhouse gas emissions and climate-related risk data government-wide.
Anne Rung is the U.S. Chief Acquisition Officer.
Ali Zaidi is the Associate Director for Natural Resources, Energy, and Science at the Office of Management and Budget.
Christine Harada is the Federal Chief Sustainability Officer at the Council on Environmental Quality.
The Federal Government announcement may be the most immediately damaging. Quite apart from the extra costs, it potentially allows Federal bureaucrats to reject bids which offer best value for money on the basis of a qualitative judgement as to whether the bidder has provided the right “climate risk” information – which may pave the way for more Federal procurement corruption.
But make no mistake. If you run a construction business, or your business is in some other way sensitive to environmental pressure, your compliance and planning costs will likely skyrocket, unless you take steps now to challenge some of the more ridiculous green assertions which will shortly be added to various statutes, such as wild predictions of imminent accelerated sea level rise.
Paying lip service to green issues will no longer protect your business from increasingly damaging compliance requirements based on green fantasies.