Speaker 1: Today on the podcast, we talk about the contractors who
Speaker 1: are struggling to sort out conflicting environmental transparency requests from
Speaker 1: their client, and that client happens to be Uncle Sam. Hello,
Speaker 1: and welcome back once again two Parts per Billion, the
Speaker 1: environmental podcast from Bloomberg Law. I'm your host, David Schultz.
Speaker 1: So we've talked a lot of on this podcast about
Speaker 1: the push to get corporations to disclose more info about
Speaker 1: their impact on the environment and specifically on climate change.
Speaker 1: In the past, we've looked at it from the perspective
Speaker 1: of what activists want, when investors want, what the government wants.
Speaker 1: But today we're taking a different angle and we're going
Speaker 1: to focus on what all this means for the corporations themselves,
Speaker 1: and specifically corporations that do business with the federal government.
Speaker 1: Earlier this month, the White House ordered its General Services
Speaker 1: Administration to start collecting more climate changing info from federal contractors. Now,
Speaker 1: this in itself is relatively straightforward. It just means they'll
Speaker 1: have to gather up some data on their greenhouse gas
Speaker 1: emissions and report that to the FEDS. The issue is, however,
Speaker 1: another federal agency, the Securities and Exchange Commission, is about
Speaker 1: to release its own climate reporting requirements, and it's not
Speaker 1: clear whether the SEC's rules will be mutually compatible with
Speaker 1: the GSA's Bloomberg laws. Andrew Ramonas has been reporting on
Speaker 1: these potentially competing climate reporting rules, and I brought them
Speaker 1: on the podcast to sort through all of this. The
Speaker 1: SEC's rules aren't actually out yet, so Andrew started off
Speaker 1: by explaining the rules that we have actually seen. The
Speaker 1: order directs the General Service Administration to track major contractors
Speaker 1: disclosure of greenhouse gas emissions, carbon reduction goals, and financial
Speaker 1: risk from climate change. It's kind of what some companies
Speaker 1: might already be doing to some degree and their voluntary
Speaker 1: sustainability reports that they post on their websites. So I
Speaker 1: want to make note of one key modifier that you
Speaker 1: used there. You said major, What does that mean? I
Speaker 1: guess that means that there are going to be some
Speaker 1: smaller federal contractors that don't need to do this. Yeah, yes,
Speaker 1: you're right about that what it appears to be. But
Speaker 1: there's still a lot to be seen exactly who and
Speaker 1: what will be affected. But definitely big contractors like Boeing
Speaker 1: and North or Grumman are going to have to be
Speaker 1: complying with this right. And that's something that you pointed
Speaker 1: out in your story that you know, Boeing North Grumman,
Speaker 1: the really big ones are already kind of reporting this
Speaker 1: information to other federal agencies like the EPA. So it
Speaker 1: seems like this is going to really fall on the
Speaker 1: medium size contractors because the smaller ones will be exempt,
Speaker 1: the bigger ones are already doing it. Is that really
Speaker 1: that that donut hole? Is that where it'll hurt the most,
Speaker 1: you think possibly? And you know, it also kind of
Speaker 1: depends on what they might already be doing in voluntarily.
Speaker 1: You know, some of these medium firms might be putting
Speaker 1: stuff up on their websites about their sustainability, they might
Speaker 1: be releasing greenhouse gas emissions, but there also are most
Speaker 1: likely a big chunk that aren't doing that, and that
Speaker 1: will have to kind of beef up and try to
Speaker 1: figure this out and see what they need to do.
Speaker 1: But I think the real heart of your story, and
Speaker 1: this is why I wanted to talk to you, is
Speaker 1: that it's not just the GSA that is doing this
Speaker 1: with this new executive order. The SEC is also coming
Speaker 1: out with new rules about greenhouse gas emissions reporting very
Speaker 1: soon and based on the folks that you talk to,
Speaker 1: it sounds like they might not be the same rules.
Speaker 1: They might be sort of duplicative or slightly different. That
Speaker 1: seems like it'd be a big headache for these contractors, right, Yeah,
Speaker 1: there could be with that, There could be conflicting reporting
Speaker 1: standards that could elevate litigation risks if the disclosures a
Speaker 1: company makes to compete for a government contract exceed or
Speaker 1: deemed inconsistent with what they say in SEC filings. That's
Speaker 1: what so what source told me. But you know, another
Speaker 1: source told me the name of the game is consistency
Speaker 1: because investors and other stakeholders will look to these disclosures
Speaker 1: to see if they tell the same story. Yeah, I
Speaker 1: mean that makes me think that there could be some
Speaker 1: companies that are performing pretty well on the greenhouse gas
Speaker 1: emission side, but they have file one filing that says
Speaker 1: one thing and another finally says another thing, and now
Speaker 1: their investors are saying, what's going on. Climate activists are saying,
Speaker 1: what's going on? Is that a possibility? Could we see
Speaker 1: that kind of litigation happen? Yees, So it's very possible,
Speaker 1: And you know, with government contractors, things like the false
Speaker 1: Claims Act can come into play where you know, you
Speaker 1: can't lie to the government in order to get a contract.
Speaker 1: So there's there's a lot of play, and you know,
Speaker 1: there could be a lot of a lot of legal
Speaker 1: scrutiny depending on what the GSA does, right, And let's
Speaker 1: just sort of really quickly explain what that is. I mean,
Speaker 1: you've already sort of alluded to it, but the False
Speaker 1: Claims Act is a lot that could expose some of
Speaker 1: these companies to uh, you know, some serious liability if
Speaker 1: they mislead the government in some ways. Do I have
Speaker 1: that right? Yes, that's right, that's right, And you know
Speaker 1: it could come into play here, you know. And then
Speaker 1: there's the other the other side of the coin. Let's
Speaker 1: say the GSA is requiring more detailed disclosures in the SEC.
Speaker 1: If investors think something's not quite right between what the
Speaker 1: story they're telling and the SEC disclosures versus the GSA,
Speaker 1: they you know, there could be an SEC related case
Speaker 1: out there that investors could be bringing. So there's there's
Speaker 1: a lot to keep in mind. But you know, as
Speaker 1: as I said before, what my source has told me
Speaker 1: is consistency is very important, and there's ways that you know,
Speaker 1: companies can think this through if the agencies aren't you know,
Speaker 1: aren't on the same page necessarily. Do you think that
Speaker 1: it'll be sort of a highest common denominator situation where
Speaker 1: like the companies will just default to whoever whichever rule
Speaker 1: has the most reporting requirements and kind of issue those reports.
Speaker 1: Is that something we could see or is it? Is
Speaker 1: it not quite like that? Well? I think that's what.
Speaker 1: You know, the lawyers would be advising these companies to
Speaker 1: do report whatever the highest common denominator is, so there
Speaker 1: is not you can't be accused of saying too little,
Speaker 1: even though companies might not like to do that. But
Speaker 1: I think that's that's where we go. I have to ask,
Speaker 1: why do you know or have you talked to any
Speaker 1: folks who have explained why there are these two different
Speaker 1: federal agencies moving along different but sort of parallel pads,
Speaker 1: Like is this just a situation of the federal bureaucracy
Speaker 1: is very big and it doesn't you know, the right
Speaker 1: hand doesn't always know what the left hand is doing.
Speaker 1: Or is there is there more going on here? Is
Speaker 1: there a reason why the SEC and the and you know,
Speaker 1: the GSA and maybe even the EPA are acting on
Speaker 1: their own. Well, there could be a little bit of
Speaker 1: the right hand not talking to the left hand or
Speaker 1: knowing what the other ones doing. Part of the problem
Speaker 1: is the SEC operates as an independent agency that's sort
Speaker 1: of in its own little world from the GSA. Yes,
Speaker 1: they're all you know. Biden of points that the chair
Speaker 1: of the SEC, and the points the head of the GSA.
Speaker 1: But the SEC kind of does its own thing. But
Speaker 1: the hope, at least among some of the lawyers I
Speaker 1: talked to, is that that they are coordinating, they are
Speaker 1: taught walking with each other, and that the GSA might
Speaker 1: be like, look, we see you're making these filings and
Speaker 1: your annual reports with the SEC. You're you're in the
Speaker 1: notes of you know, you're talking about your greenhouse gas
Speaker 1: emissions and other climate information that could satisfy what we want,
Speaker 1: and you're you're good to go. But uh, you know,
Speaker 1: there's always the possibility that the GSA, you know, like
Speaker 1: I could just be no, we want our own, our
Speaker 1: own thing at our own time, and this is just
Speaker 1: the way it is, and you'll have to deal with it.
Speaker 1: And then you have the EPA in there, which already
Speaker 1: requires some disclosures about greenhouse gas emissions, and they're not
Speaker 1: necessarily as detailed as the SEC might be looking for,
Speaker 1: but they have their own requirements and I know already
Speaker 1: that at least between the SEC and the EPA, there
Speaker 1: have been discussions to try to, you know, hopefully find
Speaker 1: some common ground there there may be and there almost
Speaker 1: certainly are federal contractors that are not public companies, so
Speaker 1: they wouldn't have to comply with the SEC's rules, but
Speaker 1: they will have to comply with the GSA rules. That
Speaker 1: would seem like it would put them in a really
Speaker 1: tough position because these companies may not have the ability
Speaker 1: or the infrastructure to get this information and reported out
Speaker 1: in a way that public companies are probably already used
Speaker 1: to do. Yeah, there there is definitely that that possibility
Speaker 1: and that these companies would kind of be forced to
Speaker 1: become at least public and how they do do this.
Speaker 1: But look, you know, if we're talking about major contractors,
Speaker 1: whether they're private or public, they're they're probably they're mostly
Speaker 1: big companies. They should have the resources and the funds
Speaker 1: to do it. Whether they would like to be spending
Speaker 1: their money on these things, and that's another another question. Yeah,
Speaker 1: that's a good but we're not talking about like mom
Speaker 1: and pop, you know companies here. Yeah, okay, so what
Speaker 1: are the next steps here? As you reported on, the
Speaker 1: proposal from the GSA came out and the SEC proposal
Speaker 1: has yet to come out, but it could be pretty soon.
Speaker 1: What kind of timeline are we talking about here? When
Speaker 1: when will these be in effect? So it's sort of
Speaker 1: unclear when the GSA rules will take effect, but they
Speaker 1: have been you know, the GSA has been seeking common
Speaker 1: on how they should look and you know, as far
Speaker 1: as the SEC, SEC chair Gary Gensler said this month
Speaker 1: that he's hoping his agency's proposal will come out in
Speaker 1: early twenty twenty two, So, uh, we'll see early twenty Okay,
Speaker 1: that's uh, that's bureau bureaucrat TSE for. We're not really
Speaker 1: sure when this is coming out, but we hope it
Speaker 1: will be soon's Yeah, it was actually you know, on
Speaker 1: his agenda to come out to this year, but it
Speaker 1: does not appear to be happening as we're quickly approaching
Speaker 1: at the end of the year. Oh well, I guess
Speaker 1: that's there will be something to look for in the
Speaker 1: winter and spring. But finally, where do you see like
Speaker 1: the sort of future of climate reporting or corporate climate
Speaker 1: reporting heading. This is something you cover a lot. Do
Speaker 1: you see you know, eventually maybe one agency that will
Speaker 1: be responsible for collecting this and make the reporting and
Speaker 1: collecting information burden a little bit easier on these companies
Speaker 1: or do you see the number of agencies just continue
Speaker 1: to grow and there will be you know, twenty seven
Speaker 1: different reports that each company will have to file. What
Speaker 1: direction do you see this heading in? Well, every agency
Speaker 1: may want its own thing, but its own its own disclosures,
Speaker 1: its own reporting. But you know, the GSA could as
Speaker 1: I as I said before, they could they could look
Speaker 1: to the SEC and say, uh, what you do for
Speaker 1: the SEC is good for us. Then again they could
Speaker 1: say something different, you know, stay tuned. Yeah, but I
Speaker 1: just have to you know, it seems like we've talked
Speaker 1: about this before, but the demand for climate data and
Speaker 1: for environmental data in general is just going only in
Speaker 1: one direction. It's going up, you know, from investors, from
Speaker 1: the government, from activists. It just seems like companies are
Speaker 1: going to have to eventually figure out a way to
Speaker 1: really get this out all out there in a you know,
Speaker 1: easy and efficient manner instead of you know, it almost
Speaker 1: seems like they're pulling teeth in some sense, you know,
Speaker 1: the way it is now to get climate data out
Speaker 1: of these companies. Right, Yeah, it can be. It can
Speaker 1: be like pulling teeth. But you know it's one of
Speaker 1: my sources said it said to me, you know, regardless
Speaker 1: whether some companies want to do this or not, industry
Speaker 1: generally we're moving in this direction. We're industries trying to
Speaker 1: you know, be more environmentally friendly, trying to at least
Speaker 1: say they are so. Uh, you know, yes, it might
Speaker 1: be they might not like the way that the SEC
Speaker 1: or the GSA requires them to say they're environmentally friendly,
Speaker 1: if you will. But sooner or later, you know, all
Speaker 1: big companies at least are going to have to make
Speaker 1: something that some sort of disclosure like that to the government.
Speaker 1: All right, Well, that was Andrews with the Bloomberg Law
Speaker 1: speaking to us. Andrew, thank you so much for a time,
Speaker 1: Thank you for having me. And that's it for today's
Speaker 1: episode of Parts for Avillion. If you want more environmental news,
Speaker 1: check us out on Twitter. We use the handle at environment.
Speaker 1: Just that at environment, I'm at David B. Schultz. That's
Speaker 1: b Bye bye. Twenty twenty one, Today's episode of Parts
Speaker 1: for Billion was produced by myself, David Schultz. Parts for
Speaker 1: Billion was created by Jessica Coombs and Rachel Dagle and
Speaker 1: is edited by Rebecca Baker and Chuck McCutcheon. Executive producer
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