WEBVTT - Competing Climate Rules Worry Federal Contractors 0:00:00.160 --> 0:00:02.880 Today on the podcast, we talk about the contractors who 0:00:02.880 --> 0:00:07.040 are struggling to sort out conflicting environmental transparency requests from 0:00:07.040 --> 0:00:15.520 their client, and that client happens to be Uncle Sam. Hello, 0:00:15.680 --> 0:00:18.000 and welcome back once again two Parts per Billion, the 0:00:18.079 --> 0:00:21.680 environmental podcast from Bloomberg Law. I'm your host, David Schultz. 0:00:22.200 --> 0:00:23.919 So we've talked a lot of on this podcast about 0:00:23.920 --> 0:00:26.600 the push to get corporations to disclose more info about 0:00:26.600 --> 0:00:30.200 their impact on the environment and specifically on climate change. 0:00:30.280 --> 0:00:32.080 In the past, we've looked at it from the perspective 0:00:32.159 --> 0:00:35.440 of what activists want, when investors want, what the government wants. 0:00:35.920 --> 0:00:37.720 But today we're taking a different angle and we're going 0:00:37.800 --> 0:00:40.880 to focus on what all this means for the corporations themselves, 0:00:41.240 --> 0:00:44.320 and specifically corporations that do business with the federal government. 0:00:44.840 --> 0:00:47.519 Earlier this month, the White House ordered its General Services 0:00:47.520 --> 0:00:52.040 Administration to start collecting more climate changing info from federal contractors. Now, 0:00:52.080 --> 0:00:54.600 this in itself is relatively straightforward. It just means they'll 0:00:54.600 --> 0:00:56.960 have to gather up some data on their greenhouse gas 0:00:56.960 --> 0:01:00.920 emissions and report that to the FEDS. The issue is, however, 0:01:01.480 --> 0:01:05.040 another federal agency, the Securities and Exchange Commission, is about 0:01:05.040 --> 0:01:08.440 to release its own climate reporting requirements, and it's not 0:01:08.520 --> 0:01:11.480 clear whether the SEC's rules will be mutually compatible with 0:01:11.520 --> 0:01:15.200 the GSA's Bloomberg laws. Andrew Ramonas has been reporting on 0:01:15.240 --> 0:01:18.560 these potentially competing climate reporting rules, and I brought them 0:01:18.600 --> 0:01:20.760 on the podcast to sort through all of this. The 0:01:20.840 --> 0:01:23.679 SEC's rules aren't actually out yet, so Andrew started off 0:01:23.680 --> 0:01:26.319 by explaining the rules that we have actually seen. The 0:01:26.440 --> 0:01:31.000 order directs the General Service Administration to track major contractors 0:01:31.040 --> 0:01:36.040 disclosure of greenhouse gas emissions, carbon reduction goals, and financial 0:01:36.160 --> 0:01:39.400 risk from climate change. It's kind of what some companies 0:01:39.480 --> 0:01:42.720 might already be doing to some degree and their voluntary 0:01:43.080 --> 0:01:46.760 sustainability reports that they post on their websites. So I 0:01:46.800 --> 0:01:49.800 want to make note of one key modifier that you 0:01:49.880 --> 0:01:52.920 used there. You said major, What does that mean? I 0:01:52.920 --> 0:01:54.640 guess that means that there are going to be some 0:01:54.680 --> 0:01:58.080 smaller federal contractors that don't need to do this. Yeah, yes, 0:01:58.240 --> 0:02:01.160 you're right about that what it appears to be. But 0:02:01.240 --> 0:02:05.280 there's still a lot to be seen exactly who and 0:02:05.640 --> 0:02:09.280 what will be affected. But definitely big contractors like Boeing 0:02:09.360 --> 0:02:11.440 and North or Grumman are going to have to be 0:02:12.040 --> 0:02:15.760 complying with this right. And that's something that you pointed 0:02:15.800 --> 0:02:19.239 out in your story that you know, Boeing North Grumman, 0:02:19.320 --> 0:02:21.639 the really big ones are already kind of reporting this 0:02:22.040 --> 0:02:25.840 information to other federal agencies like the EPA. So it 0:02:25.919 --> 0:02:28.520 seems like this is going to really fall on the 0:02:28.600 --> 0:02:32.480 medium size contractors because the smaller ones will be exempt, 0:02:32.720 --> 0:02:35.880 the bigger ones are already doing it. Is that really 0:02:35.919 --> 0:02:38.760 that that donut hole? Is that where it'll hurt the most, 0:02:38.840 --> 0:02:43.920 you think possibly? And you know, it also kind of 0:02:43.960 --> 0:02:48.240 depends on what they might already be doing in voluntarily. 0:02:48.480 --> 0:02:51.359 You know, some of these medium firms might be putting 0:02:51.360 --> 0:02:54.240 stuff up on their websites about their sustainability, they might 0:02:54.280 --> 0:02:58.800 be releasing greenhouse gas emissions, but there also are most 0:02:58.840 --> 0:03:02.800 likely a big chunk that aren't doing that, and that 0:03:02.840 --> 0:03:05.359 will have to kind of beef up and try to 0:03:05.400 --> 0:03:07.679 figure this out and see what they need to do. 0:03:08.280 --> 0:03:10.000 But I think the real heart of your story, and 0:03:10.000 --> 0:03:11.880 this is why I wanted to talk to you, is 0:03:11.960 --> 0:03:15.280 that it's not just the GSA that is doing this 0:03:15.720 --> 0:03:19.920 with this new executive order. The SEC is also coming 0:03:19.960 --> 0:03:24.480 out with new rules about greenhouse gas emissions reporting very 0:03:24.560 --> 0:03:27.400 soon and based on the folks that you talk to, 0:03:27.480 --> 0:03:30.200 it sounds like they might not be the same rules. 0:03:30.280 --> 0:03:32.960 They might be sort of duplicative or slightly different. That 0:03:32.960 --> 0:03:36.280 seems like it'd be a big headache for these contractors, right, Yeah, 0:03:36.320 --> 0:03:39.560 there could be with that, There could be conflicting reporting 0:03:39.640 --> 0:03:44.320 standards that could elevate litigation risks if the disclosures a 0:03:44.400 --> 0:03:48.120 company makes to compete for a government contract exceed or 0:03:48.400 --> 0:03:52.080 deemed inconsistent with what they say in SEC filings. That's 0:03:52.120 --> 0:03:56.160 what so what source told me. But you know, another 0:03:56.240 --> 0:03:58.880 source told me the name of the game is consistency 0:03:59.080 --> 0:04:02.720 because investors and other stakeholders will look to these disclosures 0:04:02.720 --> 0:04:05.760 to see if they tell the same story. Yeah, I 0:04:05.760 --> 0:04:07.360 mean that makes me think that there could be some 0:04:07.360 --> 0:04:11.240 companies that are performing pretty well on the greenhouse gas 0:04:11.600 --> 0:04:15.600 emission side, but they have file one filing that says 0:04:15.920 --> 0:04:19.440 one thing and another finally says another thing, and now 0:04:19.520 --> 0:04:23.440 their investors are saying, what's going on. Climate activists are saying, 0:04:23.480 --> 0:04:26.159 what's going on? Is that a possibility? Could we see 0:04:26.200 --> 0:04:29.880 that kind of litigation happen? Yees, So it's very possible, 0:04:29.960 --> 0:04:33.880 And you know, with government contractors, things like the false 0:04:33.880 --> 0:04:37.560 Claims Act can come into play where you know, you 0:04:37.640 --> 0:04:41.160 can't lie to the government in order to get a contract. 0:04:41.279 --> 0:04:43.760 So there's there's a lot of play, and you know, 0:04:43.800 --> 0:04:45.520 there could be a lot of a lot of legal 0:04:45.560 --> 0:04:50.599 scrutiny depending on what the GSA does, right, And let's 0:04:50.600 --> 0:04:53.080 just sort of really quickly explain what that is. I mean, 0:04:53.080 --> 0:04:54.839 you've already sort of alluded to it, but the False 0:04:54.839 --> 0:04:58.880 Claims Act is a lot that could expose some of 0:04:58.880 --> 0:05:03.240 these companies to uh, you know, some serious liability if 0:05:03.279 --> 0:05:06.200 they mislead the government in some ways. Do I have 0:05:06.279 --> 0:05:10.400 that right? Yes, that's right, that's right, And you know 0:05:10.480 --> 0:05:13.000 it could come into play here, you know. And then 0:05:13.040 --> 0:05:16.640 there's the other the other side of the coin. Let's 0:05:16.640 --> 0:05:22.000 say the GSA is requiring more detailed disclosures in the SEC. 0:05:23.520 --> 0:05:27.599 If investors think something's not quite right between what the 0:05:27.640 --> 0:05:31.240 story they're telling and the SEC disclosures versus the GSA, 0:05:31.440 --> 0:05:34.520 they you know, there could be an SEC related case 0:05:34.760 --> 0:05:40.680 out there that investors could be bringing. So there's there's 0:05:40.680 --> 0:05:43.640 a lot to keep in mind. But you know, as 0:05:43.839 --> 0:05:46.440 as I said before, what my source has told me 0:05:46.560 --> 0:05:50.240 is consistency is very important, and there's ways that you know, 0:05:50.360 --> 0:05:56.120 companies can think this through if the agencies aren't you know, 0:05:56.320 --> 0:05:59.640 aren't on the same page necessarily. Do you think that 0:05:59.760 --> 0:06:02.840 it'll be sort of a highest common denominator situation where 0:06:02.880 --> 0:06:06.919 like the companies will just default to whoever whichever rule 0:06:07.240 --> 0:06:11.400 has the most reporting requirements and kind of issue those reports. 0:06:11.560 --> 0:06:13.520 Is that something we could see or is it? Is 0:06:13.560 --> 0:06:16.240 it not quite like that? Well? I think that's what. 0:06:17.000 --> 0:06:19.680 You know, the lawyers would be advising these companies to 0:06:19.720 --> 0:06:24.479 do report whatever the highest common denominator is, so there 0:06:24.640 --> 0:06:29.080 is not you can't be accused of saying too little, 0:06:30.400 --> 0:06:33.960 even though companies might not like to do that. But 0:06:34.120 --> 0:06:56.240 I think that's that's where we go. I have to ask, 0:06:56.400 --> 0:06:59.160 why do you know or have you talked to any 0:06:59.240 --> 0:07:03.960 folks who have explained why there are these two different 0:07:04.000 --> 0:07:07.600 federal agencies moving along different but sort of parallel pads, 0:07:07.680 --> 0:07:10.600 Like is this just a situation of the federal bureaucracy 0:07:10.680 --> 0:07:12.040 is very big and it doesn't you know, the right 0:07:12.080 --> 0:07:13.800 hand doesn't always know what the left hand is doing. 0:07:14.320 --> 0:07:16.680 Or is there is there more going on here? Is 0:07:16.760 --> 0:07:20.880 there a reason why the SEC and the and you know, 0:07:20.920 --> 0:07:24.720 the GSA and maybe even the EPA are acting on 0:07:24.760 --> 0:07:27.320 their own. Well, there could be a little bit of 0:07:27.320 --> 0:07:29.600 the right hand not talking to the left hand or 0:07:29.640 --> 0:07:33.440 knowing what the other ones doing. Part of the problem 0:07:33.600 --> 0:07:38.239 is the SEC operates as an independent agency that's sort 0:07:38.280 --> 0:07:41.360 of in its own little world from the GSA. Yes, 0:07:41.480 --> 0:07:45.040 they're all you know. Biden of points that the chair 0:07:45.080 --> 0:07:49.400 of the SEC, and the points the head of the GSA. 0:07:49.440 --> 0:07:53.840 But the SEC kind of does its own thing. But 0:07:54.160 --> 0:07:56.480 the hope, at least among some of the lawyers I 0:07:56.560 --> 0:07:59.720 talked to, is that that they are coordinating, they are 0:07:59.760 --> 0:08:02.440 taught walking with each other, and that the GSA might 0:08:02.520 --> 0:08:07.360 be like, look, we see you're making these filings and 0:08:08.160 --> 0:08:12.000 your annual reports with the SEC. You're you're in the 0:08:12.040 --> 0:08:15.560 notes of you know, you're talking about your greenhouse gas 0:08:15.600 --> 0:08:19.680 emissions and other climate information that could satisfy what we want, 0:08:19.840 --> 0:08:24.080 and you're you're good to go. But uh, you know, 0:08:24.280 --> 0:08:27.680 there's always the possibility that the GSA, you know, like 0:08:27.960 --> 0:08:31.040 I could just be no, we want our own, our 0:08:31.040 --> 0:08:34.079 own thing at our own time, and this is just 0:08:34.160 --> 0:08:37.200 the way it is, and you'll have to deal with it. 0:08:37.800 --> 0:08:39.880 And then you have the EPA in there, which already 0:08:39.920 --> 0:08:45.360 requires some disclosures about greenhouse gas emissions, and they're not 0:08:45.520 --> 0:08:50.160 necessarily as detailed as the SEC might be looking for, 0:08:50.600 --> 0:08:54.920 but they have their own requirements and I know already 0:08:55.040 --> 0:08:57.600 that at least between the SEC and the EPA, there 0:08:57.679 --> 0:09:01.720 have been discussions to try to, you know, hopefully find 0:09:01.760 --> 0:09:06.200 some common ground there there may be and there almost 0:09:06.240 --> 0:09:09.679 certainly are federal contractors that are not public companies, so 0:09:09.720 --> 0:09:13.920 they wouldn't have to comply with the SEC's rules, but 0:09:14.000 --> 0:09:18.640 they will have to comply with the GSA rules. That 0:09:19.040 --> 0:09:21.040 would seem like it would put them in a really 0:09:21.040 --> 0:09:25.040 tough position because these companies may not have the ability 0:09:25.160 --> 0:09:28.080 or the infrastructure to get this information and reported out 0:09:28.520 --> 0:09:31.000 in a way that public companies are probably already used 0:09:31.040 --> 0:09:34.599 to do. Yeah, there there is definitely that that possibility 0:09:35.280 --> 0:09:37.680 and that these companies would kind of be forced to 0:09:37.760 --> 0:09:41.000 become at least public and how they do do this. 0:09:41.240 --> 0:09:45.000 But look, you know, if we're talking about major contractors, 0:09:45.360 --> 0:09:49.319 whether they're private or public, they're they're probably they're mostly 0:09:49.360 --> 0:09:53.760 big companies. They should have the resources and the funds 0:09:53.800 --> 0:09:56.680 to do it. Whether they would like to be spending 0:09:56.679 --> 0:10:00.320 their money on these things, and that's another another question. Yeah, 0:10:00.360 --> 0:10:02.200 that's a good but we're not talking about like mom 0:10:02.240 --> 0:10:06.320 and pop, you know companies here. Yeah, okay, so what 0:10:06.360 --> 0:10:10.080 are the next steps here? As you reported on, the 0:10:10.120 --> 0:10:16.120 proposal from the GSA came out and the SEC proposal 0:10:16.200 --> 0:10:18.560 has yet to come out, but it could be pretty soon. 0:10:18.960 --> 0:10:20.800 What kind of timeline are we talking about here? When 0:10:20.800 --> 0:10:24.000 when will these be in effect? So it's sort of 0:10:24.080 --> 0:10:27.760 unclear when the GSA rules will take effect, but they 0:10:27.880 --> 0:10:31.520 have been you know, the GSA has been seeking common 0:10:31.600 --> 0:10:35.880 on how they should look and you know, as far 0:10:35.920 --> 0:10:40.120 as the SEC, SEC chair Gary Gensler said this month 0:10:40.160 --> 0:10:43.200 that he's hoping his agency's proposal will come out in 0:10:43.280 --> 0:10:48.040 early twenty twenty two, So, uh, we'll see early twenty Okay, 0:10:48.120 --> 0:10:51.840 that's uh, that's bureau bureaucrat TSE for. We're not really 0:10:51.880 --> 0:10:54.160 sure when this is coming out, but we hope it 0:10:54.160 --> 0:10:58.480 will be soon's Yeah, it was actually you know, on 0:10:58.640 --> 0:11:01.240 his agenda to come out to this year, but it 0:11:01.280 --> 0:11:04.880 does not appear to be happening as we're quickly approaching 0:11:05.280 --> 0:11:08.319 at the end of the year. Oh well, I guess 0:11:08.360 --> 0:11:09.880 that's there will be something to look for in the 0:11:09.880 --> 0:11:14.840 winter and spring. But finally, where do you see like 0:11:14.880 --> 0:11:18.560 the sort of future of climate reporting or corporate climate 0:11:18.600 --> 0:11:22.160 reporting heading. This is something you cover a lot. Do 0:11:22.240 --> 0:11:26.400 you see you know, eventually maybe one agency that will 0:11:26.440 --> 0:11:29.520 be responsible for collecting this and make the reporting and 0:11:29.559 --> 0:11:33.440 collecting information burden a little bit easier on these companies 0:11:33.559 --> 0:11:35.880 or do you see the number of agencies just continue 0:11:35.880 --> 0:11:38.160 to grow and there will be you know, twenty seven 0:11:38.200 --> 0:11:40.520 different reports that each company will have to file. What 0:11:40.559 --> 0:11:43.319 direction do you see this heading in? Well, every agency 0:11:43.480 --> 0:11:47.920 may want its own thing, but its own its own disclosures, 0:11:47.960 --> 0:11:54.520 its own reporting. But you know, the GSA could as 0:11:54.559 --> 0:11:56.680 I as I said before, they could they could look 0:11:56.679 --> 0:12:00.760 to the SEC and say, uh, what you do for 0:12:00.800 --> 0:12:04.200 the SEC is good for us. Then again they could 0:12:04.240 --> 0:12:08.679 say something different, you know, stay tuned. Yeah, but I 0:12:08.720 --> 0:12:11.040 just have to you know, it seems like we've talked 0:12:11.040 --> 0:12:14.440 about this before, but the demand for climate data and 0:12:14.480 --> 0:12:18.160 for environmental data in general is just going only in 0:12:18.160 --> 0:12:22.240 one direction. It's going up, you know, from investors, from 0:12:22.320 --> 0:12:26.679 the government, from activists. It just seems like companies are 0:12:26.720 --> 0:12:30.160 going to have to eventually figure out a way to 0:12:31.160 --> 0:12:34.600 really get this out all out there in a you know, 0:12:34.679 --> 0:12:40.360 easy and efficient manner instead of you know, it almost 0:12:40.360 --> 0:12:42.560 seems like they're pulling teeth in some sense, you know, 0:12:43.280 --> 0:12:45.440 the way it is now to get climate data out 0:12:45.480 --> 0:12:49.880 of these companies. Right, Yeah, it can be. It can 0:12:49.960 --> 0:12:52.920 be like pulling teeth. But you know it's one of 0:12:52.960 --> 0:12:57.200 my sources said it said to me, you know, regardless 0:12:57.280 --> 0:13:00.719 whether some companies want to do this or not, industry 0:13:00.880 --> 0:13:06.440 generally we're moving in this direction. We're industries trying to 0:13:07.040 --> 0:13:11.120 you know, be more environmentally friendly, trying to at least 0:13:11.760 --> 0:13:15.600 say they are so. Uh, you know, yes, it might 0:13:15.640 --> 0:13:20.000 be they might not like the way that the SEC 0:13:20.240 --> 0:13:25.440 or the GSA requires them to say they're environmentally friendly, 0:13:25.920 --> 0:13:30.920 if you will. But sooner or later, you know, all 0:13:31.000 --> 0:13:33.680 big companies at least are going to have to make 0:13:33.800 --> 0:13:38.320 something that some sort of disclosure like that to the government. 0:13:39.000 --> 0:13:43.760 All right, Well, that was Andrews with the Bloomberg Law 0:13:43.840 --> 0:13:46.840 speaking to us. Andrew, thank you so much for a time, 0:13:47.200 --> 0:13:50.440 Thank you for having me. And that's it for today's 0:13:50.480 --> 0:13:53.080 episode of Parts for Avillion. If you want more environmental news, 0:13:53.120 --> 0:13:55.960 check us out on Twitter. We use the handle at environment. 0:13:56.040 --> 0:13:59.680 Just that at environment, I'm at David B. Schultz. That's 0:13:59.720 --> 0:14:03.120 b Bye bye. Twenty twenty one, Today's episode of Parts 0:14:03.120 --> 0:14:05.599 for Billion was produced by myself, David Schultz. Parts for 0:14:05.679 --> 0:14:08.120 Billion was created by Jessica Coombs and Rachel Dagle and 0:14:08.240 --> 0:14:11.440 is edited by Rebecca Baker and Chuck McCutcheon. Executive producer 0:14:11.520 --> 0:14:16.040 is Josh Block. Thanks everyone for listening. You don't need 0:14:16.080 --> 0:14:18.280 to be a judge to be interested in our nation's 0:14:18.360 --> 0:14:21.640 laws and legal institutions, just like you don't need to 0:14:21.640 --> 0:14:23.800 have a law degree to be curious about the inner 0:14:23.840 --> 0:14:27.360 workings of courts, law firms, and law schools. That's where 0:14:27.360 --> 0:14:30.080 we come in. My name's Adam Allington, and I'm the 0:14:30.120 --> 0:14:34.000 host of Uncommon Law, a podcast from the Bloomberg Industry Group. 0:14:34.320 --> 0:14:37.960 Uncommon Law is where public policy, storytelling, and the law 0:14:38.000 --> 0:14:42.360 are combined. We explore big topics ranging from tech policy 0:14:42.440 --> 0:14:46.400 to free speech, to race and gender diversity. So please 0:14:46.440 --> 0:14:49.120 give us a listen. You can subscribe and download today 0:14:49.360 --> 0:14:52.880 Just search for Uncommon Law wherever you get your podcasts. 0:14:53.480 --> 0:14:54.200 Thanks so much,