Aerospace Industries Association (AIA) president and CEO Eric Fanning is warning of national security consequences of the proposed Federal Supplier Climate Risks and Resilience Rule, which would call for government contractors to report their own and, for some, their supply chain’s greenhouse emissions according to the guidelines established an independent, international standards body.
According to the proposal released late last year, companies bringing in more than $50 million in government contracts would be required to report Scope 1, 2, and 3 emissions, while those with between $7.5 million and $50 must report Scope 1 and 2 emissions.
Testifying before the House Science, Space, and Technology’s investigations and oversight subcommittee this week, Fanning cautioned against allowing an international body such as the Standards-Based Technology initiative (SBTi) to establish the standards for contractors jeopardizes U.S. leadership in sustainability and “opens the door for foreign influence over U.S. government procurement.” He noted SBTi is led by foreign nationals and is not accountable to the U.S. government. “The organization is designed to create transparency around greenhouse gas emissions, but has no transparency of its own,” he maintained.
Under the proposal, he said, other international government organization will solict information regarding a company’s environmental impact and targets. “If a contractor does not provide this information or if SBTi does not approve their targets, then the contractor would be ruled ineligible for federal contracts,” Fanning said. “In other words, it gives an international body the authority to determine which American companies can and can’t do business with the U.S. government, including our military….It is an unnecessary and unacceptable risk for the U.S. government to divest this authority.”
He further expressed concern at the prospect of forcing aerospace and defense companies to report on Scope 3 emissions, which are defined as those that “are not produced by the company itself and are not the result of activities from assets owned or controlled by them, but by those that it's indirectly responsible for up and down its value chain.” Fanning said such a mandate is not executable and poses national security challenges.
“For an industry like aerospace and defense that builds platforms, lasts for decades, and has a global supply chain and a global market, being able to get accurate information to aggregate into that report seems inexecutable,” Fanning said. “When you add in the national security component, because if you are talking about federal contractors and aerospace and defense, the Department of Defense, is the biggest customer. We are not even sure if they would offer that information, nor would we want them to for national security reasons.”
Simply put, Fanning said the proposal threatens national security by disclosure of sensitive information on military systems to foreign nationals.
“Congress should be particularly concerned about the national security implications of the rule,” he added.