ASTM E3377-24

This international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for the
Development of International Standards, Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade (TBT) Committee.
Designation: E3377 − 24
Standard Guide for
Environmental, Social, and Governance (ESG) Disclosure
Related to Climate and Community
This standard is issued under the fixed designation E3377; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A
superscript epsilon (´) indicates an editorial change since the last revision or reapproval.
1. Scope
Appendix X6 Resources for Consumer Focused ESG Disclosures
Appendix X7 Resources for ESG Disclosures: Enterprise Software
1.1 This guide provides an overview of frameworks used for
Platforms
environmental, social, and governance (ESG) disclosures ap- Appendix X8 Overview of ESG Ratings
plicable to a variety of organizations.
1.6 Before beginning the ESG disclosures process, organi-
zations should document the information and data identified
1.2 This guide discusses the history and purpose of ESG
disclosure frameworks, as well as the challenges associated and evaluated, clarify the professional judgement factors con-
sidered during decision making and state how those factors
with the greater interest in and broader requirements for
transparency and accountability in the information used in influenced decisions or actions, and document the relevant
technical policy decisions. The organization should verify that
disclosures.
the data and information which are to be used in the ESG
1.3 The focus of this guide is the array of ESG disclosure
disclosures process, including historical data and current data,
frameworks and the regulatory context for organizations mak-
will be relevant to and of sufficient quantity and quality to
ing ESG disclosures including climate and community con-
answer the questions posed and the decisions made in the ESG
cerns.
disclosures process.
1.4 The goal of this guide is to improve the users’ under-
1.7 The ESG disclosures should be appropriate, relevant,
standing of ESG disclosure frameworks and to outline but not
and decision-useful disclosures suited to a particular request,
to supersede federal, state, tribal, and local regulatory
purpose, or target audience.
requirements, and guidelines for disclosures. This guide can be
used in situations where there may not be a regulatory
1.8 The ESG disclosure frameworks discussed in this guide
requirement or framework for disclosure, or where the user
vary widely in ESG elements. For example, some ESG
wishes to conduct voluntary disclosure initiatives. In addition,
frameworks focus only on disclosure of a select set of
it can also be used to standardize efforts when several different
environmental factors such as regulated emissions. The wider
disclosure requirements apply to an organization.
range of ESG elements that may be disclosed are summarized
below.
1.5 This guide is organized as follows:
1.8.1 The environmental component of the disclosures
Section 1 Scope
Section 2 Referenced Documents
might focus on an organization’s impact on the environment—
Section 3 Terminology
for example, its energy and water inputs and pollution outputs.
Section 4 Significance and Use
It also might focus on the risks and opportunities associated
Section 5 Overview of ESG Disclosure Requirements and Guidelines
Section 6 Overview of ESG Disclosure Frameworks
with the impacts of climate change on or by the company, its
Section 7 Common Elements of ESG Disclosures
supply chains and value chains, its industry, and the commu-
Section 8 Data Sources and Metrics
nities in which its facilities and operations reside. Key ele-
Section 9 Materiality Determinations
Section 10 Communications Methods and Best Practices
ments of the environmental component may include carbon
Section 11 Keywords
footprint; resource consumption; resource depletion; energy
Appendix X1 Resources for this Guide: Weblinks
efficiency; renewable energy; greenhouse gas emissions; waste
Appendix X2 Example State and Municipal Disclosure Requirements
Appendix X3 Example Industry-Specific Disclosure Templates
reduction, recycle, reuse, and waste management; pollution
Appendix X4 Databases for Federal Environmental Criteria
prevention; and issues related to environmental justice.
Appendix X5 Resources for Social and Governance Criteria
1.8.2 The social component of the disclosures might focus
on the organization’s relationship with people and society—for
This guide is under the jurisdiction of ASTM Committee E50 on Environmental
example, opportunities and risks for diversity and inclusion;
Assessment, Risk Management and Corrective Action and is the direct responsibil-
human rights; the rights of Indigenous People; specific faith-
ity of Subcommittee E50.07 on Climate and Community.
based issues; health and safety of employees, customers,
Current edition approved March 15, 2024. Published March 2024. DOI:
10.1520/E3377–24. consumers, and communities, both locally and/or globally;
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States
E3377 − 24
company investment in its local community; and how such IEEE/ASTM SI 10 American National Standard for Use of the
issues are addressed by the organization in its facilities and its International System of Units (SI): The Modern Metric Sys-
value and supply chains. Key elements of the social component tem.
of disclosures may include employee relations; customers and
1.15 This standard does not purport to address safety
consumer relations; supply and value chain management;
concerns, if any, associated with its use. It is the responsibility
workplace health and safety; human rights; and community
of the user of this standard to establish appropriate safety,
relations.
health, and environmental practices and determine the appli-
1.8.3 The governance component of the disclosures might
cability of regulatory limitations prior to use.
focus on as how the organization is run—for example, trans-
1.16 This international standard was developed in accor-
parency and reporting; ethics; compliance; shareholder rights;
dance with internationally recognized principles on standard-
and the composition and role of the board of directors and/or
ization established in the Decision on Principles for the
senior management team. Key elements of the governance
Development of International Standards, Guides and Recom-
component of disclosures may include organizational structure;
mendations issued by the World Trade Organization Technical
diversity; compensation; business ethics; reporting; transpar-
Barriers to Trade (TBT) Committee.
ency; oversight; communications; regulatory compliance; tax
strategy; political actions (such as lobbying and campaign 2. Referenced Documents
contributions); investor relations; shareholder and stakeholder
2.1 ASTM Standards:
rights; and decision-making regarding opportunity and risk
E1369 Guide for Selecting Techniques for Treating Uncer-
management strategy for the organization, and its value and
tainty and Risk in the Economic Evaluation of Buildings
supply chains.
and Building Systems
1.9 This guide assists users in navigating the array of
E2013 Practice for Developing Functions, Constructing
various ESG disclosure frameworks. It is not the intent of this FAST Diagrams, and Performing Function Analysis Dur-
guide to define the technical decisions or professional judge- ing Value Engineering (VE)/Value Analysis (VA) Study
ments appropriate for each user, but rather to provide informa-
E2081 Guide for Risk-Based Corrective Action
tion on the existing decision frameworks. E2091 Guide for Use of Activity and Use Limitations,
Including Institutional and Engineering Controls
1.10 This guide recognizes the complexity and diversity of
E2114 Terminology for Sustainability
topics related to ESG disclosures and provides technical
E2129 Practice for Data Collection for Sustainability As-
support for a range of ESG disclosure applications. ESG
sessment of Building Products
factors are an increasing focus of regulatory guidance, con-
E2137 Guide for Estimating Monetary Costs and Liabilities
sumer demand, investor goals, academic research, and industry
for Environmental Matters
efforts to manage risk and maximize return.
E2173 Guide for Disclosure of Environmental Liabilities
1.11 This guide provides an overview of ESG disclosure
E2205 Guide for Risk-Based Corrective Action for Protec-
requirements and frameworks and provides resources for
tion of Ecological Resources
organizations in making their disclosures. It is beyond the
E2348 Guide for Framework for a Consensus-based Envi-
scope of this guide to evaluate potential impacts of climate
ronmental Decision-making Process
change, or to review the outcomes of decisions taken by
E2432 Guide for General Principles of Sustainability Rela-
organizations, or to analyze the cost/benefit determinations
tive to the Built Environment
made by organizations on the negative vs. positive impacts of
E2541 Guide for Stakeholder-Focused, Consensus-Based
technological advances that may or may not contribute to
Disaster Restoration Process for Contaminated Assets
climate change.
(Withdrawn 2019)
1.12 The guide user’s legal counsel should be consulted
E2718 Guide for Financial Disclosures Attributed to Climate
regarding information and data designated for the disclosure
Change
process, which should be evaluated for compliance implica-
E2725 Guide for Basic Assessment and Management of
tions potentially associated with its public release (such as
Greenhouse Gases
compliance with environmental laws; regulations; and terms or
E2986 Guide for Evaluation of Environmental Aspects of
conditions of permits and consent agreements). Review of
Sustainability of Manufacturing Processes
alignment of ESC policy with fiduciary duty should be
E2893 Guide for Greener Cleanups
included in this consultation.
E3012 Guide for Characterizing Environmental Aspects of
Manufacturing Processes
1.13 This guide is intended to complement, not replace,
existing regulatory requirements or guidance. ASTM Interna-
tional (ASTM) guides are not regulations; they are consensus-
For referenced ASTM standards, visit the ASTM website, www.astm.org, or
based standards that may be followed as deemed appropriate
contact ASTM Customer Service at service@astm.org. For Annual Book of ASTM
Standards volume information, refer to the standard’s Document Summary page on
by guide users.
the ASTM website.
1.14 Units—The values stated in International System of 3
The last approved version of this historical standard is referenced on
Units (SI) units are to be regarded as the standard. Refer to: www.astm.org.
E3377 − 24
E3027 Guide for Making Sustainability-Related Chemical NIST Guide for Environmentally Sustainable Investment
Selection Decisions in the Life-Cycle of Products Analysis Based on ASTM E3302, March 2021, https://
E3032 Guide for Climate Resiliency Planning and Strategy nvlpubs.nist.gov/nistpubs/ams/NIST.AMS.200-11.pdf
E3096 Guide for Definition, Selection, and Organization of
3. Terminology
Key Performance Indicators for Environmental Aspects of
Manufacturing Processes 3.1 Definitions:
E3123 Guide for Recognition and Derecognition of Envi-
3.1.1 The terms used in this guide have been defined
ronmental Liabilities previously in other documents and in ASTM standards. ASTM
E3130 Guide for Developing Cost-Effective Community
standards are referenced where applicable
Resilience Strategies 3.1.2 climate change, n—a change in the state of the climate
E3136 Guide for Climate Resiliency in Water Resources
that can be identified by changes in the mean and/or the
E3181 Practice for Determination of the Converted Fraction variability of its properties and that persists for an extended
of Starch and Cellulosic Content From a Fuel Ethanol
period, typically decades or longer. E3032
Production Facility 3.1.2.1 Discussion—The United Nations Framework Con-
E3183 Guide for Harvesting Coal Combustion Products
vention on Climate Change, in Article 1, defines “climate
Stored in Active and Inactive Storage Areas for Beneficial
change” as: “a change of climate which is attributed directly or
Use
indirectly to human activity that alters the composition of the
E3210 Practice for Infrastructure Management
global atmosphere and which is in addition to natural climate
E3228 Guide for Environmental Knowledge Management
variability observed over comparable time periods.” The UN-
E3240 Guide for Risk-Based Corrective Action for Contami-
FCCC thus makes a distinction between “climate change”
nated Sediment Sites
attributable to human activities altering the atmospheric
E3249 Guide for Remedial Action Resiliency to Climate
composition, and “climate variability” attributable to natural
Impacts causes. The exclusion of climate change not attributed to
E3256 Practice for Reference Scenarios When Evaluating
human activity within the definition of climate change is a
the Relative Sustainability of Bioproducts point of difference between different organizations and con-
E3302 Guide for PFAS Analytical Methods Selection
ventions. The guide user should consider whether to include
E3341 Guide for General Principles of Resilience factors not attributed to human activity in their definition of
E3350 Guide for Community Resilience Planning for Build-
climate change specific to the disclosures they are pursuing.
ings and Infrastructure
3.1.3 climate change adaptation, n—the adjustments that
E3356 Guide for Stakeholder Engagement on Environmen-
communities or ecosystems make to limit the negative effects
tal Risk Management and Climate
of climate change or to take advantage of opportunities
D7612 Practice for Categorizing Wood and Wood-Based
provided by a changing climate.
Products According to Their Fiber Sources
3.1.3.1 Discussion—ASTM E3032 Standard Guide for Cli-
2.2 ISO Standards:
mate Planning and Strategy defines adaptation as actions to
ISO 14000 Environmental management
reduce the adverse consequences of extreme weather and
ISO 14001 Registrar - Environmental Mgmt System
harness opportunities; it is not explicit about climate changes
ISO 14026 Environmental labels and declarations
that may be more gradual than extreme weather. See Section 5
ISO 14024 Environmental labels and declarations
for discussion of regulatory developments and Section 6 for
ISO 14025 Environmental labels and declarations
discussion of disclosure frameworks and standards that address
ISO 14040 Environmental management
climate change adaptation and the management of climate-
ISO 14046 Environmental management
related risks.
ISO 14064 Greenhouse Gases Package
3.1.4 climate risk, n—social, cultural, economic, health, and
ISO 14065 General principles and requirements for bodies
environmental impacts associated with more severe or frequent
validating and verifying environmental information
extreme weather events, or long term chronic changes in
ISO 14066 Environmental information
conditions such as sea level rise, saltwater intrusion, or
ISO 26000 Social responsibility
droughts, associated with climate change.
ISO 27000 Information security management
3.1.5 financial impacts attributed to climate change, n—the
2.3 Other Referenced Documents:
material financial impacts on a company’s performance,
United States Code of Federal Regulations (CFR), Title 40,
operations, assets, and liabilities attributed to climate change
Chapter I, Subchapter C, Part 98 Mandatory Greenhouse
effects, including but not limited to real or expected risks of
Gas (GHG) Reporting Requirements (40 CFR Part 98)
physical damage to facilities, regulatory costs and incentives,
IEEE/ASTM SI 10 American National Standard for Use of
and shifts in the market for products and services (including
the International System of Units (SI): The Modern Metric
stranded assets). E2718-21
System
3.1.5.1 Discussion—Trends in climate and weather over the
long term have the potential to result in substantial impacts to
the local built and natural environment including financial
Available from International Organization for Standardization (ISO), ISO
impacts. (See E3136.) See Sections 5, 6, 7, 8, 9, and 10 for
Central Secretariat, Chemin de Blandonnet 8, CP 401, 1214 Vernier, Geneva,
Switzerland, https://www.iso.org. further discussion on this topic.
E3377 − 24
3.1.6 greenhouse gas (GHG), n—Greenhouse gases (GHGs) distribution, processing of sold products, use of sold products,
are gases that absorb infrared radiation, such as water vapor, end of life treatment of sold products, and disposal of produc-
thereby trapping heat in the atmosphere and making the planet tion wastes).
warmer; and the most important greenhouse gases directly
3.2 Acronyms:
emitted by human activities, that may be reportable, include
3.2.1 CDP—Carbon Disclosure Project
carbon dioxide (CO ), methane (CH ), nitrous oxide (N O),
2 4 2
3.2.2 CDSB—Climate Disclosure Standards Board
and several fluorine{containing halogenated substances (HFCs,
3.2.3 CSR—corporate sustainability reporting
PFCs, SF6 and NF3).
3.1.6.1 Discussion—The disclosures applicable to this guide
3.2.4 DOE—U.S. Department of Energy
focus on GHGs found in the USEPA Annual Inventory of GHG
3.2.5 EPA—U.S. Environmental Protection Agency
Emissions and Sinks, pursuant to the UN Framework Conven-
3.2.6 FSOC—Financial Stability Oversight Council
tion on Climate Change (UNFCCC). The seven categories of
anthropogenic GHGs tracked in the national GHG inventories, 3.2.7 FTC—U.S. Federal Trade Commission
pursuant to the UNFCC, include carbon dioxide (CO ), meth-
3.2.8 GHG—greenhouse gas
ane (CH ), nitrous oxide (N O), hydrofluorocarbons (HFCs),
4 2
3.2.9 GRI—Global Reporting Initiative
perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitro-
3.2.10 IFRS—International Financial Reporting Standards
gen trifluoride (NF3). (See E2725, E2893, E3181). Refer to: 40
Foundation
U.S. CFR Part 98, and the American Innovation and Manufac-
turing Act (AIM Act) (Pub. L. 116-260; dated 12/27/2020;
3.2.11 IPCC—Intergovernmental Panel on Climate Change
effective 11/04/2021). The GHG Protocol, developed in a
3.2.12 ISO—International Organization for Standardization
multi-stakeholder process undertaken in the late1990s, in-
3.2.13 ISSB—International Sustainability Standards Board
cluded a standardized measurement of GHG emissions. The
first edition of the GHG Protocol was published in 2001 and 3.2.14 LCA—life cycle assessment
has since been updated. The USEPA Annual GHG Inventory
3.2.15 NGO—non-government organization
and international greenhouse gas inventories do not include
3.2.16 NIST—National Institute for Standards and
requirements to measure and report on water vapor or ozone.
Technology, U.S. Department of Commerce
Refer to: USEPA 2023 Inventory of U.S. Greenhouse Gas
3.2.17 NOAA—National Oceanic and Atmospheric
Emissions and Sinks: 1990-2021. U.S. Environmental Protec-
Administration, in U.S. Department of Commerce
tion Agency, EPA 430-R-23-002, available at: https://
www.epa.gov/ghgemissions/inventory-us-greenhouse-gas-
3.2.18 PRI—UN Principles for Responsible Investment
emissions-andsinks-1990-2021.
3.2.19 SASB—Sustainability Accounting Standards Board
3.1.7 resilience, n—the capacity of social, economic, and
3.2.20 SBTi—Science Based Targets initiative
environmental systems to withstand and rapidly recover from a
3.2.21 SEC—U.S. Securities and Exchange Commission
hazardous event or trend or disturbance, responding or reorga-
nizing in ways that maintain their essential function, identity, 3.2.22 SDG—United Nations Sustainable Development
and structure, while also maintaining the capacity for
Goals
adaptation, learning and transformation. E3032, E3341
3.2.23 TAS—tribal treatment in the same manner as a state
3.1.8 stakeholders, n—individuals, organizations,
3.2.24 TCFD—Task Force on Climate-Related Financial
communities, or other entities that affect or are affected by an
Disclosures
organization, an event, an action, a regulation, or a policy.
3.2.25 UN—United Nations
3.1.8.1 Discussion—Stakeholders may include, but are not
3.2.26 UNDRIP—UN Declaration on the Rights of Indig-
limited to, owners, buyers, developers, lenders, insurers,
enous Peoples
investors, employees, customers, consumers, suppliers, gov-
ernment agencies, nongovernment organizations, tribal
3.2.27 WEF—World Economic Forum
organizations, and community members, groups, and advo-
3.2.28 WRI—World Resources Institute
cates. (See E2013, E2081, E2091, E2205, E2541, E3183,
E3240, E3350, E3356.)
4. Significance and Use
3.1.9 value chain, n—the upstream and downstream activi-
4.1 Purpose—This guide provides an overview of frame-
ties related to an organization’s operations.
works used for environmental, social, and governance (ESG)
3.1.9.1 Discussion—Upstream activities in connection with
disclosures applicable to a variety of organizations. This guide
a value chain may include activities by a party other than the
provides users with information on the history of ESG disclo-
organization that relate to the initial stages of an organization’s
sure frameworks, the components that comprise ESG
production of a good or service (such as materials sourcing,
disclosures, the target audience of these disclosures, and the
materials processing, and supplier activities). Downstream
challenges associated with this topic.
activities in connection with a value chain may include
activities by a party other than the organization that relate to 4.2 How to Use Information—This guide is intended to
processing materials into a finished product and delivering it or provide a brief overview of ESG disclosure frameworks and
providing a service to the end user (such as transportation and considerations. The users of this guide are encouraged to
E3377 − 24
review the sections of this guide and the supplemental infor- sures. A brief overview follows with weblinks for specific tools
mation provided in the Appendices to this guide which include and resources found in Appendix X1.
example templates and further discussion on key topics rel-
5.2 In addition to summaries of final regulations, this
evant to ESG disclosures.
section also includes brief summaries of a few significant
4.3 Who Should Use Information—The intended users of proposed rules to alert users of this guide to potential regula-
this guide may include a diverse range of stakeholders such as tory changes that are under consideration at the time of writing,
industries and companies that use, make, or sell products; so that they may watch for coming final rules that may affect
regulators at federal, state and local levels; consultants and their climate and ESG disclosures. Users of this guide should
vendors; consumers; investors; academic researchers and stu- confirm the status of agency regulations and requirements. The
dents; non-governmental organizations (NGOs); and commu- rule proposals discussed in this guide are for information
nity constituents. Over the past 35 years, this topic has been the purposes only and are subject to change if/when the rules are
subject of increasing corporate, regulatory, consumer, ratings finalized. This section of the guide describes relevant proposed
agencies, and stakeholder interest. regulations to make the reader aware of changes in the law that
are under consideration, some of which may or may not be
4.4 Regulatory Context—This guide reviews regulatory de-
adopted in an upcoming final rule. Proposed regulations are not
velopments regarding ESG disclosures in the U.S. and inter-
final or binding. The description provided in this guide is not
nationally. This guide provides a brief overview of regulatory
intended as either legal advice or as an endorsement of any
developments and trends regarding ESG disclosures. Users of
such proposal. The user should consult with legal counsel for
this guide should stay current on the regulatory requirements
legal advice based on the user’s specific facts, fiduciary duties,
applicable to their operations, products, services, and supply
and applicable law.
and value chains.
5.3 United States Federal:
4.5 Frameworks—This guide provides an overview of ESG
5.3.1 The U.S. Securities and Exchange Commission (SEC):
disclosure frameworks in the U.S. and internationally. There
5.3.1.1 SEC Division of Enforcement developed a Task
are several voluntary frameworks that provide guidance for
Force on Climate and ESG in 2020. The SEC Divisions of
ESG disclosures, such as GRI, TCFD, the Value Reporting
Corporation Finance provided Guidance Regarding Disclosure
Foundation, and the Stakeholder Capital Metrics framework
Related to Climate Change (2010, currently under revision).
(developed by the World Economic Forum and the major
The SEC Division of Investment Management, Division of
accounting firms). In the U.S., the practice of voluntary,
Examinations, Investor Advisory Committee has provided
market-led disclosures using multiple guidelines is developing
communications related to climate change. Refer to: https://
into a more standardized but flexible approach. This stands in
www.sec.gov/
contrast to the European Union where specific standardized
5.3.1.2 In August 2020, the SEC adopted amendments to
directives have been adopted.
modernize the description of business (Item 101), legal pro-
4.6 Professional Judgement—An organization’s ESG dis-
ceedings (Item 103), and risk factor disclosures (Item 105) that
closures require professional judgement regarding approaches
organizations are required to make pursuant to SEC Regulation
to the selected ESG elements, and their alignment with the
S-K. These disclosure requirements had not undergone signifi-
organization’s actual practices, as considered alongside many
cant revisions in over 30 years.
other factors. Explanations should be clear, concise, and well
5.3.1.3 In spring 2021, the SEC issued a request for public
documented regarding how ESG disclosures were made and
comment on ESG disclosure related to climate and community,
evaluated using goals established under selected ESG frame-
with responses compiled for review in fall 2021, leading to a
works. Policies and procedures that address ESG disclosures
March 2022 rule proposal.
should be documented and part of the organization’s relevant
5.3.1.4 In Sept. 2021, the SEC’s Division of Corporation
practices. Compliance personnel should be knowledgeable
Finance released a sample letter it sent to companies regarding
about the organization’s specific ESG-related practices. Factors
climate change-related risks and opportunities that may be
requiring professional judgement should include a clear, well
required in their disclosures.
documented rationale.
5.3.1.5 In March 2022, the SEC proposed rules to enhance
4.7 This guide is not intended to replace or supersede
and standardize climate-related disclosures for investors. The
federal, state, local, or international regulatory requirements.
SEC may revise the disclosure requirements before finalizing
Users of this guide should confirm the regulatory guidance and
the rule in Fall 2023, based on public comments filed in June
requirements for the jurisdiction in which they are working.
2022. Refer to: https://www.sec.gov/news/press-release/2022-
This guide may be used to complement and support such
46. The user should be aware of this development and review
requirements. This guide does not replace the need for engag-
the final SEC rules when published. Refer to SEC rules index
ing competent persons in ESG disclosure.
at: https://www.sec.gov/rules/rulemaking-index.shtml
5.3.1.6 In May 2022, the SEC proposed rules to enhance
5. Regulatory Requirements, Guidelines, Directives,
disclosures by certain investment advisers and investment
Initiatives
companies about environmental, social, and governance (ESG)
5.1 In the U.S. and internationally, governments and regu- investment practices. The notice of proposed rulemaking is
latory agencies enact rules, issue guidance, and implement available at: https://www.sec.gov/rules/proposed/2022/33-
initiatives and directives to require and encourage ESG disclo- 11061.pdf. A fact sheet summary is available at: https://
E3377 − 24
www.sec.gov/files/ia-6034-fact-sheet.pdf Guide users should Oversight Council’s Report on Climate-Related Financial Risk
be aware of this development and review the final rule when (Oct. 2021) and inform the ongoing work of the Commission’s
published. Climate Risk Unit. The 2021 report recommendations include
enhanced public climate-related disclosures.
5.3.2 The U.S. Department of Treasury:
5.3.5 The U.S. Federal Reserve Board:
5.3.2.1 The U.S. Department of the Treasury’s Climate
Action Plan (July 2021) focuses on Executive Order 14008 5.3.5.1 The US Federal Reserve Board is conducting a 2023
Section 211 (Climate Action Plans and Data and Information pilot Climate Scenario Analysis (CSA) exercise to learn about
Products to Improve Adaptation and Increase Resilience) and large banking organizations’ climate risk-management prac-
Treasury’s efforts with regards to its facilities and operations to tices and challenges and to enhance the ability of both large
improve adaptation and increase resilience to the impacts of banking organizations and supervisors to identify, measure,
climate change. The U.S. Treasury is also supporting the monitor, and manage climate-related financial risks. This pilot
development of a governmentwide Climate-Related Financial exercise will support the Board’s responsibilities to ensure that
Risk Strategy, pursuant to Executive Order 14030 (Climate- supervised institutions are appropriately managing all material
Related Financial Risk). risks, including financial risks related to climate change. Refer
to: https://www.federalreserve.gov/publications/climate-
5.3.2.2 The U.S. Department of Treasury’s Office of the
scenarioanalysis-exercise-instructions.htm
Comptroller of the Currency, with the U.S. Federal Deposit
Insurance Corporation, proposed risk management principles 5.3.5.2 The U.S. Federal Reserve Board invited public
in 2021 and 2022 to provide guidance to banking organizations comment on proposed principles providing a high-level frame-
they supervise with over $100 billion in total assets as they work for the safe and sound management of exposures to
develop capabilities and deploy resources to manage climate- climate-related financial risks for large banking organizations
related financial risks. The principles cover six areas: gover- (Dec. 2, 2022, Docket No. OP- 1793). See: https://
nance; policies, procedures, and limits; strategic planning; risk www.federalreserve.gov/ and https://www.federalreserve.gov/
management; data, risk measurement and reporting; and sce- newsevents/pressreleases/other20221202b.htm
nario analysis. Refer to: Fed Notes on Climate Change and
5.3.5.3 The U.S. Federal Reserve Board issued a bulletin
Financial Stability (March 19, 2021).
(Fed Notes, March 19, 2021) on Climate Change and Financial
5.3.2.3 The U.S. Department of the Treasury’s Financial Stability which describes an approach to understanding how
Stability Oversight Council (FSOC) released in October 2021 risks arising from climate change may affect financial stability
a new report on climate-related financial risk. The U.S. and connects this discussion to the financial stability monitor-
Treasury Department Climate Hub, Climate Counselor, and ing framework described in the Federal Reserve’s Financial
Financial Stability Oversight Council indicated they are in the Stability Reports. The U.S. Federal Reserve is evaluating
process of evaluating climate change. climate risk and vulnerabilities in the U.S. economy and in
sectors such as insurance, banking, real estate, and global
5.3.2.4 The U.S. Treasury Department’s Federal Insurance
supply chains.
Office released a report entitled, Insurance Supervision and
Regulation of Climate-Related Risks (June 2023). The report, 5.3.6 The U.S. Department of Energy (US DOE):
issued in response to the White House Executive Order 14030
5.3.6.1 The US DOE released in March 2022 new building
on Climate-Related Financial Risk (May 2021), is part of
energy code final rules (10 CFR Part 430) for federal buildings
broader efforts the Federal Insurance Office is undertaking to
and in April and May 2023 issued new rules (10 CFR Part 429
assess climate-related risks to the insurance industry. See:
and 430) containing standards for consumer appliances, includ-
https://home.treasury.gov/news/press-releases/jy1579
ing room air conditioners, air cleaners, and pool heaters. All
5.3.3 The U.S. Federal Trade Commission published a new buildings and major retrofits constructed by the Federal
request for information (December 20, 2022) to assist in the government must comply with the 2021 International Energy
FTC’s decision whether to revise its environmental marketing Conservation Code (IECC) and the 2019 American Society of
guidelines known as ‘Green Guides’ (16 CFR Part 260) to Heating, Refrigerating, and Air Conditioning Engineers Stan-
address statements or disclosures regarding climate change or dard 90.1 building energy codes. In February 2020, the US
greenhouse gas reduction goals. The current ‘Green Guides’ DOE issued in a final rule the Energy Conservation Program
contain guidelines for marketing claims regarding certifications for Appliance Standards: Procedures for Use in New or
and seals of approval; carbon off sets; free-of claims; non-toxic Revised Energy Conservation Standards and Test Procedures
claims; made with renewable energy claims; and made with for Consumer Products and Commercial/Industrial Equipment.
renewable materials claims. Comments were filed in May The Federal government plans to finalize more than 100
2023. If the FTC proceeds, a notice of proposed rule-making proposed and final actions for appliance and equipment stan-
could be published in 2023 and a final rule could be published dards. See: https://www.regulations.gov/document/
in 2024. EERE2017-BT-STD-0062-0163. See: https://www.energy.gov/
eere/buildings/appliance-and-equipmentstandards-program
5.3.4 The U.S. Commodity Futures Trading Commission
published a request for information to inform its understanding 5.3.6.2 The US DOE established the Better Climate Chal-
and oversight of climate related financial risk in the derivatives lenge in February 2022, to challenge organizations to set
markets and commodities markets (Federal Register, June 8, ambitious, portfolio wide GHG emission reduction goals. This
2022). Responses will be used to inform the Commission’s new effort provides additional opportunities for peer exchange
approach to the recommendations of the Financial Stability and technical assistance to mitigate the impacts of climate
E3377 − 24
change. Through the Better Climate Challenge, organizations 5.3.7.4 The US EPA proposed rules (in May 2023) which
can partner with US DOE to reduce portfolio wide GHG include five separate actions under section 111 of the Clean Air
emissions. US DOE provides technical assistance and oppor- Act (40 CFR Part 60) addressing greenhouse gas (GHG)
tunities to learn and share actionable best practices for carbon emissions from fossil fuel-fired electric generating units
reduction. US DOE program overview and resources are (EGUs). The public comment period was extended (to August
available at: www.energy.gov Resources and tools developed 8, 2023). The final rule may be issued in 2024 and may include
by the US DOE include the 50001 Ready Navigator, an online some GHG reporting requirements or may affect reporting
application that provides step-by-step guidance for implement- under the GHGRP. Refer to: https://www.epa.gov/stationary-
ing and maintaining an energy management system in confor- sources-air-pollution/greenhouse-gasstandards-and-guidelines-
mance with the ISO 50001 Energy Management System fossil-fuel-fired-power
Standard. Refer to: https://navigator.lbl.gov/
5.3.7.5 The US EPA regulations at 40 C.F.R. Part 60,
5.3.7 The U.S. Environmental Protection Agency (US EPA): Subpart OOOOa require certain major sources of GHGs in
certain segments of the Crude Oil and Natural Gas source
5.3.7.1 The US EPA implemented the Greenhouse Gas
category to deploy leak detection and repair or other actions to
Reporting Program (GHGRP) in 2009 (refer to 40 CFR Part
reduce methane emissions. US EPA published a notice of
98) with revised rules in subsequent years. The GHGRP
proposed rule-making (November 15, 2021) and a supplemen-
requires annual reporting by March 31 each year of greenhouse
tal notice (December 6, 2022) seeking public comment on US
gas (GHG) data for the preceding year from large GHG
EPA proposals to revise and to update, strengthen, and expand
emission sources, fuel and industrial gas suppliers, and CO
the standards proposed on November 15, 2021. The proposed
injection sites in the United States. Annual emissions reporting
rules are intended to significantly reduce emissions of green-
is required by approximately 8,000 facilities, and the data
house gases (GHGs) and other harmful air pollutants from the
reported in March are made available to the public in October
GHG reduction actions to be mandated under US EPA’s new
of each year. The GHG Reporting Program provides informa-
source performance standards (NSPS) for new sources and
tion on how the source category is defined, the greenhouse
Guidelines to States for existing sources in segments of the
gases required to be reported, how emissions must be
Crude Oil and Natural Gas source category. The final Clean Air
calculated, what information must be reported, when and how
Act NSPS will affect reporting under Subpart W of the
reports are submitted, and under what circumstances a facility
GHGRP, because the U.S. Congress required US EPA under
may stop reporting. The complete list of data elements that
the Inflation Reduction Act of 2022 to impose a methane fee on
must be reported and records that must be retained under 40
emissions exceeding certain thresholds of methane emissions
CFR Part 98 (Mandatory Greenhouse Gas Reporting) are
reported under Subpart W, but it allowed an exemption for
available online in the e-CFR. See:
entities subject to and in compliance with the methane NSPS
https://www.epa.gov/ghgreporting
regulations. After reviewing comments filed on the rule pro-
5.3.7.2 The US EPA proposed amendments to the GHGRP
posal notices, US EPA is expected to issue a new final rule in
rules in 2022 (FR Vol. 87, No. 118, dated June 21, 2022). The
2023.
US EPA published a supplemental notice of additional pro-
5.3.7.6 The US EPA is directed under the American Inno-
posed rule revisions on May 22, 2023. The agency plans to
vation and Manufacturing (AIM) Act of 2020 to develop a U.S.
issue additional supplemental notices of proposed rulemaking
production baseline and a U.S. consumption baseline and to
in 2023 to propose revisions in Subpart W to implement
phase down the production and consumption of climate-
provisions of the Inflation Reduction Act directing US EPA to
damaging hydrofluorocarbons (HFCs) in production and con-
collect a methane fee based on “empirical evidence” for certain
sumption relative to those baselines. Data reported to the
sources of methane that exceed specified methane intensity
GHGRP under 40 CFR Part 98.360 Subpart OO, Suppliers of
thresholds. The May 2023 Federal Register notice (88 FR
Industrial Greenhouse Gases, are relevant to the production
32852) is available at: https://www.govinfo.gov/content/pkg/
and consumption baselines. Companies that produce, import,
FR-2023-05-22/pdf/2023-10047.pdf. The June 2022 rule pro-
export, destroy, use as a feedstock, reclaim, package, or
posal is available at: https://www.govinfo.gov/content/pkg/FR-
otherwise distribute HFCs may be affected by the final rule.
2022-06-21/pdf/2022-09660.pdf. See: https://www.epa.gov/
Companies may also be affected if they use HFCs to manu-
ghgreporting and https://www.epa.gov/ghgreporting/
facture refrigeration and air-conditioning equipment, foams,
rulemaking-noticesghg-reporting
aerosols, and fire suppressants, or use HFCs in one of the six
5.3.7.3 The US EPA issued a supplemental proposal (on
applications specified in the AIM Act. Refer to: https://
December 6, 2022) to update, strengthen, and expand the
www.epa.gov/climate-hfcsreduction/aim-act
proposed standards (of November 15, 2021), which are in-
5.3.7.7 The US EPA administers the ENERGY STAR
tended to significantly reduce emissions of greenhouse gases
program, a voluntary labeling program for which the US EPA
(GHGs) and other harmful air pollutants from the Crude Oil
sets energy efficiency specifications and those that meet them
and Natural Gas source category. The Federal Register notices
can choose to display the ENERGY STAR logo. The program,
are available at: https://www.govinfo.gov/content/pkg/FR-
launched in 1992, has been expanded and updated over the past
2022-12-06/pdf/2022-24675.pdf and https://www.govinfo.gov/
30 years. See: https://www.energystar.gov/about/how_energy_
content/pkg/FR-2021-11-15/pdf/2021-24202.pdf. Also see:
star_works/ENERGY_STAR_certification
https://www.epa.gov/controlling-air-pollution-oil-and-natural-
gas-industry 5.3.8 The U.S. Federal Acquisition Regulations (FAR):
E3377 − 24
5.3.8.1 The FAR are the primary regulations for use by all 5.4.4 The City of Philadelphia PA enacted the 2019 Build-
Federal Executive agencies in their acquisition of supplies and ing Energy Performance Program (BEPP). This program is
services with appropriated funds. The FAR became effective on
commonly referred to as Building Tune-ups. The City of
April 1, 1984, and are issued pursuant to applicable statutes
Philadelphia Office of Sustainability (OOS) passed regulations
under the joint authorities of the U.S. Administrator of General
that provide more detail to the policy in Fall 2020. The City of
Services (GSA), the U.S. Secretary of Defense (DOD), and the
Philadelphia amended Chapter 9-3400 of The Philadelphia
U.S. Administrator for the National Aeronautics and Space
Code, entitled “Energy Conservation”, to add a new Section
Administration (NASA), under the broad policy guidelines of
9-3403, entitled “Building Energy Performance Policy,” to
the Administrator, U.S. Office of Federal Procurement Policy,
require owners of certain large buildings to conduct tune-ups of
U.S. Office of Management and Budget (OMB) (collectively
the energy and water systems in such buildings, under certain
“FAR Council”). Refer to: 48 CFR Parts 1, 4, 9, 23 and 52.
terms and conditions. The City of Philadelphia’s Office of
5.3.8.2 On November 14, 2022, the FAR Council published
Sustainability established a comprehensive Green Works Plan.
a proposed rule regarding the Disclosure of Greenhouse Gas
The City of Philadelphia tracks and reports on key sustainabil-
Emissions and Climate-Related Financial Risk Rule by certain
ity metrics relevant to that plan. These include energy and
federal contractors. The Federal Register Notice (dated Nov.
water usage in large commercial buildings as tracked and
14, 2022) with comment extension notice (dated Dec. 23,
reported against benchmarks.
2022) is available at: https://www.govinfo.gov/content/pkg/
5.4.5 The Montgomery County Council of Maryland en-
FR-2022-11-14/pdf/2022-24569.pdf. Public comments are on
acted Building Energy Performance Standards (BEPS) legisla-
the proposed rule are available at: https://www.regulations.gov/
tion (Bill 16-21) in April 2022. The BEPS Law of 2021 builds
docket/FAR-2021-0015/comments.
on the County’s existing Building Energy Benchmarking Law
5.3.9 The U.S. Department of Transportation Pipeline and
of 2014, which requires owners of certain buildings to report
Hazardous Materials Safety Administration (PHMSA) pub-
annual energy use to Montgomery County Department of
lished a proposed rule-making (Federal Register, dated May 5,
Environmental Protection (DEP) each year. The BEPS Law (1)
2023) for regulatory amendments that implement congressio-
expands the number of buildings covered by benchmarking
nal mandates in the Protecting our Infrastructure of Pipelines
requirements; (2) amends certain definitions; (3) established
and Enhancing Safety Act of 2020 to reduce methane emis-
energy performance standards for covered
...