On July 8, 2021, DoD published a request for information (RFI) soliciting the input of interested parties on sustainability initiatives and climate-related disclosures. DoD’s request asks companies to comment on their voluntary efforts in measuring and disclosing Greenhouse Gas (GHG) Emissions, Environment, Social, and Governance (ESG) reporting, and Supply Chain GHG and Risk Management, but could be a prelude to a mandatory disclosure scheme for defense contractors.
ESG and other disclosures pertaining to sustainability and climate are growing in importance for a wide range of companies, as investors, stakeholders, and customers increasingly are interested in and evaluating progress on sustainability-related disclosures and the business practices and plans underlying them. Companies are now under more pressure to demonstrate forward movement on ESG and other sustainability metrics, particularly in the areas of climate change, environmental justice, industrial chemical use, diversity and inclusion, and compliance and ethical business practices.
Over the last several years, more and more companies have voluntary published sustainability reports. However, there is an evident lack of standardization in these disclosures, and companies vary greatly in what they measure and disclose. Without a standardized ESG disclosure framework, investors, consumers, stakeholders and the government may be unable to reasonably evaluate and compare companies’ ESG practices and risks.