In March of 2022, the Securities and Exchange Commission adopted a new rule that has a large effect on the annual ESG (Environmental, Social, and Governance) Reports. Until this year, those annual reports did not have to report the climate impacts of their upstream operations. But, a new rule by the SEC, released March 21, requires this assessment to be made and included in their annual ESG reports. In addition, the Biden administration has encouraged states (like California) to take into account not only environmental impacts of their big infrastructure project, but also both the upstream and downstream climate change impacts as well.
This has spurred the American Composites Manufacturers Association (ACMA) into action. That is the genesis of the ACMA Climate Impact Project, which is a wide ranging and all encompassing project being undertaken by the largest National Association in the composite materials manufacturing business in the U.S.
One of the problems that manufacturers face, including the large OEMs like the automotive manufacturers and airframe manufacturers, is that the new rules now require that they look back into the raw materials manufacturers (upstream producers) to determine the climate impact that their operations have on producing the raw materials that the OEMs use. And these impacts need to be incorporated into their environmental impact assessments on an annual basis. The ACMA states that it is common currently – without the new mandates – for an OEM to pay a consulting firm $20k or more to produce these reports. With the new mandates the costs will be significantly more.
The main problem with all of this is that there are no currently recognized standards for what needs to be assessed or how the clime impacts are to be addresses and in what format they are to be reported. Fortunately, there are a few ISO standards that speak to this problem, so the ACMA Climate Impact Project is starting with those standards and building a set of tools for all sizes of manufacturers to enable them to make these assessments and report them in a consistent format that is acceptable to the Federal Government.
This includes an update to the current “Life Cycle Inventory” that was established in 2012. The ACMA is using that as a basis for creating a set of tools to enable a Life Cycle Assessment based on this updated LCI that can be used in a very broad set of industries for their upstream composites based climate impact statements.
As is usually the case in situations like this, it is the setting of standards whereby large and small manufacturers alike need a set of nationally accepted standards upon which to make assessments and write reports about those assessments that are acceptable to a governmental regulatory agency. This is one more positive step in the right direction for the composites industry as a whole and for them to begin to enable the transition to greener fibers and resins in their manufacturing business.
In another post in this same Category, I’m going to expand on this thread a bit and give a few examples of companies that are working to update their upstream supply chain to reduce their carbon footprint. This is a very positive story with a lot of hope for the future of the planet, so stay tuned.
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