The U.S. Securities and Exchange Commission has proposed a rule mandating extensive climate disclosures by public companies, including measured impacts for their entire supply chain. For many farmers, the impact of this rule could be severe, said Jeff Cummins, INFB associate director of policy engagement.
Called “The Enhancement and Standardization of Climate Related Disclosures for Investors,” the proposed rule’s expansive reporting requirements for “Scope 3” greenhouse gas emissions not only directly affects farmers’ operations, but could create several substantial costs and liabilities, such as reporting obligations, technical challenges, significant financial and operational disruption and the risk of financially crippling legal liabilities.
“Traditionally, SEC is concerned about large public companies that you would associate with Wall Street,” said Andrew Walmsley, AFBF senior director of government affairs. “But what the SEC has proposed through the Scope 3 reporting requirements could touch every farmer and rancher in this country, as it’s requiring those large companies to report emissions from suppliers from downstream and upstream, and that would capture many small, medium and large farmers.”
The Environmental Protection Agency defines “Scope 3” emissions as those emissions that are the result of activities from assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain. They are sometimes referred to as “value chain emissions” and include purchased goods and services, transportation and distribution and leased assets.
In contrast, Cummins said, Scope 1 emissions are those that come directly from the reporting company, while Scope 2 emissions are attributable to the reporting company’s use of energy.
Eleven farm groups, including Farm Bureau, have filed formal comments encouraging the SEC to amend this proposed rule and provided technical documents outlining concerns and recommendations.
The rule would require burdensome record-keeping as well as create liability concerns and data privacy concerns, Cummins said.
“Frankly, I think this is a questionable use of the SEC’s authority regulating publicly traded companies, and I think they should desist with rulemaking in this area entirely,” Cummins said. “And aside from that they should certainly expand exemptions.”