WASHINGTON, D.C. – The Security and Exchange Commission’s (SEC) proposed rule to require climate disclosures by public companies could severely impact family farms and ranches and intensify the already concerning rate of consolidation in agriculture. American Farm Bureau Federation economists discuss potential impacts of “The Enhancement and Standardization of Climate Related Disclosures for Investors” proposed rule in the latest Market Intel.

The proposed rule includes extensive requirements for public companies to report on Scope 3 emissions, which are the result of activities from assets not owned or controlled by an organization but contribute to its value chain. While farmers and ranchers would not be required to report directly to the SEC, they provide almost every raw product that goes into the supply chain. AFBF economists anticipate reporting requirements for farms “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.”


What is the main concern?

According to SEC Commissioner Hester M. Peirce, she writes that “We are Not the Securities and Environment Commission - At Least Not Yet.” Commissioner Peirce, on the minority side of 3-1 vote to publish the rules, writes “This proposal steps outside (the SEC) statutory limits by using the disclosure framework to achieve objectives that are not ours to pursue and by pursuing those objectives by means of disclosure mandates that may not comport with First Amendment limitations on compelled speech.”

Companies would be required to report on greenhouse gas emissions, climate-related targets and goals, as well as how climate risks impact their business.  This is an end run around legislation to get companies to report certain climate change information in their financial reports.

The SEC proposed rule is 510 pages long, with 1,068 technical footnotes and 750 direct questions, but initially only gave farmers 39 days for review, with public comments due May 20. News just broke that the SEC has granted an extension for the comment period for the proposed rule. 

“[Farm Bureau] appreciates the SEC extending the comment period for its proposed climate-reporting rule. We asked for the extension because America’s farmers and ranchers need time to fully understand the consequences of this 510-page proposal," said Zippy Duvall, President of the American Farm Bureau Federation. "We have deep concerns that the SEC is proposing a rule that will subject farmers to regulations that are intended for Wall Street. Unlike large corporations currently regulated by the SEC, farmers don’t have teams of compliance officers and attorneys dedicated to handling SEC compliance issues. Increased costs, legal liabilities and privacy concerns could create obstacles to ensuring food security at a time when the world is increasingly looking to America’s farmers for help. We urge the SEC to avoid enacting regulations that will keep farmers and ranchers from focusing on growing the food, fuel and fiber this country needs.”


Why It Matters

The rule extends reporting requirements for public companies to report on Scope 3 emissions, which are the result of activities from assets not owned or controlled by an organization but contribute to its value chain such as farms and ranches. AFBF economists expect the proposed SEC rule to impact farmers and ranchers through:

  • Increased costs due to compliance concerns. Farmers could be required to track and disclose information on day-to-day activities;
  • Potentially requiring private and personally identifiable data. Unlike public companies and corporations, farmers work and raise families in their place of business;
  • Consolidation, as small farms lack the resources to comply with burdensome reporting requirements;
  • Increased liability because the timeline given to comply with Scope 3 emissions is unattainable.

Farmers and ranchers are focused on growing the food, fuel and fiber this country needs, and have not had to worry about regulations intended for Wall Street.

Read the full Market Intel here.


Utah Farmers & Ranchers Needed to Send in Comments

The proposed rule extends reporting requirements for public companies to report on emissions. This could create burdensome reporting requirements for family farms and ranches selling into supply chains and force the disclosure of private information. This could create multiple, new sources of substantial costs and liabilities for farmers & ranchers. Click on the link to write to the SEC today and tell them to stop this invasive regulatory overreach!  Deadline is June 17, 2022. Visit https://bit.ly/3P8Wx01.