The SEC is facing pressure from Congress to curb its plans for big companies to disclose their suppliers’ greenhouse gas emissions amid growing concern across both parties that the reporting burden will ultimately fall to smaller companies. independent farmers.
Dozens of Republican and Democratic lawmakers have called on the Securities and Exchange Commission to give big companies clearer legal liability protections for estimating emissions from small farmers in their supply chains — or to rule out carbon dioxide altogether. agriculture of the planned disclosure requirement. Farmers’ groups, as well as
The most vocal lawmakers include Sen. Jon Tester (D-Mont.) and Rep. John Rose (R-Tenn.), farmers who serve on congressional committees that oversee the SEC. Rose said the Republican-controlled House Financial Services Committee next year will likely use its oversight power to push Gensler hard on the issue and that he appreciates Democrats who have already raised concerns.
“They hear it from their constituents. They hear it from farmers in their districts,” Rose told Bloomberg Law. “It’s a pretty strong statement that this rule is wrong.”
A representative for the SEC declined to comment.
Democratic concerns
Tester pressed Gensler in writing and in person about “unnecessary bureaucracy” and other obligations that could burden small farmers. At a Senate Banking Committee hearing in September, Tester Told Gensler, he worries that big agricultural companies will ask small farmers for emissions data that they would be hard pressed to provide.
Gensler told Tester during the hearing that the agency was reviewing comments on the matter, but defended the plans.
The proposal would only require large companies to provide estimates of their supply chain emissions, also known as scope 3 emissions, Gensler said. Companies have no obligation to ask their suppliers for emissions data, he said.
Tester told Bloomberg Law that his fight to protect small farmers from any SEC climate regulation will continue, though he hasn’t publicly supported any particular approach to solving the problem he sees.
“As an active farmer, I know firsthand how critical it is that we get the effects of climate change under control, but we need to make sure that any new regulations don’t have unintended consequences,” Tester said in a statement.
representatives. The Bishop of Sanford of Georgia, Jim Costa of California, Abigail Spanberger of Virginia and other House Democrats also have them. Told Small farmers in Gensler are concerned about the proposal. All SEC rules should make it clear that supply chain emissions estimates are acceptable for agriculture and that small farmers have no obligation to provide data, lawmakers said.
Rose led the editorial staff of a bipartisan letter to Gensler who went further, calling on him to drop any plans for Scope 3 emissions disclosure requirements for farmers. Democratic representatives. Elissa Slotkin of Michigan and Elaine Luria of Virginia were among the signatories.
Gensler has said the agency will make “appropriate” changes to its proposal before finalizing the rules, which are expected early next year. But he did not reveal any possible modifications.
“Useless” estimates
Rose and more than 100 Republicans, as well as at least one Democrat, Rep. Vicente Gonzalez of Texas is trying to pass bills in the House and Senate that would prevent the SEC from requiring companies to disclose emissions from agricultural activities in their supply chain. measures, HR9063 and S.5135are pending in the House Financial Services and Senate Banking Committees.
Restrictions on the disclosure of agricultural emissions data are not new. The Environmental Protection Agency is currently prohibited require reporting of emissions from livestock manure management systems.
The bills have the support of the American Farm Bureau Federation and other farm groups, which have also urged the SEC to provide an exclusion for farmers itself. Zippy Duvall, president of the American Farm Bureau Federation, met with Gensler in July about Scope 3 emissions, according to agency records.
“Most of these range 3 estimates are pretty useless,” Travis Cushman, the organization’s assistant general counsel, told Bloomberg Law. The only way to get real meaningful data is to get first-hand data itself. So they will end up asking for this data to sell to them. »
Both Tyson and walmart told the SEC that calculating Scope 3 emissions will be difficult. Tyson called for more safeguards to protect companies that make a good faith effort to report Scope 3 emissions, while Walmart urged the agency to make such disclosures optional for all companies. Scope 3 calculations involve “estimates on top of assumptions that are layered over and over to arrive at a deceptively precise number,” Walmart said in a June letter at the SEC.
No problems here
But not everyone wants a Scope 3 exclusion for agriculture. Several leftist groups have pushed the SEC to require Scope 3 disclosures for the agricultural sector.
A company’s scope 3 emissions are typically much larger than its scope 1 or 2 emissions from its direct operations and energy consumption. agriculture accounts for about 10% of total US emissions, according to the EPA.
The SEC must ensure that investors get information about companies’ Scope 3 emissions so they can assess the risks their investments face due to climate change, said Alexandra Thornton, senior director of tax policy at the Center for American Progress, a left-wing think tank. But the agency has been generous about its Scope 3 disclosure requirements to large companies that deal with farmers, she said.
“If they make a good faith effort, it will be good,” Thornton said.
Senate Banking Committee Chairman Sherrod Brown of Ohio, Sen. Massachusetts’ Elizabeth Warren and other Democratic senators also urged the SEC to keep its proposed Scope 3 disclosure requirements in its final rules, saying in June letter they provide flexibility to farmers.
The possibility that the SEC’s proposal will attract smaller deals shouldn’t dampen the agency’s efforts to get information on big company issuances, Warren told Bloomberg Law.
“The SEC has rightly focused on large publicly traded companies and should continue to do so,” she said. “They shouldn’t back down to get adequate information for large companies because the rules inadvertently cover small operations.”
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