BY TAMMIE SLOUP
The U.S. Securities and Exchange Commission (SEC) dropped a proposed controversial climate change reporting requirement that could’ve had a devastating impact on small to mid-sized farms.
Introduced in spring 2022, the initial set of rules outlined extensive climate disclosures by publicly-traded companies, including measured impacts for their entire supply chain, known as Scope 3 emissions.
As the agriculture sector provides nearly every raw product that goes into the supply chain, the proposal prompted top agricultural organizations, including Illinois Farm Bureau, to file comments with the SEC and write thousands of letters to the nation’s top financial regulator and lawmakers in opposition of the requirement. Ag leaders and grassroots Farm Bureau members emphasized the potential costly expenses and privacy issues for family farms if farmers were mandated to disclose greenhouse gas emissions on their operations.
After two years of debate, the SEC met March 6 and adopted the final rules, which eliminate the Scope 3 portion and reduce reporting requirements for other types of emissions, known as Scope 1 and 2. Scope 1 emissions refer to a company’s direct emissions, and Scope 2 are indirect emissions that come from the production of energy a company acquires for use in its operations as part of the value chain.
American Farm Bureau Federation (AFBF) led the charge for the removal of Scope 3 since the rule was first proposed two years ago. Illinois Farm Bureau supported these efforts with nearly 1,200 members communicating with their representatives about the rule.
“IFB thanks AFBF for leading the charge and working with SEC Chair Gary Gensler and his staff to research the unintended consequences of the Scope 3 rule,” said IFB President Brian Duncan. “The Scope 3 requirement would have imposed additional burdens on our farmers — especially our small, family-owned farms — which could have potentially led to even more consolidation in our industry.
“Illinois farmers are dedicated to advancing climate-smart agriculture and putting scientific solutions, technology and innovation to work. We have made great strides in this space and recognize the value in collecting scientifically-sound data to share our efforts, such as collaborating with our partners on the recent Illinois Agriculture Retail Survey, which helps us record nutrient loss reduction progress.”
AFBF President Zippy Duvall said Farmers are committed to protecting the natural resources they’ve been entrusted with, and they continue to advance climate-smart agriculture, but they cannot afford to hire compliance officers just to handle SEC reporting requirements.
“This is especially true for small farms that would have likely been squeezed out of the supply chain,” Duvall said.
The final rule also reduces reporting requirements for Scopes 1 and 2. Companies only have to report those emissions if they believe they are “material,” or significant, to investors. Companies will decide whether they need to disclose emissions-related information, and small or emerging companies don’t have to report emissions at all.
The SEC rule comes after California passed a similar measure last October that requires both public and private companies operating in the state with more than $1 billion in revenue to report their direct and indirect emissions, including Scope 3.
AFBF urged California to follow the SEC’s lead by withdrawing its Scope 3 reporting requirement for any company doing business in the state. Farm Bureau, along with the U.S. Chamber of Commerce and others, recently challenged that state law and its national ramifications.
The finalized SEC rules include a phased-in compliance period for all registrants, with the compliance date dependent on the registrant’s filer status and the content of the disclosure.
The SEC estimates that roughly 2,800 U.S. companies will have to make the disclosures and about 540 foreign companies with business in the U.S. will have to report information related to their emissions.
Content for this story was provided by FarmWeekNow.com.