At the end of April, Farm Bureau joined more than 100 agriculture groups on a letter expressing concern with a proposed rule that would require farmers to report personal and business-related information to the Securities Exchange Commission (SEC), an agency with little to no existing oversight of agriculture. The Enhancement and Standardization of Climate Related Disclosures for Investors proposed rule would mandate extensive climate disclosures by public companies, including measured impacts for their entire supply chain. 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.
For many farmers, the impact of this rule could be severe. The agriculture sector provides nearly every raw product that goes into the supply chain, with a valued contribution of over $1 trillion to the U.S gross domestic product in 2020 and employing over 21 million people. While farmers are not public companies and therefore not “registrants” that are required to report directly to the SEC, their obligations through their regulated customers could be burdensome because 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.
This could create burdensome reporting requirements for family farms and ranches selling into supply chains and force the disclosure of private information. And may create multiple, new sources of substantial costs and liabilities. These include reporting obligations, technical challenges, significant financial and operational disruption and the risk of financially crippling legal liabilities.
Farmers are already heavily regulated by multiple agencies at the local, state, and federal level and the proposed SEC reporting requirements will no doubt make an already complicated patchwork of regulations even more cumbersome. Unlike public companies, it is extraordinarily rare for a farm to employ a compliance team tasked with fulfilling such a regulatory burden.
Farmers are focused on growing the food, fuel, and fiber this country needs, and have not had to worry about regulations intended for Wall Street. When factoring in productivity and population gains, both per unit and per capita agricultural emissions are declining. That means U.S. agriculture is producing more food, fiber, and renewable fuel for more people while using fewer resources and emitting fewer greenhouse gases. The additional efforts to adopt conservation practices through voluntary, market-based incentives have helped farmers and ranchers trap 759 million metric tons of carbon in the soils, representing 12.7% of total U.S. emissions. There is no need for the agriculture industry to face additional regulation.
Want to dig deeper into the proposed SEC rule? Click Here for an AFBF Market Intel with more details.
Want to learn more about agricultural sustainability? Click Here for the most recent Inventory of U.S. Greenhouse Gasses and Sinks.