Proposed SEC rule pulls farms, ranches into regulatory target

The U.S. Securities and Exchange Commission (SEC) proposes to require publicly traded companies to provide climate-related information from their entire supply chain in their filings and annual reports, including potentially invasive and burdensome information about farms and ranches. 

Companies would be required to report on greenhouse gas emissions, climate-related targets and goals, as well as how climate risks impact their business.

The proposed rule would have an effect on farms and ranches across the country.

“This is an end-run around legislation to get companies to report certain climate change information in their financial reports,” Texas Farm Bureau (TFB) President Russell Boening said. “Our concern is that the only way the public companies will get this information is by requiring it from the farmers and ranchers themselves.”

The proposed SEC rule is 510 pages long, with 1,068 technical footnotes and 750 direct questions. The SEC extended the public comment period for its proposed rules on The Enhancement and Standardization of Climate-Related Disclosures for Investors until June 17.

The proposed rule could create burdensome reporting requirements for family farms and ranches selling into supply chains and force the disclosure of private information. It 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.

“This is an example of overreach by the SEC,” Boening said. “Farmers and ranchers are heavily regulated by agencies at the federal, state and local levels. These new reporting requirements would make an already complicated patchwork of regulations even more cumbersome.”

The American Farm Bureau Federation (AFBF) and TFB issued an action alert on the proposed rule where public comments can be submitted to the SEC.

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.

The proposed rule, according to AFBF economists, could potentially require private and personally identifiable data. Unlike public companies and corporations, farmers work and raise families in their place of business.

The proposed rule could spur consolidation, as small farms lack the resources to comply with burdensome reporting requirements.

There could also be increased liability because the timeline given is unattainable to comply with Scope 3 emissions, which are the result of activities from assets not owned or controlled by an organization but contribute to its value chain.

“These are regulations intended for Wall Street, not family farmers and ranchers,” Boening said. “Corporations currently regulated by the SEC have a team of compliance officers or attorneys dedicated to handling SEC compliance issues. Family farmers and ranchers do not. 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.”

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