Farmers already take significant time to demonstrate compliance with a tangled web of federal, state and local regulation.
And a proposed U.S. Securities and Exchange Commission (SEC) rule that would require companies to report their efforts to cut greenhouse gas emissions from their supply chains, including purchasing carbon offsets stemming from agricultural practices, would lead to a significant burden on farmers, Illinois Farm Bureau President Richard Guebert Jr. wrote in comments filed with the SEC Friday.
While farmers would not be required to report directly to the SEC, food and ag companies would be compelled to collect data from farmers on emissions and supply it to their customers.
“A farm is not a power plant where a known quantity of fuel produces a known quantity of energy. On any given day, a farm may require more or less water, more or less fertilizer or crop protection products. Tracking such fluctuations in the context of GHG emissions would be daunting,” Guebert wrote.
Much of the debate hinges on one provision included in the SEC’s 500-page draft rule — the disclosure of a company’s Scope 3 emissions, which are the result of activities from assets not owned or controlled by a publicly-traded company but contribute to its value chain.
Costs associated with reporting and overhead needed to collect climate data also would be burdensome, or impossible, for small- to mid-sized farmers, potentially leading to consolidation of operations.
“Such consolidation would have far-reaching socioeconomic consequences, including further eroding rural tax bases,” Guebert wrote.
IFB also stressed including location data disclosures for GHG emissions may disclose farmers’ private information, and urged the SEC to consider whether it has the legal authority to implement the proposed rule.
Guebert also outlined a handful of recommended actions, including removing the “value-chain” concept from the proposed rule, removing or substantially revising the Scope 3 emissions disclosure requirement to include a carveout for the agricultural industry and removing the requirement that registrants provide disclosures pertaining to their climate-related targets and goals, among other recommendations.
The proposed rule has also sparked opposition from the American Farm Bureau Federation and a bipartisan group of U.S. lawmakers, as well as business groups. Nearly 100 top House Republicans and their colleagues recently sent a letter to President Joe Biden requesting his administration withdraw the “harmful” rule.
“During a time when this administration purports to support deconsolidation in the agricultural system, this rule would result in the exact opposite,” the Republicans wrote in the June 13 letter.
AFBF President Zippy Duvall has also spoken out against the rule.
“We have deep concerns that the SEC is proposing a rule that will subject farmers to regulations that are intended for Wall Street,” AFBF President Zippy Duvall previously said. “Unlike large corporations currently regulated by the SEC, farmers don’t have teams of compliance officers and attorneys dedicated to handling SEC compliance issues.”