The Securities and Exchange Commission (SEC) approved a climate risk reporting rule aimed at compelling public companies to disclose more information about their climate-related risks, costs of severe weather events and greenhouse gas emissions. The rule, voted along party lines, represents a significant overhaul of U.S. corporate reporting and is considered a legacy-defining effort for SEC Chair Gary Gensler. The final rule, a scaled-back version of the original proposal due to intense lobbying and threats of litigation, requires public companies to disclose climate-related risks, management strategies, and the impact of severe weather events. However, it drops the requirement for Scope 3 disclosures, which would have covered emissions from suppliers and customers. This reduction in requirements aims to address concerns about compliance costs and data reliability.
Of note: Ag groups are mostly praising SEC’s move to shield the ag sector. “AFBF thanks SEC Chair Gary Gensler and his staff for their diligence in researching the unintended consequences of an overreaching Scope 3 requirement,” said American Farm Bureau Federation President Zippy Duvall. “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… Farm Bureau recognizes the value of data collection and has actively contributed to responsible approaches to such efforts, including as a founding member of the Ecosystem Services Market Consortium and a leader in Field to Market. Both organizations work to empower farmers when it comes to on-farm data collection. The proposed Scope 3 requirement, however, would have imposed additional burdens on farmers, who provide almost every raw product that goes into the food supply chain. The onerous reporting requirements could have disqualified small, family-owned farms from doing business with public companies, putting those farms at risk of going out of business. Now that the SEC has thoughtfully evaluated the issue, AFBF urges 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.”
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