Over a hundred House members from both parties have criticized a proposed Securities and Exchange Commission rule requiring farmers to provide detailed climate data to public companies, as reported by Fox Business.
New Proposed SEC Rule Would Hurt Small Farms in US
House members say the proposed ESG regulatory requirements for small farms are ‘unworkable’ and could block farmers from working with public companies. The new regulations are referred to as ‘Enhanced and Standardization of Climate-Related Disclosures for Investors’ and is part of a recent trend towards environmental, social and governance (ESG) investing. ESG investing involves investors evaluating the criteria in addition to a standard data on business performance.
House Unites to Criticize Proposed ESG Rule
The House members criticizing the new ESG rule total 118 and include both Democrats and Republicans. They have written and signed a letter expressing their concerns, addressed to Gary Gensler, Chair of the Securities and Exchange Commission (SEC).
The letter read: “It is our strong belief that this proposed rule, if promulgated, would be a significant and unworkable regulatory burden, and a considerable departure from the SEC’s mission to protect investors, facilitate capital formation, and foster fair, orderly, and efficient markets. It is not within the purview of the SEC to regulate farmers and ranchers, which is what this rule would do by requiring public companies to disclose their Scope 3 greenhouse gas (GHG) emissions. To do business with public companies, small farms would be required to disclose a significant amount of climate-related information. But unlike large corporations, small farms do not have full-scale compliance departments. Imposing these additional reporting requirements could disqualify small, family-owned farms from doing business with companies which could lead to more consolidation in the agriculture industry.”
SEC Demands Climate-Related Disclosures
Fox Business reports that the SEC proposed rule requires registrants to include a certain amount of climate-related disclosures in their registration statements and periodic reports. These climate-related disclosures include information about climate-related risks that are considered ‘reasonably likely’ to have a material impact on their business, results of operations or financial condition.
Gary Gensler spoke in March to support the new rule, saying: “I am pleased to support today’s proposal because, if adopted, it would provide investors with consistent, comparable, and decision-useful information for making their investment decisions.”
However, the House members criticizing the new rule received support from the American Farm Bureau Federation. They believe the rule will force farmers and ranchers to track data that they simply do not have the resources for.
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