Farm groups applaud scaled-back final climate disclosure ruling

Drawing praise from farm groups, the Securities and Exchange Commission has scrapped a plan to mandate the tracking of greenhouse gas emissions all the way down to family farms.

The action occurred as the SEC finalized a rule for large corporations to disclose their carbon footprint, according to a news release. 

“We are extremely pleased to see that the SEC stayed within their scope of regulating the activities of publicly traded companies and did not extend their reach to the farm level,” National Potato Council Vice President of Environmental Affairs Ben Sklarczyk, a potato grower from Michigan, said in the release.

Approved by the SEC in a 3-2 vote, the rule limits the disclosure requirement to emissions that the company produces itself and those associated with its energy consumption, deemed Scope 1 and Scope 2 emissions, respectively.

Dropped was a requirement to disclose Scope 3 emissions, which originate throughout supply chains such as in agriculture. As originally written, it would have mandated a food company to track all the emissions associated with producing the commodities used in its products all the way down to the family farm, according to the release.

In 2022, the NPC board of directors adopted a policy stating: “The National Potato Council believes the proposed Securities and Exchange Commission’s Climate Rule is a significant government regulatory overreach. NPC should take all necessary actions to exclude agriculture from any final rule and thereby minimize the impact on family farms and related activities.”

Following that policy adoption, the NPC, the American Farm Bureau Federation and eight other organizations filed comments in 2022 opposing the proposed rule, the release said.

The groups said in their comments that the then-proposed Scope 3 disclosure requirement would be “wildly burdensome and expensive” for farmers and potentially put small and mid-size farmers out of business and supported the Protect the Farmers from the SEC act.

“AFBF thanks SEC Chair Gary Gensler and his staff for their diligence in researching the unintended consequences of an overreaching Scope 3 requirement,” AFBF President Zippy Duvall said in the release. “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.”