Controversial SEC proposal opens farms and ranches to potential greenhouse gas reporting requirements
Thank You Nebraska Farm Bureau members!
As a young farmer, Lance Atwater constantly looks to technology to reduce his farm’s carbon footprint. “We use soil sampling, variable rate [irrigation] technology, soil moisture monitors and satellite imagery to help us understand what our fields need and don’t need,” he said.
Atwater has a diversified farming operation near Ayr where he grows irrigated corn, popcorn, soybeans and non-GMO white corn utilizing conventional cropping methods. He also serves as a youth at-large member on the Nebraska Farm Bureau Board of Directors.
“New technologies help us use less water, less fertilizer and take fewer trips through our field with equipment while still maintaining and increasing our yields. We have also been looking at how cover crops could be used on our fields to protect our topsoil. At the end of the day, farmers and ranchers are always looking for ways to increase efficiency while also increasing production knowing that we have to have healthy soil and a healthy environment to produce food to feed our communities, nation and world,” he said.
But as Atwater navigates the best management practices to use on his farm, he is concerned about a recent federal government proposal from the Securities and Exchange Commission (SEC) entitled “The Enhancement and Standardization of Climate Related Disclosures for Investors.” The proposal would mandate extensive climate disclosures by SEC regulated companies, including measured impacts for their entire supply chain. Farms and ranches would be subject to the new mandates.
“For many of the farmers and ranchers who feed, fuel and clothe America and much of the world, the impact of this rule could be significant,” said Jordan Dux, NEFB national affairs director. “The rule requires publicly traded companies to disclose their Scope 1 (direct), Scope 2 (energy/electricity) and Scope 3 (supply chain) greenhouse gas emissions. Any publicly traded company that utilizes agricultural commodities will likely require farmers and ranchers to provide information on their greenhouse gas emissions in order to be compliant with the Scope 3 requirements of this proposed rule.”
The proposed rule’s expansive reporting requirements for Scope 3 greenhouse gas emissions not only directly affects farmers’ and ranchers’ operations, but also could create substantial costs and liabilities, such as reporting obligations, technical challenges, significant financial and operational disruption, and the risk of financially crippling legal liabilities.
Ultimately, the rule could have meaningful consequences on the abilities of farmers and ranchers to produce food, fuel and fiber for the U.S. and the globe and jeopardizes the security and stability of the U.S. supply chain.
“The SEC is a Wall Street regulator. Agriculture falls far outside the agency’s jurisdiction. It is nearly impossible to measure greenhouse gas emissions from individual farms and ranches today. Worst of all, this proposal offers little data privacy protection and would open farmers and ranchers to legal liability if large public companies or their shareholders feel that emissions information is incorrect,” said Dux.
A lot of the food, feed and fiber farmers and ranchers produce eventually touches a publicly traded company, meaning that farmers and ranchers could be forced to report personal information and business-related data. This unprecedented overreach could create onerous reporting requirements for even small farms and ranches with few or no employees and opens farms to intrusive data mining they’ve never had to deal with before.
According to Atwater, if this rule is enacted by the SEC, it will create burdensome reporting requirements for family farms like his. “Since we aren’t a large corporation, we don’t have in-house compliance officers and attorneys. We will likely have to hire a third party to monitor, calculate and report our greenhouse gas emissions, which will increase our financial costs in producing a crop. I am certain it will also create new liability issues for farmers like me as it opens us up to either not getting paid or even potentially sued if an error would occur in the reporting process. I also worry it could limit my access to certain markets we sell our products into as this rule would impact the whole supply chain, not just a certain segment of the supply chain. Overall, this rule creates a lot of unknowns and burdens for farmers like me who are already doing more with less thanks to technology and sustainable farming practices,” Atwater said.
“Farms are unique in that few business owners outside of farming live at their place of business. This raises serious privacy concerns for farmers, including how their personal information will be protected in the reporting process, along with questions over potential legal liabilities,” Dux said.
If there was one thing Atwater would want to tell the SEC about this new rule, it’s that it is not only burdensome to farm and ranch families, but also punishes them when they are already doing more with less thanks to innovation and technology.
“Farmers and ranchers are the best stewards of our environment and there is no need to place burdensome reporting requirements on them when they are already doing things to trap carbon in the soil, reduce run off, improve efficiency and continue to promote a healthy environment for our plants, animals and families to grow,” Atwater said.