Farmer’s request for extension to SEC proposed rule granted
By: Sydney Sheffield
The Enhancement and Standardization of Climate-Related Disclosures for Investors, a proposed rule by the United States Securities and Exchange Commission (SEC), would require registrants to provide certain climate-related information in their registration statements and annual reports. Agriculture organizations across the country are warning this rule could negatively impact every farmer and rancher. Almost 120 agriculture organizations asked the SEC for an extension of time to comment on the proposed rule. The SEC obliged.
The vastness of the proposed rule is worrisome to agricultural organizations. The proposed rule is 510 pages, with 1,068 technical footnotes, and almost 750 direct questions. The SEC originally set a deadline of May 20, 2022, for comments, only allowing a total of 39 days for review. But after concern from many, the deadline has been extended to June 17, 2022.
“National Pork Producers Council (NPPC) thanks Chairman Gensler and the SEC for recognizing the concerns of farmers and the challenges they face in understanding and commenting on the commission’s lengthy Climate Disclosures rule,” said NPPC’s Chief Executive Officer Bryan Humphreys.
"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, and it would provide consistent and clear reporting obligations for issuers," said SEC Chair Gary Gensler. “Today, investors representing literally tens of trillions of dollars support climate-related disclosures because they recognize that climate risks can pose significant financial risks to companies, and investors need reliable information about climate risks to make informed investment decisions.
While the SEC sees the rule as an advantage, agriculture organizations have major concerns about the proposed rule. “This appears to be an example of overreach by the Securities and Exchange Commission,” said American Farm Bureau Federation (AFBF) President Zippy Duvall. “Farmers and ranchers are already heavily regulated by multiple agencies at the local, state, and federal levels. New SEC reporting requirements will no doubt make an already complicated patchwork of regulations even more cumbersome.”
Under the proposed rule, there would be new climate-related disclosure requirements added to Regulation S-K, which primarily governs qualitative disclosures, and Regulation S-X, which governs financial statements and other financial disclosures. In general, these disclosures would address various climate-related risks to the registrant's business, operations, and financial condition, including disclosure of a registrant's greenhouse gas emissions and its management of physical and transition risks. The agricultural organizations worry the proposed rule may create new sources of substantial costs and liabilities.
“Farmers and ranchers are focused on growing the food, fuel, and fiber this country needs, and have never been subjected to SEC regulations,” Duvall continued. “Unlike the large corporations currently regulated by the SEC, family farms and ranches don’t have teams of compliance officers. We urge the SEC to extend the comment period to allow those in agriculture time to understand the full impact of this proposal and offer meaningful input.”
The proposed rule is expected to receive hundreds of comments and will likely be legal challenges if the rule is adopted. Read the letter from over 120 agriculture groups.