Bloomberg Law
Dec. 27, 2022, 10:00 AM

SEC Climate Rules Face Bipartisan Heat Over Farming Emissions

Andrew Ramonas
Andrew Ramonas
Senior Corporate Disclosure Reporter

The SEC faces pressure from Congress to curtail its plans for big companies to disclose their suppliers’ greenhouse gas emissions amid mounting bipartisan concern that the reporting burden would ultimately fall on small and independent farmers.

Dozens of Republican and Democratic lawmakers have asked the Securities and Exchange Commission to give large companies clearer legal liability protections to estimate emissions from small farmers in their supply chains-–or to exclude agriculture from the planned disclosure requirement altogether. Farm groups, as well as Tyson Foods Inc., Walmart Inc. and other companies that rely on independent farmers and ranchers for their products, have criticized the plan to the SEC, whose chair, Gary Gensler, has disputed any burdens on small companies.

The most vocal lawmakers include Sen. Jon Tester (D-Mont.) and Rep. John Rose (R-Tenn.), farmers who sit on congressional committees that oversee the SEC. Rose said the Republican-controlled House Financial Services Committee next year will likely use its oversight power to push Gensler hard on the issue and that he appreciates the Democrats who have already raised concerns.

“They’re hearing it from their constituents. They’re hearing it from the farmers in their districts,” Rose told Bloomberg Law. “It’s a pretty strong statement that this rule is misguided.”

An SEC representative declined to comment.

Democratic Concerns

Tester has pressed Gensler in writing and in person about “unnecessary red tape” and other obligations that would potentially burden small farmers. At a Senate Banking Committee hearing in September, Tester told Gensler he’s worried that big agriculture companies will ask small farmers for emissions data that would be hard for them to provide.

Gensler told Tester at the hearing that the agency is reviewing feedback over the issue, but defended the plans.

The proposal only would require big companies to provide estimates of their supply chain emissions, also known as Scope 3 emissions, Gensler said. The companies have no obligation to ask their suppliers for emissions data, he said.

Tester told Bloomberg Law his fight to protect small farmers from any SEC climate regulations will continue, though he hasn’t publicly backed any particular approach to fixing the problem that he sees.

“As a working farmer, I know firsthand just how critical it is that we rein in the effects of climate change, but we need to make sure that any new regulations don’t have unintended consequences,” Tester said in a statement.

Reps. Sanford Bishop of Georgia, Jim Costa of California, Abigail Spanberger of Virginia and other House Democrats also have told Gensler small farmers are worried about the proposal. Any SEC rules should make clear supply chain emissions estimates are acceptable for agriculture and small farmers have no obligation to provide data, the lawmakers said.

Rose led the drafting of a bipartisan letter to Gensler that went further, calling on him to abandon any plans for Scope 3 emissions disclosure requirements for farmers. Democratic Reps. Elissa Slotkin of Michigan and Elaine Luria of Virginia were among the signers.

Gensler has said the agency will make any “appropriate” changes to its proposal before it finalizes the rules, which are expected early next year. But he hasn’t disclosed any possible modifications.

‘Useless’ Estimates

Rose and more than 100 Republicans, as well as at least one Democrat, Rep. Vicente Gonzalez of Texas, are trying to pass bills in the House and Senate that would bar the SEC from requiring companies to disclose emissions from agricultural activities in their supply chain. The measures, H.R. 9063 and S. 5135, are pending in the House Financial Services and Senate Banking committees.

Restrictions on disclosing agriculture emissions data aren’t new. The Environmental Protection Agency is currently prohibited from requiring any reporting of emissions from livestock manure management systems.

The bills have the support of the American Farm Bureau Federation and other agriculture groups, which also have urged the SEC to provide a carve-out for farmers on its own. Zippy Duvall, president of the American Farm Bureau Federation, met with Gensler in July about Scope 3 emissions, according to agency records.

“Most of those Scope 3 estimates are pretty useless,” Travis Cushman, the organization’s deputy general counsel, told Bloomberg Law. “The only way to get actual meaningful data is to get firsthand data itself. So, they’ll eventually be asking for that data in order to sell to them.”

Both Tyson and Walmart told the SEC calculating Scope 3 emissions will be challenging. Tyson asked for more safeguards to protect companies that make a good-faith effort to report Scope 3 emissions, while Walmart urged the agency to make those disclosures optional for all companies. Scope 3 calculations involve “estimations on top of assumptions that are repeatedly layered to arrive at a falsely precise number,” Walmart said in a June letter to the SEC.

No Problems Here

But not all want a Scope 3 carve out for farming. Several left-leaning groups have pushed the SEC to require Scope 3 disclosures for the agriculture sector.

A company’s Scope 3 emissions are generally much larger than its Scope 1 or 2 emissions from its direct operations and power usage. Agriculture accounts for about 10% of total US emissions overall, according to the EPA.

The SEC needs to ensure investors get information about companies’ Scope 3 emissions so they can evaluate the risks their investments face from climate change, said Alexandra Thornton, senior director of tax policy at the Center for American Progress, a left-leaning think tank. But the agency has been generous on its Scope 3 disclosure requirements to big companies dealing with farmers, she said.

“If they make a good-faith effort, that will be fine,” Thornton said.

Senate Banking Committee Chairman Sherrod Brown of Ohio, Sen. Elizabeth Warren of Massachusetts and other Democratic senators also have urged the SEC to keep its proposed Scope 3 disclosure requirements in its final rules, saying in a June letter they provide flexibility for farmers.

The possibility that the SEC’s proposal draws in small operations should not sink the agency’s push to get emissions disclosures from big companies, Warren told Bloomberg Law.

“The SEC rightly has focused on large publicly traded corporations and should continue to do so,” she said. “They should not pull back in getting adequate disclosures for the big corporations because the rules inadvertently cover smaller operations.”

To contact the reporter on this story: Andrew Ramonas in Washington at

To contact the editors responsible for this story: Jeff Harrington at; Michael Ferullo at

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