North Carolina Rep. Jeff McNeely, R-Iredell, has filed a resolution that would urge the U.S. Congress to fight the Securities and Exchange Commission (SEC) proposed rule forcing “the enhancement and standardization of climate-related disclosures for investors” in agriculture.
“It is plain to see that the Biden administration is using the SEC as it’s enforcement tool to punish businesses if they don’t comply with their progressive way of thinking,” McNeely told Carolina Journal on June 16. “With inflation and input costs at an all time high, now is not the time to increase regulations and mandates on Agriculture. This madness must stop, before we all go hungry.”
The resolution, filed June 16, begins by stating that the proposed rule requiring public companies to disclose “Scope 3 greenhouse gas emissions,” “would become de facto regulation of all farms by the SEC and would require farms of all sizes to disclose a significant amount of information on climate-related items that they very well may be currently unable to quantify.”
The resolution says this would significantly “impact the State’s agriculture industry,” which contributes almost $100 billion to North Carolina’s economy, making it the largest industry in the state.
But SEC Chair Gary Gensler said the rule is necessary because 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.”
Gensler argued that “Our core bargain from the 1930s is that investors get to decide which risks to take, as long as public companies provide full and fair disclosure and are truthful in those disclosures. 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.”
But Jon Sanders — research editor for the John Locke Foundation’s Center for Food, Power, and Life — said the SEC rule is burdensome and the resolution opposing it is an appropriate step for the N.C. General Assembly to take to bring attention to something that could harm an already struggling agriculture industry.
“The resolution would stand up for family farms across North Carolina that would be terribly affected by the SEC climate disclosure rule,” Sanders said. “Even though the rule wouldn’t technically apply to private companies, because it would apply to publicly traded companies’ supply chain, they would have to report on climate emissions from any private company — including family farms — they do business with. That is what the resolution refers to as ‘de facto regulation,’ and it would indeed be a heavy regulatory burden.”
McNeely’s resolution notes that “of the 46,000 farms in our State, nearly 80% have revenues of $50,000 or less.”
“The estimates they would be called upon to make would be very complex and way outside their bailiwick,” Sanders said. “Such a huge burden would upset the delicate balance of costs and revenues these vital entrepreneurs face every day, and as a result we’d lose even more of them to opportunistic multinational corporations. Beyond that, it seems well beyond the regulatory scope of the Securities and Exchange Commission to be issuing what are essentially climate regulations.”
The resolution agrees with Sanders that small farms will struggle to make these disclosure and would come under pressure at a time when prices are rising and food supplies are already tight.
“These farms are not corporations with sophisticated compliance departments with dedicated staffing resources like you would find in a publicly traded company, nor should they be treated as such,” the resolution states. “Imposing additional reporting requirements around climate-related metrics would distract farms of all sizes from their focus on producing food, fiber, and fuel.”
The resolution also cites “challenges currently facing the farm economy from inflation and increased expenses,” as reasons that “this additional regulatory burden could cause family farms to cease operations.” It also notes “the strong potential for food shortages in the near future.”
The resolution concludes by saying, “The [N.C.] House of Representatives urges Congress to oppose the Securities and Exchange Commission’s proposed rule that would require public companies to disclose their Scope 3 greenhouse gas emissions as this requirement would impact, and potentially harm, the State’s agriculture industry.”
