Federal climate regulation softens risk disclosure rules
Newsom called the deadline for imple- mentation “infeasible,” and stated the reporting protocol could result in incon- sistent reporting. “I am concerned about the overall fi- nancial impact of this bill on businesses, so I am instructing CARB to closely mon- itor the cost impact as it implements this new bill and to make recommendations to streamline the program,” Newsom stated. Newsom also signed Senate Bill 261, the Climate‐Related Financial Risk Act, which requires companies doing business in California with more than $500 million in
annual revenue to submit reports that di- vulge how climate change threatens their business starting in 2026. The governor’s initial 2024-25 budget proposal pauses spending for implemen- tation of the two climate laws. “Farmers and ranchers are committed to addressing the challenges of climate change,” said Christopher Reardon, di- rector of governmental affairs for the California Farm Bureau. “But these regu- lations only increase the burdens to those
By Christine Souza California is the first state in the U.S. to pass laws that eventually require large cor- porations to publicly disclose greenhouse gas emissions and their climate risks. The U.S. Securities and Exchange Commission followed suit last week. But it approved a weakened federal regula- tion that drops a proposed requirement for companies to report emissions from their supply chains and customer use of their products. Since the federal rule was first proposed two years ago, the American Farm Bureau Federation, California Farm Bureau, busi- nesses groups, companies and others opposed the Scope 3 emissions reporting requirements. Scope 3 are indirect emis- sions that occur in the value chain, includ- ing upstream and downstream emissions. Opponents argued that compliance cost and difficulty providing the data would be a burden, especially for farmers, who pro- vide most raw products that go into the food supply chain. AFBF said in a statement the onerous reporting requirements could disquali- fy small, family-owned farms from doing business with public companies, putting those farms at risk of going out of busi- ness. The organization said, “Regulations intended for Wall Street should not extend to America’s family farms.” “Farmers are committed to protect- ing the natural resources they’ve been entrusted with, and they continue to ad- vance climate-smart agriculture, but they cannot afford to hire compliance officers just to handle SEC reporting require- ments,” AFBF President Zippy Duvall said. “This is especially true for small farms that would have likely been squeezed out of the supply chain.” In addition to relaxing reporting of Scope 3 emissions, the federal rule reduc- es reporting requirements for Scope 1, or direct emissions, and Scope 2, indirect emissions from the production of energy a company acquires for use in its opera- tions. Companies are given discretion to report such emissions that they believe are significant. SEC Chair Gary Gensler said in a state- ment the federal rule is specific on what companies must disclose and requires climate-risk disclosures to be included in a company’s SEC filings, such as an- nual reports. “These final rules build on past re- quirements by mandating material climate risk disclosures by public com- panies and in public offerings,” Gensler said. “The rules will provide investors with consistent, comparable and deci- sion-useful information, and issuers with clear reporting requirements.” With the approval of the federal rule, at- tention turns to California. Last fall, Gov. Gavin Newsom signed Senate Bill 253, the Climate Corporate Data Accountability Act, which applies to businesses with total annual revenues
exceeding $1 billion. The law requires the California Air Resources Board to develop and adopt the nation’s first requirements for large corporations to publicly disclose their greenhouse gas emissions, carbon in supply chains and climate risks by Jan. 1, 2025. In his Oct. 7, 2023, signing statement,
See CLIMATE, Page 13
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March 13, 2024 Ag Alert 3
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