The Wall Street Journal: SEC Climate Rule Won’t Demand Extensive Reporting From Small Businesses, Gensler Says
A proposed climate disclosure rule wouldn’t require public companies to ask small private suppliers to report on their carbon footprints, Securities and Exchange Commission Chairman Gary Gensler said, responding to concerns about compliance costs.
Public companies reporting emissions linked to their supply chain—known as Scope 3 emissions—can estimate the carbon footprint of small suppliers and still comply with the proposed rule, Mr. Gensler said Thursday at a U.S. Senate oversight hearing.
The SEC in March proposed a rule that would require public companies to report their climate-related risks and their emissions, including in some cases those from suppliers. Representatives for some small businesses expressed concern over the costly compliance burden during a public comment period. The rule isn’t yet final and could face challenges in court.
Sen. Jon Tester (D., Mont.), a farmer, said at the hearing that the “little guy” doesn’t have time to sit in front of a computer cataloging fuel and fertilizer consumption. Mr. Gensler responded by saying that wasn’t the intent of the rule.
“That public company you sell to does not have any obligation to ask you specifically,” he said. “[Public companies] either need to estimate, or if they don’t have an estimate just discuss how they’re managing that Scope 3.
“The intent, senator, is…whether it’s the farm community or other community—if they’re not public companies, they’re not under this rule,” Mr. Gensler said, adding that the SEC is “working through” the issue, which was raised in some of the 14,000 comments the agency received.
An SEC representative didn’t respond to a request for further information.
Small businesses across industries, from egg farmers to convenience-store owners, have voiced concerns over the proposal and the cost burden it would place on them. Mr. Gensler on Thursday responded to questions about those costs by saying the rule is meant to provide investors with more consistent information on climate-related risks faced by public companies.
A lawyer for the American Farm Bureau Federation said Thursday that the organization was encouraged that the SEC had recognized its concerns. The federation hopes the SEC will publish a final rule that ensures “farmers will never be responsible for tracking and reporting their operational data to Wall Street,” Deputy General Counsel Travis Cushman said.
A manufacturing trade group said the Scope 3 requirements of the proposed rule should be taken off the table.
“The best way to protect these businesses is to strike Scope 3 from any final rule,” said Charles Crain, senior director of tax and domestic economic policy at the National Association of Manufacturers. The mandate as proposed prioritizes actual reported emissions over estimates and could disproportionately harm small and family-owned manufacturers, he said. The SEC has estimated the plan will raise the cost to businesses to comply with its disclosure rules from $3.9 billion to $10.2 billion. Mr. Gensler Thursday referred to estimates that place the cost to comply with the climate rule in the “single-digit billions across the entire economy.”