The SEC's climate disclosure rule, originally proposed in March 2022, would require public companies to disclose an array of climate-related information in their registration statements and periodic reports. Perhaps the most contentious part of the proposal is the requirement that companies disclose the greenhouse gas emissions generated by other parts of their supply chain, known as Scope 3 emissions, if material or if the company has an emissions target that involves Scope 3. Smaller reporting companies would be exempt from the requirement.
However, the lawmakers said Scope 3 requirements could burden small, private entities, like family farmers and ranchers, in a public company's supply chain.
"This could hurt smaller operations forced to absorb the burden and cost of collecting additional information, lead to more public companies working with larger producers that can more readily supply this data, or even having public companies vertically integrate to control their own value chain and worsen consolidation in American agriculture," the lawmakers wrote.
"If it is not possible to develop Scope 3 in a way that does not burden small businesses in a public company's supply chain, including agricultural producers, it would be better to take it out of the final rule altogether," they added.
The Montana Farm Bureau Federation backed the lawmakers' letter, according to a Jan. 24 news release from Tester, who is a farmer himself.
"Scope 3 in the SEC's proposed climate reporting rule unnecessarily burdens farmers and ranchers with unproductive record keeping and red tape," said Cyndi Johnson, president of the Montana Farm Bureau Federation, in the news release. "Family farms and ranches should not be wrapped up in overreaching regulation that is meant for publicly traded companies, so Scope 3 must be removed from the rule."
While many Republicans have called for the withdrawal of the SEC proposal altogether, Tester and Sinema simply ask that the final rule be amended.
"The SEC must make sure that any final rule only impacts public companies, and does not indirectly regulate private companies," the lawmakers wrote. "We appreciate your continued attention to these concerns, and stand ready to work with you to craft a better final rule."