GOP state financial officers are sounding the alarm over what they predict will be ‘cataclysmic’ consequences if the Securities and Exchange Commission (SEC) finalizes a rule that requires companies to add their risk assessment to climate damage to their financial disclosures.
The SEC voted 3 to 1 in March to address the lack of standardization in corporate climate risk reporting through a new proposed rule.
If the rule is finalized, companies will have to report their direct greenhouse gas emissions, called Scope 1, and Scope 2 their indirect greenhouse gas emissions, such as what is produced from the electricity that is produced. they use to keep the lights on in their business. Large companies should provide assurances to safeguard the information they provide.
Risks that should be reported also include physical hazards, such as owning property in flood-prone areas and transition risks, such as the effect of new government regulations.
Clear reporting on climate impact aims to provide investors and consumers with data to determine whether they are doing business with companies that are irresponsible for their emissions.
GOP state financial officers are sounding the alarm over what they predict will be ‘cataclysmic’ consequences if the SEC finalizes a rule requiring companies to add their climate damage risk assessment to their financial disclosures
The SEC voted 3-1 in March to address the lack of standardization in corporate climate risk reporting with a new rule proposal
“I think it’s going to be cataclysmic for small businesses to comply with this rule to get into their supply chain,” West Virginia Treasurer Riley Moore told DailyMail.com at a meeting of State finance officials in Washington, DC this week.
‘This will destroy [small businesses]” continued Moore, who is reportedly considering a run against Sen. Joe Manchin in 2024.
“Some big manufacturers have to go down their supply chain and calculate their carbon footprint – the compliance aspect is going to be so onerous it’s going to kill jobs and businesses,” he predicted.
Moore said the climate disclosure rule would kill small businesses like he says the Dodd-Frank Act killed community banks.
“Of course, this could lead to price increases,” he said. “It’s like consolidating the power and money of a few banks and asset managers, they’re going to have the ability to set prices.”
Large companies should also report Scope 3 emissions – indirect emissions from supply chains, which are difficult to track. Some of the rule’s opponents note that the rule would still weigh on small businesses that are part of big business’ supply chains.
The information should be reported in SEC registration statements and annual reports, including Form 10-K filings. Companies should also disclose how their board manages climate risks and how those risks will impact business over time.
The proposal, which would apply to any company filed with the SEC, has garnered 14,000 public comments since it was posted on the SEC’s website.
Since the disputed rule was proposed, the SEC has held meetings with more than 150 companies that would be affected by the change.
Democratic Representatives Cindy Axne of Iowa, Jim Costa and Jimmy Panetta of California, Abigail Spanberger of Virginia and Sanford D. Bishop Jr. of Georgia wrote a letter expressing concern that the rule would hurt farmers and other small businesses that serve as sellers to the larger ones. .
“Our constituents are concerned that since they are part of the supply chain of large public companies, they may be asked to report detailed emissions information to their customer or supplier and face additional reporting burdens” , lawmakers said in a letter last month to the chairman of the SEC. Gary Gensler.
“It has the real potential to be devastating,” Nebraska State Treasurer John Murante said in an interview. “It’s just cramming the Green New Deal in without being able to get it through Congress — that’s unacceptable.”
He continues: “My family started a small business in 1965 and if you told my grandfather when he started this business that he would be judged not on the profitability of his business, but on his ability to lower the outside temperature or its ability to reach net zero by 2050 – first he wouldn’t believe it, then he would be appalled.
Murante predicted that costs would rise in all areas – “agriculture, animal husbandry, insurance, all industries involved”.
“It will be devastating for the American economy.”
Kentucky Treasurer Allison Ball agrees. “It will make inflation worse,” she said. “It’s a big government regulatory oversight – it will impact small businesses, energy availability, it will drive up the cost of doing business.”