US state treasurers say small businesses will suffer ‘cataclysmic’ consequences of proposed SEC rule
GOP finance officials are sounding the alarm over what they predict will be “catastrophic” consequences if the Securities and Exchange Commission (SEC) finalizes a rule requiring companies to add their climate damage risk assessment to their financial disclosures.
The SEC voted 3 to 1 in March to address a lack of standardization in corporate reporting on climate risks through a new rule proposal.
If the rule is final, companies would have to report their direct greenhouse gas emissions, known as Scope 1, and Scope 2 their indirect greenhouse gas emissions, such as what is produced from the electricity they use to keep the lights on in their business . Big companies should provide guarantees to back up the information they provide.
Risks that should be reported also include physical risks, such as property ownership in flood-prone areas, and transition risks, such as the effect of new government regulation.
Clear reporting on climate impact is intended to give investors and consumers data to determine whether they are doing business with companies that are irresponsible about their emissions.
GOP finance officials are sounding the alarm over what they predict will be ‘catastrophic’ consequences if the SEC finalizes a rule requiring companies to add their climate damage risk assessment to their financial disclosures
The SEC voted 3 to 1 in March to address a lack of standardization in corporate reporting on climate risks through a new rule proposal
“I think it will be disastrous for small businesses to abide by that rule to get into their supply chain,” West Virginia treasurer Riley Moore told DailyMail.com this week at a meeting of state finance officials in Washington. , DC.
“This is going to destroy [small businesses],” continued Moore, who is reportedly considering running against Sen. Joe Manchin in 2024.
“A big manufacturer has to go all the way down its supply chain and calculate its carbon footprint – the compliance aspect will be so heavy it will kill jobs and businesses,” he predicted.
Moore said the climate disclosure rule would kill small businesses, as he says the Dodd-Frank Act did community banks.
“Of course that can lead to price increases,” he said. “It’s like a few banks and asset managers consolidate power and money, they’re going to have the ability to set prices more or less.”
Larger companies should also report Scope 3 emissions – indirect emissions from supply chains, which are difficult to track. Some opponents of the rule note that the rule would still be a burden on smaller companies that are part of large companies’ supply chains.
The information would be required to be reported in filings with the SEC and annual reports, including Form 10-K filings. Companies should also disclose how their board of directors manages climate risks and how such risks will impact business over time.
The proposal, which would apply to any company that files with the SEC, has since passed Posted on the SEC website.
Since the controversial 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. from Georgia have written a letter expressing concern that the rule would harm farmers and other small businesses that serve as salespeople for larger businesses.
“Our constituents are concerned that as 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 last month. in a letter to the chairman of the SEC. Gary Gensler.
“This has the real potential to be devastating,” Nebraska state treasurer John Murante said in an interview. “It’s just stuffing the Green New Deal without making it through Congress — it’s unacceptable.”
He continued, “My family started a small business in 1965 and if you told my grandfather when he started that business he would not be judged by how profitable his business was but by his ability to lower the temperature outside or his ability to reach net zero by 2050 – first he wouldn’t believe it, second he would be shocked.’
Murante predicted costs would rise across the board – “agriculture, ranching, insurance, every industry it reaches.”
“It will be devastating to the American economy.”
Kentucky treasurer Allison Ball agreed. “It will make inflation worse,” she said. “It’s big government scrutiny — it’s going to affect small businesses, the availability of energy, it’s going to raise the cost of doing business.”