House Small Business Committee Republicans Pen Letter to SEC Demanding the Rescission of Burdensome Greenhouse Gas Disclosure Requirements on Small Businesses
Washington, July 21, 2022
WASHINGTON, D.C. – Republican members of the House Committee on Small Business issued the following joint statement after sending a letter to the Chairman of the U.S. Securities and Exchange Commission, Gary Gensler.
“Time and time again, Democrats always find a way to inflict damage on small businesses through unnecessary regulations. This time, Biden’s SEC is imposing a greenhouse gas disclosure for everyone up and down the value chain. This regulation will not only impact small businesses and small farmers, but also the lenders supporting all of our local communities. Plain and simple, the SEC is ignoring the needs of the nation’s smallest businesses who are struggling against the worst inflation in 40-years. Regulations by this Administration are piling up and, once again, small businesses are feeling the pain. To get our economy back on track, reckless spending and overly burdensome regulations must end. We call on the SEC Chairman to rescind this ill-advised regulation,” said the House Committee on Small Business Republicans.
Read the full letter here.
Read key excerpts of the letter:
“The proposed rule would require publicly traded companies to disclose enhanced climate-related information, including greenhouse gas (GHG) emissions as part of their Scope 1 and Scope 2 disclosures, respectively. The proposed rule goes one step further by requiring registrants to disclose Scope 3 emissions which would include ‘all indirect GHG emissions not otherwise included in a registrant’s Scope 2 emissions, which occur in the upstream and downstream activities of a registrant’s value chain.’
“Scope 3 emission information requirements threaten to extend GHG disclosures well beyond the SEC registrants to nearly every privately owned entity in the country, including countless small firms who often do not have the necessary resources to comply with the significant demands of scope 1 and 2 disclosures. For example, any manufacturer in the country who supplies parts to a publicly traded company would be required to supply GHG emission disclosures as part of the Scope 3 emission requirements of the publicly traded company. In addition, any farm that supplies feed to a publicly traded company would similarly be required to supply GHG emissions information to comply with the scope 3 requirements as a part of the ‘value chain’ of a publicly traded company.”
“The inability of small firms to produce this data and the wide reach of the proposed rule would not only burden small businesses, but also financial institutions. In public comment letters to the SEC multiple banking organizations pointed out their inability to collect GHG emission information from privately held companies. Furthermore, the lack of available data from private firms makes it nearly impossible for financial institutions to establish a comprehensive risk analysis.
“The Small Business Administration Office of Advocacy (Advocacy) was established by Congress to represent the views of small entities before Federal agencies and Congress. In fulfilling this duty, Advocacy submitted a comment letter to the proposed rule which directly states, ‘The climate disclosure rules impose fixed costs that will fall disproportionately on small entities’ and ‘Advocacy is concerned about the widespread economic impacts of the proposed climate disclosure rules on both public and privately owned small businesses.’
“Not only does Advocacy highlight the dramatic impact on small firms, but it also highlights how the SEC failed to conduct an adequate Initial Regulatory Flexibility Analysis (IRFA) as statutorily required under the Regulatory Flexibility Act (RFA). Specifically, Advocacy states ‘the IRFA in the proposed rules lacks essential information required under the RFA,’ and even more alarming, ‘the proposal does not consider indirect impacts to privately owned businesses that are not generally subject to SEC regulation.’ Considering the importance of small businesses to the U.S. economy, the failure of the SEC to consider the impact of this rule on privately owned businesses and small firms is egregious.”
All Members of the House Committee on Small Business are signatories of this letter: Ranking Member Blaine Luetkemeyer (R-MO), Vice Ranking Member Roger Williams (R-TX), Rep. Pete Stauber (R-MN), Rep. Dan Meuser (R-PA), Rep. Claudia Tenney (R-NY), Rep. Andrew Garbarino (R-NY), Rep. Young Kim (R-CA), Rep. Beth Van Duyne (R-TX), Rep. Byron Donalds (R-FL), Rep. Maria Salazar (R-FL), Rep. Scott Fitzgerald (R-WI), and Rep. Mike Flood (NE-01).