West Virginia Treasurer Riley Moore

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 businesses to add their climate damage risk assessment to their financial disclosures. 

The SEC voted 3-1 in March to address a lack of standardization in corporate reporting on climate risk through a new rule proposal. 

If the rule is finalized, 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’s produced from the electricity they use to keep the lights on in their business. Large companies would have to give assurances to back up the information they provide. 

The risks that would have to be reported also include physical hazards, such as owning property in flood-prone areas and transition risks, such as the effect of new governmental regulation. 

Clear reporting on climate impact is meant to give investors and consumers data to determine whether they do business with companies that are irresponsible with their emissions. 

West Virginia Treasurer Riley Moore

Nebraska Treasurer John Murante

GOP state financial officers are sounding the alarm over what they predict will be ‘cataclysmic’ consequences if the SEC finalizes a rule that requires businesses to add their climate damage risk assessment to their financial disclosures

The SEC voted 3-1 in March to address a lack of standardization in corporate reporting on climate risk through a new rule proposal

The SEC voted 3-1 in March to address a lack of standardization in corporate reporting on climate risk through a new rule proposal

‘I think it’s going to be cataclysmic for small businesses to comply with that rule to get into their supply chain,’ West Virginia Treasurer Riley Moore told DailyMail.com at a meeting of state financial officers in Washington, D.C. this week. 

‘This is going to destroy [small businesses],’ Moore, who is reportedly mulling a run against Sen. Joe Manchin in 2024, continued. 

‘Some large manufacturer having to get all the way down in 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 off small businesses the way he says the Dodd-Frank Act did community banks. 

‘Of course it could lead to price rises,’ he said. ‘It’s like consolidation of power and money a few banks and asset managers, they’re going to have the ability to kind of set prices.’ 

Larger companies would also have to 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 burden smaller companies which are part of large corporation’s supply chains. 

The information would need to be reported in registration statements with the SEC and annual reports, including Form 10-K filings. Companies would also have to disclose how their board of directors is managing climate risk, and how such risks will have an impact on business over time. 

The proposal, which would apply to any company filed with the SEC, has elicited 14,000 public comments since it posted on the SEC website. 

Since the contentious rule was proposed, the SEC has held meetings with over 150 companies that would be affected by the change. 

Democratic Reps. Cindy Axne of Iowa, Jim Costa and Jimmy Panetta of California, Abigail Spanberger of Virginia and Sanford D. Bishop Jr. of Georgia penned a letter expressing concern the rule would hurt farmers and other small businesses that serve as vendors to larger ones. 

‘Our constituents worry that since they are part of the supply chain for large public companies, they may be asked to report detailed emissions information to their customer or supplier and face additional reporting burdens,’ the lawmakers said in a letter last month to SEC Chair Gary Gensler.  

‘This has the real potential to be devastating,’ Nebraska state treasurer John Murante said in an interview. ‘It’s just cramming down the Green New Deal without being able to pass it through Congress – it’s unacceptable.’

He went on: ‘My family started a small business in 1965 and if you told my grandfather when he started that business that he would be judged not on how profitable his business was, but on his capacity to lower the temperature outside or his capacity to achieve net zero by 2050– he first of all he wouldn’t believe it, second he would be appalled.’ 

Murante predicted costs would go up across the board – ‘farming, ranching, insurance, every industry it reaches.’ 

‘It will be devastating to the American economy.’

Kentucky Treasurer Allison Ball concurred. ‘It’ll make inflation worse,’ she said. ‘It’s big government regulatory oversight – it’ll impact small businesses, energy availability, it’ll make the cost of doing business go up.’ 

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