WASHINGTON, June 15, 2022—Yesterday, the International Dairy Foods Association (IDFA) submitted comments regarding the U.S. Securities and Exchange Commission’s (SEC’s) proposed rule, “The Enhancement and Standardization of Climate-Related Disclosures for Investors.” IDFA suspects that the proposed SEC rule will act as a barrier to entry for some businesses, especially smaller companies, and the SEC does not account for the financial and market burdens it places on businesses of all sizes with the compressed timeline and additional climate reporting schemes it layers on existing standards. While IDFA does not take a position on the rule itself, IDFA’s comments are meant to give the SEC a clearer understanding of the impact its rule would have on the dairy value chain and requests greater flexibility regarding implementation and timelines, so the ultimate regulatory and market burdens are lessened on the dairy industry as we continue to lead the food and beverage sector in practicing responsible Environmental, Social, and Governance principles.
“The U.S. dairy industry has committed significant resources to achieve ambitious environmental stewardship goals, including GHG neutrality, optimized water use, and improved water quality by 2050,” said IDFA President and CEO Michael Dykes, D.V.M. “Should the SEC move forward with the Climate Disclosure Rule, it is critical that the SEC build in additional time for companies to comply while extending the Scope 3 safe harbor period. As currently written, the rule threatens to become overly onerous and put significant financial burdens on millions of companies and businesses that fall outside of the SEC’s regulatory jurisdiction. IDFA encourages the SEC to engage food and agriculture to learn more about how our businesses and employees are working each day to deliver nutritious, affordable, sustainable dairy nutrition to people everywhere.”
In comments, IDFA raised weaknesses in the SEC proposed rule that challenge the dairy industry’s ability to comply with the proposed regulatory requirements. For example, IDFA flagged the following in the proposed rule:
- The SEC’s lack of engagement with the dairy value chain
- The proposal’s lack of analysis of the economic and market effects on privately held and small entities directly impacted by the rule
- Rather than reconcile the various GHG reporting schemes out there, the rule adds additional requirements
- There is no recognition by the SEC that small and some medium-sized businesses lack the technical expertise and financial resources to measure and report GHG emissions, especially in the condensed timeline required by the proposed rule
- And, finally, the rule moves much too quickly toward implementation, prompting IDFA to request additional compliance time overall and for more flexibility for companies reporting Scope 3 GHG emissions
To review IDFA’s comments in full, visit the IDFA Sustainability Hub.