The National Association of Manufacturers (NAM) is considering legal action against the U.S. Securities and Exchange Commission (SEC) over its proposed climate disclosure rules. The trade association has concerns regarding the costs involved for companies and the agency’s power to enforce such rules.
Charles Crain, the vice president for domestic policy at the NAM, voiced these concerns during a recent House Financial Services subcommittee hearing. Crain argued that the SEC’s analysis of the scheme’s expenses was “faulty” as it failed to consider the “tremendous costs” businesses would incur. If the SEC fails to address these issues, a lawsuit from the NAM could be a “very real possibility,” Crain warned.
The SEC’s plan proposes requiring publicly traded companies to report on greenhouse gas emissions and other climate-related disclosures. According to the agency’s proposal, general compliance costs would amount to approximately $530,000 annually for large companies and $420,000 for small businesses following the first year.
This litigation scare from the manufacturers is just one of several recently experienced by the SEC. Republican attorneys general in various states, including West Virginia and Florida, along with entities like the US Chamber of Commerce have also threatened to sue the agency.
The proposal stipulates that large corporations disclose Scope 3 emissions (emissions from supply chains and other indirect sources), which, according to Crain, underscores problems with the SEC’s cost-analysis approach and its credibility in commanding these rules.
Crain suggested that these regulations could unduly burden smaller businesses, such as family farmers, with emissions data requests or force them to find alternative suppliers. Additionally, he questioned the relevance of these details for investors, arguing that such disclosures are outside the SEC’s jurisdiction.
While SEC Chair Gary Gensler maintains that the body has the authority to necessitate these disclosures, he has acknowledged trying to avoid complications concerning Scope 3 reporting for private firms supplying larger companies. As a result, observers feel potential weakening of requirements may be imminent.
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