As reported in UEP’s last newsletter, the Securities and Exchange Commission (SEC)  published a proposed rule in the Federal Register on April 11. The rule requires any company issuing stock for sale in public U.S. capital markets (‘public companies’) to report their greenhouse gas (GHG) emissions and in their supply chain in certain instances. Comments are due on this long, complicated and detailed proposal by June 17. UEP is working with several other agricultural groups to prepare a submission.

UEP’s study of the rule indicates that it could result in GHG reporting being required for any egg producer whose eggs are handled, processed or sold by a publicly-traded company. The rule requires that a publicly-traded company report its upstream and downstream supply chain’s GHG emissions (these are ‘Scope 3’ emissions) if they are “material” to its climate performance. The question is, what constitutes “material”? The proposed rule suggests that if supply chain emissions represent 40% or more of a company’s total emissions, they are material.

Agriculture needs to pay close attention to this rule and actively participate in this process. It will not be uncommon for any publicly-traded company that focuses on handling, processing or marketing food or inputs to the farming process to have a supply chain that accounts for more than 40% of its overall emissions. Most of those emissions will be from some stage of farming.

Egg production has a relatively small total GHG footprint, including the approximately 70% of its supply chain emissions associated with feed grain production. Regardless, egg farmers have to anticipate being required by a public food company, in whose supply chain the egg producer operates, to supply data and information to the company so it can estimate and report its GHG emissions.

Please contact Tom Hebert (tom.hebert@bayardridge.com) if you have questions or comments regarding the SEC’s proposal.