View this post on the web at [link removed]

Last month, American farmers dodged a bullet. And not a small bullet like a .22 round, but a big one—the kind you might use to take down a grizzly bear.
In early March, the Securities and Exchange Commission (SEC) adopted its global financier-backed climate disclosure rules [ [link removed] ] for publicly traded companies. The rules are multi-faceted, but their main purpose is to create a standard way to measure climate risk in so-called environmental, social and corporate governance (ESG) investing products. After all, if asset managers want to invest in companies with low greenhouse gas emissions, it makes sense to ensure that these companies are all measuring emissions in the same way.
However, thankfully there is something missing from this new set of rules: the so-called Scope 3 disclosure. Under Scope 3, for example, dairy producers whose lenders are publicly traded would face inquiries about their environmental impacts. How are they planning to lower nitrates in their soil? What are they doing with animal waste? And, in theory, if their lenders didn’t like their responses, they could sever ties with the dairy producers.
The same rules would apply to a farm selling corn to Archer Daniels Midland or cattle to Tyson Foods—both publicly traded companies that must follow SEC rules. If those companies didn’t like the farm’s responses because it didn’t help their emissions goals, and they needed to disclose that in order to be part of some climate-related investing index or to remain part of a large investment portfolio, then they could dump the farmer before some investment behemoth like the Norwegian Sovereign Wealth fund dumped them [ [link removed] ].
Had Scope 3 been included in the SEC’s new climate disclosure rules, it would have been a pitchforks-and-torches moment for farmers and ranchers across America. It would have eventually led to what most farm advocates, including those in Congress, actually despise: increasing the already amassed powers of industrial, corporate-run farming in our food supply and making it forever impossible to run a small or midsize family farm.
Not Another Europe
Climate disclosures for investors are a Western phenomenon, born in the U.K. and European Union. While the skyscrapers of London and New York City, with all of their electricity and sewer waste, produce more greenhouse gas emissions [ [link removed] ] than farmers in New York State and the U.K., farmers have become a disproportionate target of criticism for the environmental harm they cause.
Generations of family farmers have been turning away from farming as a career for decades, usually selling to housing developers. The number of U.S. farms shrank from 2.1 million in 2002 to 1.9 million in 2022, according to the USDA 2022 Agriculture Census [ [link removed] ]. That’s roughly 228,000 farmers gone in a generation.
Among the major reasons for the exit from agriculture and the growth of industrialized farming [ [link removed] ] are environmental regulations. Nowadays, farmers are being told to put solar panels [ [link removed] ] and wind turbines [ [link removed] ] on their land and become energy producers instead of raising livestock. Many find it too difficult to comply with regulations on what they can and can’t produce, so they’re forced to sell their farms. It’s not an easy life. Scope 3 would have made it impossible for many who remain.
The experience of Europe’s farmers shows where U.S. farmers might have headed. In Europe, farmers have been dealing with strict environmental mandates [ [link removed] ] under new climate rules [ [link removed] ] for over a year. Brussels’ message to farmers has been that they must comply with those rules or else they will lose government subsidies [ [link removed] ]. The backlash has been significant. In January, French farmers took to dumping manure [ [link removed] ] on the city streets of Toulouse to protest these regulations. In response to farmers’ overwhelmingly negative reactions, Brussels reversed course [ [link removed] ] last month, deciding to strip back these rules in an election year. Unfortunately, this reversal is only temporary and may itself be reversed after this year’s elections.
Who—or What—Killed Scope 3 in the U.S.?
While the SEC felt similar pressure from investor groups to implement Scope 3, its predicted unpopularity ultimately stood in the way. Scope 3 disclosures in the United States would have led to the same anger and animosity toward government that we’ve seen through Europe—from the Netherlands [ [link removed] ] to Germany [ [link removed] ] to France [ [link removed] ] and elsewhere [ [link removed] ].
“Scope 3 would have had a huge impact on us, but most of us understood how unpopular this motion would be,” said Joe Logan, president of the Ohio Farmers Union. “Few of us believed Scope 3 could ever become a reality. Most farmers just ignored it. I am definitely aware of the disturbances across Europe. The protests there were because of climate measures being mandatory, with little compensation for farmers’ efforts to reduce fertilizer use and greenhouse gas emissions.”
Ultimately, 10 attorneys general, all Republicans, killed Scope 3 [ [link removed] ]. They threatened litigation [ [link removed] ] to block Scope 3 after the Supreme Court ruled in West Virginia v. Environmental Protection Agency that the SEC needed permission from Congress to create regulations that have a major economic or political impact on their constituents.
The initial argument for the SEC rule was to create standards for environmentally focused investors as a way to mitigate climate risks. Those investors wanted proper metrics aligned across the entirety of publicly traded companies in the West. If, for example, McDonald’s says they’ve reduced greenhouse gases by 20% and Cheesecake Factory says the same, their math for declaring that reduction has to be comparable. This is why most investors, and some members of Congress for whom fighting climate change is a top priority, backed the SEC rule: They wanted a standard for declaring climate risk (too many cows producing methane gas) and reward (we are now powered by wind, so we get to subtract some other greenhouse gases from our total, perhaps).
Scope 3 would have meant that McDonald’s would have been required to include in its emissions calculus all of the farming operations it contracts. If McDonald’s wanted to be the most righteous fast-food company intent on saving the planet, it would have had to go after its farmers (or pretend to, at the very least). While McDonald’s had already said [ [link removed] ] back in 2021 that it was going to cut Scope 3 emissions, now the fast-food chain does not have to.
The Fight Will Continue
In the world of climate disclosures, investors are the main drivers, not governments. Corporations that want to look like good environmental stewards for those investors come in a close second. But it all begins with financial markets, especially those in Europe.
In 2019, more than 630 investors collectively managing more than $37 trillion created the United Nations-run Global Investor Statement to Governments on Climate Change [ [link removed] ], urging governments to require climate-related financial reporting. This investor initiative bred the Investor Agenda’s Global Investor Statement to Governments on the Climate Crisis, which was signed by more than 700 global institutional investors, with more than $52 trillion in assets under management. The SEC listened to them … except when it came to emissions along the supply chain and lender client list, which would have been regulated under the now-defunct Scope 3 disclosure.
Could Scope 3 be resurrected in a different form? The Sierra Club and Sierra Club Foundation, represented by environmental legal group Earthjustice, are considering a challenge [ [link removed] ] to the SEC’s decision to remove Scope 3 from the final rule. If they choose to move forward with the challenge and succeed, their actions will lead to more consolidation in agriculture—meaning more of the factory farms that Sierra Club donors probably hate. To say that this is illogical would be an understatement.
Scope 3 may be dead, but the push to change the way farmers and ranchers do business, in the name of climate change, is not over. It’s now on pause, thanks to this decision by the SEC and the wins scored by European farmers against even stricter rules. European Parliament elections in early June could kill these topics for good or bring them back to life. I suspect the U.S. will follow Europe’s lead, just as it did with Scope 3 in the first place.
“The entire Scope 3 idea was concocted by and driven by international finance,” said Wyoming rancher Tracy Hunt. “Lenders have already begun requiring their corporate borrowers to comply with climate change rules. They lobby regulatory agencies to enact policies that will squeeze the supply chain, including farmers and ranchers.”
“It is difficult to look at these policies and not think that their intended purpose is to restrict domestic food supply,” he continued. “I don’t see these rules doing anything to reduce carbon emissions. Instead, I see how they create criteria by which corporations, banks and regulators can discriminate against individual producers lower on the supply chain.”
Bill Bullard, president of R-Calf, an association of independent cattle ranchers in Montana, said American farmers and ranchers are not as inclined to protest as are their European counterparts. But should Scope 3 or something like it return due to lawsuits by global environmental activist groups, then he made a promise: “We will fight back.”

Unsubscribe [link removed]?