OOIDA: Truckers need flexibility with SEC’s climate-related disclosure proposal
June 20, 2022
The Owner-Operator Independent Drivers Association is asking the Securities and Exchange Commission to give truckers some flexibility with proposed standards regarding climate-related disclosures.
On Thursday, June 16, OOIDA submitted comments for the SEC’s proposed rule addressing climate-related disclosures for investors. The proposal sets standards for companies providing certain climate-related information in their registration statements and annual reports.
If finalized in its current state, the rule will require the following:
- Information about a registrant’s climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition.
- Disclosure of a registrant’s greenhouse gas emissions, which have become a commonly used metric to assess a registrant’s exposure to such risks.
- Certain climate-related financial metrics in a registrant’s audited financial statements.
Truckers are not directly affected by the rule unless they are selling securities to raise capital. However, the rule may affect owner-operators if they have customers that do have to file with the SEC.
“As part of the transportation services performed with or for other businesses, our members generate greenhouse gas emissions that would need to be included in numerous registrants’ reporting,” OOIDA stated in comments signed by President Todd Spencer. “As a result, registrants would likely seek to collect information from our members in order to meet their reporting obligations.”
OOIDA is requesting that the final rule “provide flexibility to small businesses that may have difficulty collecting or determining certain information that registrants request of them.”
Patchwork of climate-related disclosures for truckers
Whether an owner-operator is affected by another company’s climate-related disclosures varies from one operation to the next.
The U.S. Environmental Protection Agency categorizes greenhouse gas emissions into three “scopes”:
- Scope 1: Direct emissions that occur from sources that are controlled or owned by an organization (e.g., emissions associated with fuel combustion in boilers, furnaces, vehicles).
- Scope 2: Indirect emissions associated with the purchase of electricity, steam, heat or cooling.
- Scope 3: The result of activities from assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain.
Some drivers operate under their own authority as a small motor carrier. Others lease onto another company’s authority as an independent contractor.
Emissions from owner-operators with their own authority may be considered Scope 1. Drivers who are independent contractors working under another company’s authority might find themselves subject to climate-related disclosures based on Scope 3 emissions.
“In one example, the rule suggests that a registrant who owns a fleet of trucks could collect data on the total amount of diesel fuel and refrigerant used in their operations to calculate (greenhouse gas) emissions,” OOIDA stated. “While this may be feasible for a carrier that directly owns and operates their entire fleet of trucks, collecting this information would not be as simple for carriers that utilize leased-on owner-operators.”
Proposed climate-related disclosure requirements range from simple to complex. On one hand, registrants can submit reasonable estimates. On the other hand, companies must explain gaps in information. Furthermore, investors may pressure companies to divulge more detailed information.
The proposal states “an investor might find data … more reliable if based on specific distances traveled by the registrant’s transportation and distribution partners and company-specific emissions factors rather than estimates of distances traveled on industry-average data and using national average emission factors.”
Consequently, the proposed rule for climate-related disclosures has the potential to create a patchwork of collection data requests for a single owner-operator hired by multiple companies.
“Small-trucking businesses already lack the back office resources that would facilitate collecting and calculating this data, especially when compared with publically traded carriers that employ dedicated administrative departments,” OOIDA stated. “Far too often, small carriers are victims of regulations promoted by these large fleets as a method of squeezing competitors out of the industry by increasing their operating costs.”
The proposed rule offers flexibility for registrants. OOIDA is requesting that small-business entities indirectly affected be afforded that same flexibility in turning over information to businesses required to submit climate-related disclosures. LL