June 15, 2021
Hello Retail investor here.
I am not a stock picker. All of my investments are in index funds offered by my employer's 401k retirement plan. I do not evaluate individual companies according to their disclosures.
But if my retirement plan offered an ESG index plan, I would choose it over all others without a second thought. Assuming the expense ratio was reasonable and there was no indication of rampant greenwashing.
The West Virginia Attorney General has said he will sue the SEC if they mandate disclosure of political donations so investors can gauge adherence to ESG principles. He thinks companies should only have to disclose information that is \"material to future financial performance.\"
But information about political donations, and other information relevant to ESG goals and performance, is material to future financial performance. Lobbying and political expenditures are probably THE most important factor in maintaining a favorable political environment for companies to continue to externalize their costs and foist their liabilities on taxpayers.
Without those political expenditures, companies are much more likely to be held to account for polluting the environment, contributing to dangerous climate change, and taking actions that damage public health.
Therefore it is critical to know what \"lubricants\" companies are applying to the political system to get what they want. This absolutely is material information for investors. And ultimately, for citizens and taxpayers.
I would like to see a day where companies have to pay to clean up their own messes, so they will be incentivized to avoid making messes in the first place. For this to happen, companies need to disclose sustainability information in a way that is rigorous, accurate, and comparable across companies and jurisdictions.
I would really like the option to invest in an ESG index in my company's retirement plan. Because I am citizen and a taxpayer and I don't want the costs of companies' dirty, damaging, dangerous activities foisted on the rest of us. And because I am an everyday investor without the time or resources to pick individual stocks.
I would like to see a day when ESG indexes are broadly available, so that many companies offer them in 401k plans and competition drives down fees. I would like ESG indexes to be formulated and audited with integrity, so I can have confidence they're not just greenwashed nonsense. For this to happen, we need a strong ESG disclosure regime.
Thank you for your important work.