Aug. 17, 2022
Gary Gensler, Chair SEC Headquarters 100 F Street, NE Washington, DC 20549 (202) 551-2100 chairmanoffice@sec.gov Vanessa A. Countryman Secretary, Securities and Exchange Commission 100 F Street NE Washington, DC 20549-1090 rule-comments@sec.gov Re: SEC must demand greater transparency on digital and human rights issues in ESG ratings Dear Chairman and Secretary: For too long, greenwashing and opacity have let the true environmental and human rights impacts of information and communications technology (ICT) companies' actions fly under the radar. Investors seeking reliable data about the environmental, social, and governance (ESG) performance of these companies deserve more, and better, information about the societal impact of their technologies. Open MIC, Heartland Initiative, and Access Now submitted comments urging the U.S. Securities and Exchange Commission (SEC), which is weighing rules and forming amendments on ESG practices, to help investors access accurate data about the ESG performance of the companies they back, in turn making more informed decisions. Many ICT companies have poor governance practices and fall short on digital rights, labor rights, and other human rights issues. Yet, ICT stocks are overrepresented in ESG funds due to the industry’s relatively low carbon footprint and high returns for shareholders. Investors need transparency into how ESG funds weigh each of the 'E,' 'S,' and 'G' criteria and the methods used to measure them. For many ESG ratings providers, the mere act of publishing a human rights impact assessment would be sufficient for a company to earn top scores in their human rights performance, or the “S” in “ESG.” Meta Inc. recently released its first human rights audit, assessing the company’s approach to managing human rights risks. However, Meta drew criticism from human rights advocates for its failure to include a full assessment of its impact in India, which is home to Facebook’s largest user base. When it comes to addressing the adverse social impacts of a multinational corporation’s business operations, self-regulation will never be sufficient. The SEC must ensure oversight, transparency, and accountability in the tech and communications sector and give investors the power to make informed decisions about where their money goes.” The recommendations include: Disclosure about a fund’s approach to ESG should make clear the specific ESG criteria the fund uses to determine a company’s inclusion in their fund; Disclosure about a fund’s approach to ESG should make clear to investors whether their measure of ESG risk is in view of a company’s bottom line or its impact on people and planet; and Disclosure about a fund’s approach to ESG should reflect the extent to which ESG performance is measured on the basis of company self-reporting or on actual outcomes. Big Tech has unparalleled influence in the lives of millions of people across the globe. The SEC should improve the environmental, social, and governance frameworks in which tech and communications companies operate. Full proposed rule and comments: https://www.sec.gov/comments/s7-17-22/s71722-20136068-306833.pdf Yours sincerely. Robert E. Rutkowski cc: Legislative Correspondence Team 1705 Longworth House Office Building Washington DC 20515 Office: (202) 225-4131 Fax: (202) 225-4300 [REDACTED]