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]