SEC Must Demand Greater Transparency on Digital and Human Rights Issues in ESG Ratings

Heartland, Access Now, and Open MIC have submitted comments urging the U.S. Securities and Exchange Commission to establish rules and amendments related to environmental, social, and governance (ESG) practices. These changes would enable investors to access accurate data on the ESG performance of the companies they support, allowing for more informed decision-making.

For too long, greenwashing and a lack of transparency have allowed the true environmental and human rights impacts of information and communications technology companies to go unnoticed. Investors seeking reliable data on the ESG performance of these companies deserve better information regarding the societal impact of their technologies.

“When it comes to addressing the adverse social impacts of a multinational corporation’s business operations, self-regulation will never be sufficient,” said Richard Stazinski, Executive Director at Heartland Initiative. “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 the organizations made to the SEC 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.

See the full proposed rule and comments submitted by Heartland, Access Now, and Open MIC.

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