Subject: S7-17-22: WebForm Comments from Eric W. Bright, CFA
From: Eric W. Bright, CFA
Affiliation: Portfolio manager, Pennyfarthing Investment Management

Jul. 28, 2022

July 28, 2022

Dear ESG investment managers,

ESG managers, prominently disclose whether you charge your investors a higher fee for ESG funds than for non-ESG.  Your funds' boards of directors believe your work and expertise are worth it because you are more careful, invest in the people and processes, measure more factors and risks, and hold companies more accountable than do non-ESG managers.

Give investors the opportunity to vote their shares of the portfolio and, if they choose not to vote, see how their fund votes.  Be more representative and transparent.  How much do your firm's top executives get paid?

ESG has always been a part of the good work of investing, not a different sort of work.  Do say when you don't evaluate a company's or other entity's fundamentals, including non-financial risks, when you don't exercise common sense or independence, don't engage with management and make no effort to uncover fraud.

Do you manage funds named with the words ESG, sustainable, impact, social or responsible?  Have at it.  If your investors deem it ESG, then it is so for them.  Make disclosures simple and direct, in the form of an ESG Strategy Overview Table, with details elsewhere for those who seek them.  This will be messy perhaps no matter how you do it, sparking accusations of illegitimacy because others might want to hold you accountable.

Do you invest in the best of the best companies, according to your evaluation?  Or those climbing up the ladder as they improve from worse to better?  Do you engage to spur change?  How about investing in the most ethical, transparent and/or communicative?

ESG investing alone won't save the world.  Don't believe the hype.  Maybe this should be the ultimate ESG disclosure, written in big, bold letters.

Nice try and thank you, SEC, for taking steps to build out a fair ESG disclosure framework.