Aug. 15, 2022
RE: Proposed ESG rules on Investment Companies Advisors Aug. 15, 2022 I oppose the Securities Exchange Commissions (SEC) proposed Environmental, Social, Governance (ESG) rule because this action consists of an administrative rulemaking that lacks Congressional Authority and it represents other flawed thinking. According to the SEC Commissioner, these new regulations are needed to provide a cohesive framework for investors to make informed product selections. Comm. Carol Crenshaw reasons that because of a spike in ESG investment products that investors need this composite metric to discern how to make best product decisions. This is a misguided reasoning as my monitoring of new investment products in the mutual fund arena has shown that the group of socialist-minded capitalists global investors who founded these products have learned they are poor investment products. This pretense for ESG is not a wise justification for establishing a new benchmark in SEC rulemaking. In fact, this proposal is very likely unconstitutional and has no place in the SEC's heretofore Congress authorities. The SEC was established to ensure that corporate disclosures of investments were accurate and true according to the Securities Act of 1934. Further, the SEC was tasked to oversee transactions for increasing wealth and savings for American citizenry. This new rulemaking will make it a larger burden for existing small businesses and new businesses to meet this new metric of looking out for the climate and social injustices. US business need less government intrusion and new rules will only increase the costs of goods services. There are other economic considerations that would encumber small or new businesses to meet or uphold ESG standards. It is highly likely that this proposal would increase the cost of yearly corporate disclosures more than any SEC rules combined to present. This extraordinary economic burden would drive companies away from public markets or cause companies to wait to go public. Companies that must bear the rules costs would pass them as lower returns to investors and higher prices for consumers at this time when Americans can ill afford either. In essence, large investment products may be better positioned to meet the new metrics but new businesses and small businesses would struggle, or worst, collapse. None of this would help short or long-term for the American economy. This rule is bad for another reason that includes diverting companies from attending to their core mission - that is producing the vital goods and services that make American life the envy of the world. The disclosure purpose that Congress enacted in the 1930s is straightforward. Company boards and management should run their businesses as they see fit and the securities laws simply require that businesses disclose to their investors the opportunities and obstacles that may impact the investment bottom line. This approach, sanctioned by the Supreme Court, is known as the materiality standard. Yet, these new rules prescribe a more challenging course, requiring all companies to disclose their environmental grading and their social employment statuseven when that information does not affect risks and returns. In fact, it could even result in negative outcomes if a company does not hire primarily based on the best qualified candidate. Plus, new and small firms would have to pay speciali zed consultants for showing their new grades for meeting these proposed rules. This rulemaking wilI negatively impact me as I am recently retired, and like most retirees, have limited retirement income sources. This rulemaking will quickly limit my investment returns and impact my charitable donations. Implementation of SEC rules is not the best means to address climate change and social justice considerations. Best governance occurs when pursued with a light hand and when obviously needed, in a partnership and collaborative manner with US businesses who are creative in problem-solving...more so than government. Yes, that is opined from a 37-yr federal employee who served in law enforcement and was a federal Conservation Mgr. with the USCOE and USFWS. In summary, this rulemaking is unnecessary and should be discarded.