Oct. 25, 2022
October 25, 2022 Hello, I am a private citizen working for a large multinational company. Upon joining and being given the opportunity to invest in a 401k for the first time I was excited to plan for my retirement. I worked hard to became a Mechanical Engineer so I could do something about the mounting threats our species faces in regards to climate change, world hunger, sustainable energy, etc. Before I graduated I was inducted into The Order of The Engineer where I took an oath to use my skills to ethically and responsibly create. I would take the responsibility of science seriously even if I hadn't taken this pledge. I have passed on many opportunities for career advancement and have worked very hard at jobs I wasn't interested in to avoid work I though was unethical or counter to the reason I became an engineer in the first place, specifically avoiding working for the fossil fuels and defense sectors. This is the kind of personal responsibility for ones impact that is preached constantly in our country. When I was offered my 401k options for funds through my company, I looked into the holdings of each of the funds and they made me sick to my stomach. I thought of all the people who vote against fossil fuel supporting candidates, who hate private prisons/the border industry, who have distaste for the defense sector, etc. I wondered if they knew they were financially supporting them, and probably in some transitive way, supporting their lobbying actions against the values they use to decide their vote. Its a sad fact but these funds often rely on industries that many people find unethical. People should be given the opportunity to see what they are investing in, and in most cases they are given that opportunity, although many choose not to look and as I have found some banks make it very inconvenient to look. I also understand not everyone shares the same ethics and the industries I personally view as universally unethical for my own reasons may not be shared by everyone. However we c an all get behind fighting climate change. It's a threat to our entire species. The science is sound, the jury is back. I am working right now to persuade my company to include fund options in our 401k offering that are fossil fuel free and deforestation free. This is when I started reading about ESG funds. Soon after I read about greenwashing and wasn't surprised. I have low ethical expectations for investment banks for good reason. It didn't surprise me that they would try to take advantage of America's growing social conscience and try to profit off of it. I need a robust, sustainable option, managed by a reputable financial institution. Literally just something that is fossil fuel/deforestation free. I need a REAL ESG fund, not a greenwashed one, so I can convince my company to give their employees the option. You see, the fight is not about ethics, it is about the tenants of capitalism, the freedom of choice in the free market. If it were about ethics I would be asking for them to get rid of the funds they have now and JUST do sustainable ones. But thats not going to happen, nor should it. I want to give my fellow workers THE CHOICE to invest sustainably. I will never be able to make that argument if this part of investing is forever muddled in dubious behavior of misrepresenting the holdings of a fund. If an ESG fund can invest in Exon, what good is that fund? You, the SEC, are the only ones who are savvy enough to speak for the American people. You just have to choose to. You and the Department of Labor which is currently proposing a rule to reverse a Trump Admin rule which prevented employee retirement funds from considering non financial factors in selecting 401k options. You don't have to look at this as an ethical crusade if you don't want to. You can look at it like forcing companies to abide by their fiduciary responsibilities to their investors. If a fund markets itself as environmentally friendly, it SHOULD BE environmentally friendly. This rule change is about preventing fraud, not climate change. If banks and politicians worship at the alter of the free market then they need to let the investors make decisions for themselves. They already, in most cases, don't grant voting power to individual investors. If investors want to divest from polluters, and they are told they can, then you need to make sure that these banks aren't LYIN G TO THEM. The polluters know this which is why they want to stop the flow of data on comprehensive and comparable metrics for emissions. IT DOES NOT MATTER if this makes things more expensive. Make that Congress/The White House's problem. They can compensate by making costs spent on environmental assessments of operations to fill out these disclosures tax deductible, and they can sell that. Its a tax cut for corporations, 'hooray.' At the end of the day I will have to invest in private prisons that squeeze money out of overpoliced populations and their families. I will have to invest in the border industry which run camps that, especially during covid, were painfully similar to the ones my people died in in Germany. I will have to invest in the defense industry that profits off of war, underbids/overcharges our government, inflates defense spending so there is no room left for healthcare/education, abdicates responsibilities for weapons which eventually wind up in the hands of our enemies, and spies on our population, even after I bussed tables with an engineering degree to avoid working for them. I will have to invest in civilian gun manufacturers who lobby congress to keep gun laws weak ensuring future school shootings and a continuous supply of weapons into Mexico to supply the cartels which smuggle drugs into this country. I will have to invest in insurance companies who inflate the cost of healthcare and e xtort the American people to bring it down, providing no net benefit while they stick their hands in our pockets, every dollar of profit made being theft, with just enough left over to make sure we never change the system to something better. I will have to live with the burdens of supporting these things. I will have to live with the burden that the money I invest in mutual funds who invest in these things will probably be way more impactful than my vote at the ballot box. It will be very difficult. But I won't be able to live with these burdens if my city floods, if the power grid is decimated by extreme weather, if food becomes so expensive because the area of farmable land in the world shrinks dramatically, if continued deforestation gives rise to new and worse diseases like covid-19. I will not be able to live at all. I can't go to the bank when I retire if by the time I do there isn't a habitable planet to live on. I'm 27 and we're seeing some truly horrifying stuff in terms of climate projections. Yes, I am leaning pretty hard on ethical arguments here. But its only to make you realize how important it is for you to do your jobs and do your jobs correctly on this. If banks don't like your rules on ESGs then they don't have to offer ESGs, but investors want them, so they will. THIS is capitalism. We don't need any more toothless regulations. Investors deserve the truth about what they are buying into. If the banks can't provide what they are promising then an investor should be able to go to a different bank, thats how capitalism works. Banks shouldn't be able to mislead investors with holdings that go against the central tenant of a fund, which was the reason the investors bought in in the first place. Up until now they have been and you've been asleep at the wheel. WAKE UP, because yet again, t hey're rigging the game. And when the bill comes due, like it did in 2008, no one will be safe from the consequences. They preach respect for the free market but are fine with obscuring the information that allows investors to make their decisions. So I am begging you, do the right thing, and do it well. Please don't let the powerful financial forces of our fraud happy big banks stop you from doing your job. This has consequences for all of us. Respectfully and desperately, David Landerman