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,” said Audrey Mocle, Deputy Director at Open MIC. “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,” 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.
“Big Tech has unparalleled influence in the lives of millions of people across the globe,” said Laura Okkonen, Investor Advocate at Access Now. “We are excited to support the SEC in improving the environmental, social, and governance frameworks in which tech and communications companies operate.”
See the full proposed rule and comments submitted by Open Mic, Access Now, and Heartland Initiative.
For more information:
Audrey Mocle, Deputy Director, Open MIC
Laura Okkonen, Investor Advocate, Access Now
Rich Stazinski, Executive Director, Heartland Initiative