Arkansas AG, 17 Others Ask SEC For More Comment Time On ESG Rules

By Hunter Field, Arkansas Advocate

October 26, 2022

Arkansas Attorney General Leslie Rutledge joined her counterparts in 17 other states asking the Securities and Exchange Commission for more public comment time on proposed rules regarding so-called “woke” investment criteria.

The new rules would require publicly traded companies to report additional climate-related data, like greenhouse gas emissions insights. They’d also require investors and funds who focus on these type of criteria to report more details about their strategies.

These criteria are known as environmental, social and corporate governance criteria, or ESG for short, and have become an increasingly controversial topic in the investment world.

The attorneys general called for an extended public comment period in this week’s letter because some of the previous public comments on the rules were lost due to a computer glitch. However, many of the state attorneys have opposed the rules on their merits as well.

“The liberal agenda pushing ESG regulations on banks is creating huge problems for businesses attempting to invest in American economic growth,” Rutledge said in a statement. “Public input shouldn’t be wrongly discarded due to a computer error. Giving the public more time to comment is just common sense.”

Republicans across the country have taken issue with the ESG investing criteria, arguing that it places ideology above the fiduciary duty.

In Arkansas, State Treasurer Dennis Milligan in March divested $125 million in state investments from BlackRock, the world’s largest investment manager, because the firm considers ESG criteria.

However, investment companies and experts have said it’s prudent to take some ESG criteria into consideration, particularly climate factors, because how well a company is prepared to deal with climate change can have an impact on its future bottom line.

Earlier this month, the SEC acknowledged that some public input on the rules submitted through its website had been lost. It provided a 14-day resubmission period, but Rutledge and the other AGs argued the period should last no less than 60 days.

“The public needs significant, additional time to comment on these rules,” the letter states. “That’s especially true with the two climate-related rules referenced above, which seek to usher in a market transformation.

“Those proposed rules—in effect if not in form—seek to reorder public companies’ priorities from maximizing shareholder returns to improving climate reputation. To achieve these goals, the Commission’s proposed rules—which sweep far beyond its traditional area of expertise or statutory authority—would compel public companies to gather, create and disclose a crushing amount of information.”

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