Praxis Mutual Funds®, a leading faith-based, socially responsible family of mutual funds from Everence Financial®, submitted an independent comment letter urging the Securities and Exchange Commission (SEC) to establish a mandatory framework for environmental, social and governance (ESG) criteria. The letter was submitted in response to a request for information issued on March 15, 2021. Praxis joined investors with over $2.7 trillion in assets under management and advisement, corporations, nonprofit organizations, and individuals in a joint investor letter led by Ceres.
“At Praxis, caring for creation is fundamental to our understanding of faith-based investing. Investors need companies to measure and disclose climate risk in a consistent and comparable fashion in order to assess that risk in making sound investment decisions,” said Mark Regier, Praxis Vice President of Stewardship Investing. “We are proud to join nearly 200 major investors, companies, individuals and nonprofits to call on the SEC and U.S. Treasury to mandate climate disclosure.”
Praxis’ comment letter states:
We believe the natural environment is a finite resource, the inheritance of future generations and a gift from God. As stewards of creation, we expect companies to respect the limits of our natural resources and to work toward environmental sustainability. We also expect companies to act on the basis of shared prosperity, recognizing the value and contributions of all stakeholders in creating and sustaining economic success. On behalf of our clients, we seek a more sustainable and just future for all.
Corporate disclosure of climate and ESG information plays an important role in ensuring transparency and accountability in our capital markets. According to the US SIF Foundation’s 2020 Report on U.S. Sustainable and Impact Investing Trends, $17 trillion of professionally managed assets in the United States consider environmental, social and governance (ESG) factors. Voluntary ESG disclosures have increased in recent years, which is welcome; however, the information produced is often incomplete, lacks consistency, and is not comparable between companies.
A comprehensive framework for ESG disclosure is needed. Investors need disclosure of the full range of ESG issues that could impact a company, the communities in which it operates, its employees and other stakeholders in order to make informed investment decisions.
Praxis needs quality ESG data both to make informed investment management decisions and to better understand company performance on ESG issues for corporate engagement purposes. As previously stated, many large cap companies voluntarily publish extensive reports that cover ESG issues in lieu of mandatory reporting requirements. However, these reports do not necessarily compare well between companies even within the same industry, and few medium and small companies publish adequate data. Standardized information would be particularly useful.
Praxis’ complete submitted letter can be read here.