This is the Cato Daily Podcast for Saturday, August 13th, 2022.

I'm Caleb Brown.

The Securities and Exchange Commission wants to get into the business of deciding which businesses

are environmentally friendly, socially beneficial, and well governed.

And that raises a lot of questions about how to measure those qualities and why exactly

the SEC is thought to be best suited to do that measuring.

Cato's Jennifer Schulp discusses the steady creep of what's known simply as

ESG into regulating your investment choices.

You know, recently on the podcast we talked a little bit about Fair Trade

coffee. It's a nice little label says it's Fair Trade and you're supposed to be able to

draw some conclusions about that based on that label and there are all sorts of environmental labels that people put on products

and they say, well, this label demonstrates that our products are, you know, you can feel good buying our product so what's the

equivalent of that for investment products and how do the agencies that are trying to oversee this?

How do they, how are they trying to make these companies be clear about what their environmental impact might be.

Well, there's no one label, like a fair trade label or like an organic label that investment products get to show that they are good for the environment or good for society generally.

The SEC has recently become very concerned with this with the rise of

ESG or environmental, social, and governance investing, where investors are, in theory, looking to do good by

also investing and doing well for themselves.

The SEC recently proposed two rules regarding funds,

investment funds, that are aimed at combating

what is termed as green washing.

So, pretending that one is being more environmentally friendly than one is.

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