June 30, 2021

Senior Fellow Bill Harrington submitted a blistering, 46-page public comment on deficient-to-nonexistent climate and ESG content in credit rating companies to the U.S. Securities and Exchange Commission on June 14. The SEC requested public input on climate change disclosures on March 15. As of the end of June, the SEC had posted 600 public comments and 50 meetings on climate change and other ESG disclosure.

The big takeaway of Bill’s comment — “The SEC Must Fix Its Governance and That of Credit Rating Companies!” — is central to his work to inject accountability into the U.S. and global financial systems. Bill’s goals are to rationalize financial systems, optimize economies, and re-constitute social contracts. Poor governance by credit rating companies and many other financial practitioners undermines everyone in the world by relentlessly warping price signals, directing investment to sub-optimal uses, and periodically spawning full-blown crises.

Poor governance by credit rating companies also makes them uniquely unqualified to assess the credit implications of other entities’ governance, yet credit rating companies pretend to do exactly that. The following excerpts are from pages 5-6 of Bill’s SEC comment.

“SEC / NRSRO ‘Anti-Governance’ Plies ESG Ruse to the Hilt: NRSROs parrot ESG concerns while discounting them. NRSROs assign and monitor ‘long-term’ credit ratings by assessing a ‘medium-term’ horizon of three-to-five years. NRSROs retroactively ‘divine’ ESG analysis in their credit ratings, including ones assigned a decade ago. NRSROs concoct ESG ‘scores’ that are incidental to a given credit rating. NRSRO parent companies conflate ESG affiliate products with NRSRO credit ratings.”

Bill is spending the next year living in a variety of East Coast locales. To learn more about Bill and his ten-year, to-date self-funded research advocacy, please see his bio.