Despite ESG focus, transparency & verifiable proof remain elusive Certification bodies and processes highly flawed Inability to confidently verify claims leads to high level of subjectivity and abuse “Fair trade” chocolate? • E.g., Nestle to consolidate all certifications with Rainforest Alliance, leaving Chocolate made with many Fairtrade for a less stringent (and cheaper) process (Oct ’20) ingredients: cocoa, sugar, lecithin, vanilla, milk etc… Significant expenses hinder adoption of certification body …But fair-trade certification • E.g., cost to verifiably trace $12M in coffee (4kT) ~$140K and is 90% variable possible if one ingredient is by volume (UTZ) certified (e.g., cocoa) Overall lack of clarity on what and how to measure Thus, a company might use child • E.g., Two different certification bodies ranked Walmart top and third labor to produce one ingredient quartile for its ESG record, proving a lack of uniform standards and still be “fair trade” if another is ethically sourced Scarlet Letters: Remarks before the American Enterprise Institute, Commissioner Pierce (2019); The Challenge of Rating ESG Performance, MacMahon (2020)