For most, paperless communications have revolutionized the way we pay bills and receive mail in an environmentally-friendly fashion, but for other parties, this electronic breakthrough represents a hefty loss in their bottom line.
Much to the detriment of consumers, the mutual fund industry currently can’t make paperless delivery the default option for delivering financial documents, such as shareholder reports. These regulations place the industry behind the times, and fundamentally hurt environmental efforts of companies across the United States.
Fortunately, Securities and Exchange Commission (SEC) Rule 30-e3, under the Investment Company Act of 1940, would allow companies to make paperless reports the default medium of communication with shareholders—of whom 95% have internet access. Moreover, consumers would still be able to receive hard copies of reports with a simple telephone request.
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Economic benefits of the rule are readily apparent. According to the Investment Company Institute, passing Rule 30-e3 and transitioning to paperless delivery would save investors roughly $2 billion over the next decade.
Additionally, the rule would reportedly save 2 million trees a year, considering that companies mail a whopping 440 million reports per year at an average of 189 pages each. Instead of simply resorting to burning these seldom-read documents in the backyard and contaminating the environment even further, the rule would give electronic access on demand.
Support for passing the rule is considerable. According to the SEC’s own polling, 60% of respondents would prefer to examine financial reports online, while 25% would prefer hard copies. Under Rule 30-e3, all consumers would still be allowed to receive reports in the medium of their choice, while saving money and helping the environment.
Unfortunately, political cronyism at the direction of “Big Paper” could prevent the rule from going into effect.
The Coalition for Paper Options bills itself as an organization that recognizes “the need to preserve access to important paper-based information and services for Americans who prefer them or depend on them,” but it is hardly unbiased.
Funded by both the American Forest and Paper Association and the Envelope Manufacturer’s Association, the coalition has a vested interest in making sure that wasteful paper reports continue being printed, and has lead a coordinated effort to persuade Maine Congressional representatives to oppose the rule.
“Millions of our fellow Americans will be left out in an information desert,” Rep. Bruce Poliquin (R-ME) proclaimed of the rule on the House floor on July 6, while Rep. Susan Collins (R-ME) warned of “confusion and potential financial discord among the Americans who receive these financial disclosers,” in January.
Despite Poliquin and Collins’ assertions, Americans would still be able to receive hard copies of documents under Rule 30-e3, simply by picking up the telephone.
Maine, often referred to as “The Pine Tree State,” has a large pulp and paper industry, accounting for approximately $8.5 billion in 2016, so it’s no surprise that “Big Paper” has targeted the state. However, companies and consumers shouldn’t have to subsidize the paper industry.
Rep. Rodney Frelinghuysen (R-NJ), the chairman of the Appropriations Committee, and Rep. Tom Graves (R-GA), chairman of the Financial Services and General Government Subcommittee, are central to passing this rule, and must not succumb to Big Paper’s efforts to pass the bill onto consumers.
Ultimately, Rule 30-e3 would lower consumer costs in the billions and reduce a government-imposed impact on the environment, while bringing the mutual fund industry into the 21st century.
