Rule 30e-1 (ESG Proposal) Supporting Statement

OMB CONTROL NUMBER: 3235-0025
SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Rule 30e-1
A.

JUSTIFICATION
1.

Necessity for the Information Collection

Section 30(e) of the Investment Company Act of 1940 (“Investment Company Act”) 1
requires a registered investment company to transmit to its shareholders, at least semi-annually,
reports containing financial statements and other financial information as the Commission may
prescribe by rules and regulations. 2 In addition, Section 30(f) permits the Commission to require
by rule that semi-annual reports include such other information as the Commission deems
necessary or appropriate in the public interest or for the protection of investors. 3 Rule 30e-1
under the Investment Company Act generally requires a registered management company
(“fund”) to transmit to its shareholders, at least semi-annually, a report containing the
information that is required to be included in such reports by the fund’s registration statement
form under the Investment Company Act. 4 Failure to require the collection of this information
would impede the amount of current information available to shareholders and the public about
funds and would prevent the Commission from implementing the regulatory program required by
statute.
Rule 30e-1 also permits, under certain conditions, delivery of a single shareholder report
to investors who share an address (“householding”). 5 Specifically, rule 30e-1 permits

1

15 U.S.C. 80a-1 et seq.

2

15 U.S.C. 80a-29(e).

3

15 U.S.C. 80a-29(f).

4

17 CFR 270.30e-1.

5

See 17 CFR 270.30e-1(f).

householding of annual and semi-annual reports by management companies to satisfy the
transmission requirements of rule 30e-1 if, in addition to the other conditions set forth in the rule,
the management company has obtained from each applicable investor written or implied consent
to the householding of shareholder reports at such address. The rule requires management
companies that wish to household shareholder reports with implied consent to send a notice to
each applicable investor stating, among other things, that the investors in the household will
receive one report in the future unless the investors provide contrary instructions. In addition, at
least once a year, management companies relying on the householding provision must explain to
investors who have provided written or implied consent how they can revoke their consent.
On May 25, 2022, the Commission issued a proposed rule and form amendments that
would require certain funds to make enhanced disclosures regarding their environmental, social,
and governance (“ESG”) investment practices in the management’s discussion of fund
performance (“MDFP”) section of their annual reports. 6 Specifically, the proposal would require
a fund that seeks to achieve a specific ESG-related impact(s) (an “Impact Fund”) to discuss the
fund’s progress on achieving its impact in both qualitative and quantitative terms during the
reporting period and to discuss the key factors that materially affected the fund’s ability to
achieve its impact. Additionally, funds for which proxy voting is a significant means of
implementing their ESG strategy would be required to disclose certain information regarding
how the fund voted proxies relating to portfolio securities on ESG issues during the reporting
period. Funds for which engagement with issuers on ESG issues through means other than proxy
voting is a significant means of implementing their ESG strategy would also be required to

6

See Enhanced Disclosures by Certain Investment Advisers and Investment Companies about
Environmental, Social, and Governance Investment Practices, Investment Company Act Release No.
34594 (May 25, 2022) (“Proposing Release”).

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disclose certain information about their engagement practices. Finally, the proposal would
require an ESG-Focused Fund that considers environmental factors to disclose the aggregated
GHG emissions of the portfolio.
Compliance with the disclosure requirements of rule 30e-1 is mandatory. Responses to
the disclosure requirements are not kept confidential.
2.

Purpose and Use of the Information Collection

The purpose of the collection of information required by rule 30e-1 is to provide fund
shareholders with current information about the operations of their funds in accordance with
Section 30 of the Investment Company Act. The amendments to the content of registered CEFs’
shareholder reports are designed to tailor the disclosure framework for registered CEFs in light
of the amendments to the offering rules applicable to them. For example, we expect that the
rules’ reforms to elevate the importance of registered CEFs’ shareholder reports, relative to
prospectus disclosure, with investors looking to the annual reports for key information. The
amendments also are intended to modernize and harmonize disclosure requirements for
registered CEFs with those applicable to operating companies and mutual funds and exchangetraded funds.
3.

Consideration Given to Information Technology

Rule 30e-1 requires transmission of reports to shareholders. Shareholder reports have
historically been sent in paper; however, investors may currently consent to the delivery of
electronic versions. Once rule 30e-3 is in effect, 7 certain registered investment companies will

7

17 CFR 270.30e-3. See Optional Internet Availability of Investment Company Shareholder
Reports, Investment Company Act Release No. 33115 (June 5, 2018) [83 FR 29158 (June 22,
2018)].

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have the option to satisfy their obligation to transmit shareholder reports by making such reports
and other materials available at a website address specified in a notice to investors.
4.

Efforts to Identify Duplication

To ensure the relevance of the information filed by each fund and to avoid unnecessary
paperwork and duplicative reporting, the Commission has promulgated specific rules and
designed specific forms or items of forms for each type of investment company. The
Commission periodically evaluates rule-based reporting and recordkeeping requirements for
duplication and reevaluates them whenever it proposes a rule or a change in a rule. The
information required by rule 30e-1 is not generally duplicated elsewhere.
Information about fees and expenses, premiums and discounts, and outstanding senior
securities that certain registered CEFs would be required to disclose in their annual shareholder
reports under the proposal is also required in these funds’ prospectuses. However, because the
annual report will be incorporated by reference into the fund’s prospectus under the proposal,
requiring disclosure in both the prospectus and annual report should not require duplicative
disclosure.
Although we proposed that registered CEFs would be required to report information on
Form 8-K, we did not adopt the proposed Form 8-K amendments.
5.

Effect on Small Entities

The current disclosure requirements for shareholder reports do not distinguish between
small entities and other funds. The burden on smaller funds may be greater than for larger funds.
This burden includes the cost of producing and transmitting the shareholder reports. The
Commission believes, however, that imposing different requirements on smaller investment
companies would not be consistent with investor protection and the purposes of shareholder

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reports. The Commission reviews all rules periodically, as required by the Regulatory Flexibility
Act, to identify methods to minimize recordkeeping or reporting requirements affecting small
businesses.
Under the amendments, smaller registered CEFs generally would not be able to file shortform registration statements, so these funds would not be required to disclose in their annual
reports: (1) information regarding fees and expenses, premiums and discounts, and outstanding
senior securities; and (2) material unresolved staff comments. The other annual report
requirements apply to all registered CEFs because we believe investors in both large and small
registered CEFs would benefit from the additional disclosure.
6.

Consequences of Not Conducting Collection

The frequency with which information in compliance with rule 30e-1 is collected is
semi-annual, as set out in Section 30(e) of the Investment Company Act and rule 30e-1. Less
frequent collection of information would impede the amount of current information provided to
shareholders about their funds.
7.

Inconsistencies With Guidelines in 5 CFR 1320.5(d)(2)

This collection is not inconsistent with 5 CFR 1320.5(d)(2).
8.

Consultation Outside the Agency

The Commission and staff of the Division of Investment Management participate in an
ongoing dialogue with representatives of the investment company industry through public
conferences, meetings, and informal exchanges. These various forums provide the Commission
and staff with a means of ascertaining and acting upon paperwork burdens confronting the
industry. Before adopting the proposed amendments, the Commission will receive and evaluate
public comments on the proposal and its collection of information requirements.

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9.

Payment or Gift

No payment or gift to respondents was provided.
10.

Confidentiality

No assurance of confidentiality was provided.
11.

Sensitive Questions

No information of a sensitive nature, including social security numbers, would be
required under this collection of information. The information collection would not collect
personally identifiable information (“PII”). The agency has determined that a system of records
notice (“SORN”) and privacy impact assessment (“PIA”) would not be required in connection
with the collection of information.
12.

Burden of Information Collection

The following estimates of average burden hours and costs are made solely for purposes
of the Paperwork Reduction Act of 1995 8 and are not derived from a comprehensive or even
representative survey or study of the cost of Commission rules and forms.
We have previously estimated that it takes a total of 1,039,868 hours, and involves a total
external cost burden of $149,244,791, to comply with the collection of information associated
with rule 30e-1. 9 The table below summarizes our PRA initial and ongoing annual burden
estimates associated with the proposed amendments to rule 30e-1.

8

44 U.S.C. 3501 et seq.

9

This estimate is based on the last time the rule’s information collection was submitted for
PRA renewal in 2020. See ICR Reference No. 202007-3235-015, available at
https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202007-3235-015.
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TABLE 1: RULE 30E-1 PRA ESTIMATES
Internal initial
burden hours

Internal annual
burden hours1

Wage rate2

Internal time
costs

Annual external
cost burden

$2,070

$3,6545

PROPOSED AMENDMENTS TO FUND SHAREHOLDER REPORTS
ESG Impact Disclosure
$345
Summary of ESG Impact
achievement during
reporting period

9 hours

6 hours3

×

(blended rate for
compliance attorney,
senior portfolio
manager, and senior
programmer)4

Total additional burden per
fund

6 hours

Number of funds

× 58 funds6

× 58 funds

× 58 funds

Annual burden

348 hours

$120,060

$211,932

$ 2,070

$3,6545

$3,654

ESG voting matters and engagement disclosure
Disclosure of percentage
of ESG voting matters and
ESG engagement during
reporting period

9 hours

$345
(blended rate for
compliance attorney,
senior portfolio
manager, and senior
programmer)4

6 hours3

Total additional burden per
fund

6 hours

Number of funds

x 769 funds7

x 769 funds

x 769 funds

Annual burden

4,614 hours

$1,591,830

$2,809,926

$4,912

$4,87210

$3,654

GHG Emissions Metrics Disclosure
Disclosure of portfolio level
GHG emissions metrics for
the reporting period

24 hours

$307 (blended rate for
a senior accountant,
compliance attorney,
and senior
programmer)8

16 hours9

Total additional burden per
fund

16 hours

Number of funds

x 355 funds11

x 355 funds

x 355 funds

Annual burden

5,680 hours

$1,743,760

$1,729,560

$4,872

Total estimated burdens for proposed amendments
10,642 hours

$4,751,418

TOTAL ESTIMATED BURDENS INCLUDING AMENDMENTS
Current burden estimates

+1,039,868
hours

+$149,244,791

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Revised burden estimates

1,050,510
hours

$153,996,209

Notes:
1. Includes initial burden estimates annualized over a 3-year period.
2. These PRA estimates assume that the same types of professionals would be involved in satisfying the proposed reporting
requirements that we believe otherwise would be involved in complying with this requirement. The Commission’s estimates of the
relevant wage rates are based on the SIFMA Wage Report.
3. This estimate assumes that, after the initial 9 hours that a fund would spend preparing the proposed disclosure, which we annualize
over a 3-year period, the fund would incur 3 additional burden hours associated with ongoing preparation of the proposed disclosure per
year. The estimate of 6 hours is based on the following calculation: ((9 initial hours /3) + 3 hours of additional ongoing burden hours) = 6
hours.
4. The $345 wage rate reflects current estimates of the blended hourly rate for an in-house compliance attorney ($368), a senior
portfolio manager ($332), and a senior programmer ($334). $345 is based on the following calculation: ($368+$332+$334) / 3 =
$345.
5. $3,654 includes an estimated $1,467 for 3 hours of outside legal services and an estimated $2,187 for 3 hours of management
consultant services.
6. Based on the staff’s estimate of the number of funds registered on Form N-1A and Form N-2 with the term “impact” included in the
fund name.
7. The estimated 769 funds includes the staff’s estimate of 711 ESG-Focused Funds and 58 ESG Impact Funds registered on Form N-1A
and Form N-2.
8. The $307 wage rate reflects current estimates of the blended hourly rate for an in-house senior accountant ($218), compliance
attorney ($368), and a senior programmer ($334). $307 is based on the following calculation: ($368+$218+$334) / 3 = $307.
9. This estimate assumes that, after the initial 24 hours that a fund would spend preparing the proposed disclosure, which we annualize
over a 3-year period, the fund would incur 8 additional burden hours associated with ongoing preparation of the proposed disclosure per
year. The estimate of 6 hours is based on the following calculation: ((24 initial hours /3) + 8 hours of additional ongoing burden hours) =
6 hours.
10. $4,872 includes an estimated $1,956 for 4 hours of outside legal services and an estimated $2,916 for 4 hours of management
consultant services.
11. Based on the staff’s estimate of the number of funds registered on Form N-1A and Form N-2 with climate-related terms included in
the fund name or principal investment strategies.

13.

Cost to Respondents

Cost burden is the cost of goods and services purchased to prepare, print, and transmit
reports under rule 30e-1, such as for the services of independent auditors and outside counsel.
We previously estimated that 25% of the burden of preparing annual reports under rule
30e-1 is undertaken by outside professionals, such as outside counsel and independent auditors,
retained by the fund at an average cost of $400 per hour, resulting in a total external cost burden
of $149,244,791, to comply with the collection of information associated with rule 30e-1. 10 As
indicated in Table 1 above, we estimate that funds will incur a total amount of $4,751,418 of
external costs to comply with the proposed amendments.

10

Id.

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14.

Cost to the Federal Government

There are no costs to the federal government associated with rule 30e-1. The annual cost
of reviewing and processing registration statements, post-effective amendments, proxy
statements, shareholder reports, and other filings of investment companies amounted to
approximately $30 million in fiscal year 2021, based on the Commission’s computation of the
value of staff time devoted to this activity and related overhead. We note, however, that
shareholder reports are filed with the Commission to comply with the requirements of Form NCSR, and not rule 30e-1, which requires the transmission of the reports to shareholders.
15.

Change in Burden

As summarized in Table 1 above, the estimated hourly burden associated with rule 30e-1
would increase from 1,039,868 hours to 1,050,510 hours (an increase of 10,642 hours). The
estimated cost burden associated with rule 30e-1 would increase from $149,244,791 to
$153,996,209 (an increase of $4,751,418). This increase is due to the proposed amendments that
would require funds to provide additional information related to its ESG investment practices in
their annual reports. These changes in burden also reflect the Commission’s revision and update
of burden estimates for all information collections under this OMB control number (whether or
not associated with rulemaking changes), and the Commission requested public comment on all
information collection burden estimates for this OMB control number.
16.

Information Collection Planned for Statistical Purposes

The results of any information collection will not be published.
17.

Approval to Omit OMB Expiration Date

The Commission is not seeking approval to omit the expiration date for OMB approval.

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18.

Exceptions to Certification Statement for Paperwork Reduction Act
Submission

The Commission is not seeking an exception to the certification statement.
B.

COLLECTION OF INFORMATION EMPLOYING STATISTICAL METHODS
The collection of information will not employ statistical methods.

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