The First Amendment Implications of a Mandatory Environmental, Social, and Governance Disclosure Regime

Date01 November 2018
Author
11-2018 NEWS & ANALYSIS 48 ELR 10989
The First Amendment
Implications of a Mandatory
Environmental, Social, and
Governance Disclosure Regime
by Rebecca Susko
Rebecca Susko received her J.D. magna cum laude from Fordham University School of Law in 2018. She is currently serving
in the Honor Law Graduate Program in the Oce of the General Counsel at the U.S. Nuclear Regulatory Commission.
It is undeniable that globalization has increased the
extent to which corporate entities are connected to the
daily lives of people from every corner of the world. Yet
coupled to the growing reach of corporations is a growing
demand that the behavior of private business reect public
aims.1 e tethering of corporate action to social policy
is not new. Indeed, corporate law has been blended with
social policy through t he securities disclosure regime for
decades.2 However, what is new is a rapidly growing inter-
est across business, government, and civil society in using
disclosure regimes to tran sform corporate behavior. In fact,
the refocusing of corporate purposes toward the ach ieve-
ment of environmentally and socially responsible outcomes
has been characterized by some as a “mega-trend.”3
In many ways, this trend has been embraced by the cor-
porate world through the adoption of voluntary reporting
on environmental, social, and governance (ESG) indica-
tors. Indeed, eorts to develop voluntary transnational
reporting standards have proliferated in recent years.4
However, some scholars have argued that industry-led
eorts to adopt voluntary disclosure standards are simply
Editor’s Note: is Comment won honorable mention in the
Environmental Law Institute’s 2017-2018 Henry L. Diamond
Constitutional Environmental Law Writing Competition.
1. See Cynthia Williams, Corporate Social Responsibility and Corporate Gov-
ernance, in O H  C L  G
(Jerey N. Gordon & Wolf-Georg Ringe ed., Oxford Univ. Press 2018)
(manuscript at 37-38), available at https://digitalcommons.osgoode.yorku.
ca/cgi/viewcontent.cgi?article=2783&context=scholarly_works.
2. See Cynthia Williams, e Securities and Exchange Commission and Corpo-
rate Social Responsibility, 112 H. L. R. 1199, 1203 (1999).
3. Jerry K.C. Koh & Victoria Leong, e Rise of the Sustainability Reporting
Megatrend: A Corporate Governance Perspective, 18 B. L. I’ 233, 234
(2017).
4. See Cynthia Williams, e Global Reporting Initiative, Transnational Corpo-
rate Accountability, and Global Regulatory Counter-Currents, 1 U.C. I
J. I’ T’  C. L. 67, 69 (2016).
a means for companies to create a non-enforceable regime
precisely to “resist the legalization of their social duties.”5
us, the establishment of voluntary standards may serve
to undermine the development of a stronger form of regu-
lation: sovereign domestic law.6
Nevertheless, since 2000, 22 countries and the Euro-
pean Union (EU) have enacted legislation that requires
public companies to report on environmental and social
indicator s.7 Conspicuously missing from this list of coun-
tries is the United States. While the United States has
certain environmental and social disclosure requirements
in industry-specic contexts,8 there is currently no man-
datory general ESG reporting framework.9 e lack of a
mandatory ESG reporting regime is problematic because
the available empirical evidence suggests that the eect ive-
ness of ESG disclosure regimes only manifests when the
regime is mandatory, specic, and targeted to a n identi-
able group of users.10
Despite calls from some for a mandatory ESG disclo-
sure regime in the United States, there has been hesitation
from the business community toward adopting manda-
5. Ronen Shamir, Between Self-Regulation and the Alien Tort Claims Act: On the
Contested Concept of Corporate Social Responsibility, 38 L  S’ R.
635, 636 (2004).
6. See Williams, supra note 4, at 70.
7. Id. at 73 (citing I  R I, C
S R D E  N G
 S E (2015), http://iri.hks.harvard.edu/les/iri/les/
corporate_social_responsibility_disclosure_3-27-15.pdf. ese countries
include Argentina, China, Denmark, Ecuador, the EU, Finland, France,
Germany, Greece, Hungary, India, Indonesia, Ireland, Italy, Japan, Malay-
sia, the Netherlands, Norway, South Africa, Spain, Sweden, Taiwan, and the
United Kingdom.
8. One example of such industry-specic disclosure requirements is the con-
ict mineral disclosures required under the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010.
9. Williams, supra note 1 (manuscript at 16).
10. See Williams, supra note 4, at 82.
Copyright © 2018 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.

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