William & Mary Environmental Law and Policy Review


Anna Bailey


This Note argues that mandatory ESG [environmental, social, and governance] disclosure would be a valuable step in the larger fight against the deleterious effects of climate change. First, standardized disclosure would provide investors a better understanding of the climate risks associated with their investments by increasing the quality of that information supplied. This standardization would be a valuable driver in corporate behavior because mandated disclosure tends to result in shifts in corporate behavior. Previous examples of disclosure for nonfinancial risks, such as disclosure relating to state sponsors of terrorism and use of conflict minerals, illuminate how mandating ESG disclosure will deflect the pitfalls of voluntariness.

First, Part I begins with the background of the SEC’s [Securities and Exchange Commission] efforts relating to climate change disclosure, as well as a general discussion of the current framework of disclosure. Next, this Note will examine in Part II the issue of materiality, because it weighs heavily in the discussion in adopting disclosure requirements. Parts III and IV review case studies of nonfinancial disclosures. The case studies include the following: (1) state sponsors of terrorism disclosure and (2) conflict minerals disclosure. This Note argues in Part V that, in light of past nonfinancial disclosure requirements, a mandatory disclosure framework for ESG concerns will enhance environmental disclosure’s clarity and utility to investors.

This abstract has been taken from the author's introduction.