ESG Risk Disclosure and the Risk of Green Washing (original) (raw)
Related papers
Australasian Accounting, Business and Finance Journal, 2020
Today, companies across all industries around the globe face the challenges of unprecedented disruption due to climate change and other social disruptions. It is the responsibility of standard setters and regulators of the financial sector to constantly encourage industries to adopt and respond instead of ignoring the disruption. Environmental Social and Governance (ESG) risk disclosure is one of the main emerging corporate disclosures of rising importance. Specifically with new Australian Securities Exchange (ASX) listing rules companies listed in the ASX are expected to comply with new Environmental Social and Governance (ESG) risk discloser requirements from the year 2016 and if they do not comply, the 'if not, why not' rule applies. This study seeks to provide insight into the current ESG risk disclosure practices in the Australian context giving particular reference to the extractive sector companies for which ESG disclosure has become a crucial reporting requirement.
Beyond Sustainability Reporting: Integrated Reporting is Practiced, Required & More Would Be Better
SSRN Electronic Journal, 2014
Ninety-five percent of the Global Fortune 250, along with thousands of other companies worldwide, voluntarily report on their environmental, societal, and economic impacts. The practice is variously known as sustainability reporting, corporate responsibility (CR) reporting, corporate social responsibility (CSR) reporting, citizenship reporting, environmental, societal, and governance (ESG) reporting, or triple bottom line (TBL) reporting. A growing number of countries now mandate or provide guidance related to this practice to some extent. For example, in the United States, * The authors would like to thank Linda Lowson, Esq., Founder and CEO of the Global ESG Regulatory Academy™ and CSR Insight™ LLC, for contributing her findings regarding SEC noncompliance on ESG issue SEC reporting requirements. 1060 2013] BEYOND SUSTAINABILITY REPORTING 1061 the Dodd-Frank Wall Street Reform and Consumer Protection Act explicitly requires publicly traded companies to disclose data related to their supply chains of certain minerals. Should greater disclosures be explicitly and specifically required? Should companies begin greater disclosures for their own benefit? Do the basic principles of existing laws already require a greater amount of disclosure in our current context? If so, what would be gained from greater and more explicit guidance from legislators or regulators such as the SEC? We seek to answer these questions. This article summarizes the history, current state, and motivations and impacts of sustainability reporting and regulation-by-disclosure, along with data on the present needs of investors and recent market trends. It also reviews the definition of materiality under U.S. securities laws and regulations-the key to understanding what data a company must publicly disclose for the benefit of investors. Based on our review of recent history, the current needs of investors, and the definition of materiality, it is clear that existing laws and related rules already require greater disclosure of data on environmental and societal impacts than commonly understood. The article concludes with recommendations for managers, their attorneys, accountants, and policymakers, and provokes further questions for constructive scholarship in the fields of business and law.
University of St Thomas Law Journal, 2014
Ninety-five percent of the Global Fortune 250, along with thousands of other companies worldwide, voluntarily report on their environmental, societal, and economic impacts. The practice is variously known as sustainability reporting, corporate responsibility (CR) reporting, corporate social responsibility (CSR) reporting, citizenship reporting, environmental, societal, and governance (ESG) reporting, or triple bottom line (TBL) reporting. A growing number of countries now mandate or provide guidance related to this practice to some extent. For example, in the United States, * The authors would like to thank Linda Lowson, Esq., Founder and CEO of the Global ESG Regulatory Academy™ and CSR Insight™ LLC, for contributing her findings regarding SEC noncompliance on ESG issue SEC reporting requirements. 1060 2013] BEYOND SUSTAINABILITY REPORTING 1061 the Dodd-Frank Wall Street Reform and Consumer Protection Act explicitly requires publicly traded companies to disclose data related to their supply chains of certain minerals. Should greater disclosures be explicitly and specifically required? Should companies begin greater disclosures for their own benefit? Do the basic principles of existing laws already require a greater amount of disclosure in our current context? If so, what would be gained from greater and more explicit guidance from legislators or regulators such as the SEC? We seek to answer these questions. This article summarizes the history, current state, and motivations and impacts of sustainability reporting and regulation-by-disclosure, along with data on the present needs of investors and recent market trends. It also reviews the definition of materiality under U.S. securities laws and regulations-the key to understanding what data a company must publicly disclose for the benefit of investors. Based on our review of recent history, the current needs of investors, and the definition of materiality, it is clear that existing laws and related rules already require greater disclosure of data on environmental and societal impacts than commonly understood. The article concludes with recommendations for managers, their attorneys, accountants, and policymakers, and provokes further questions for constructive scholarship in the fields of business and law.
2020
General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. • Users may download and print one copy of any publication from the public portal for the purpose of private study or research. • You may not further distribute the material or use it for any profit-making activity or commercial gain • You may freely distribute the URL identifying the publication in the public portal ? Take down policy If you believe that this document breaches copyright please contact us providing details, and we will remove access to the work immediately and investigate your claim.
Good Practices on ESG Reporting in the Context of the European Green Deal
The European Green Deal proposes a series of measures to the EU Member States in order to adopt policies on how to use and produce green energy, support new clean technologies, and reduce noise, air and water pollution. The target referring to reducing emissions by at least 50% by 2030 has already strongly impacted Europe on social, economic and environmental levels, as well as the business sector. This study begins by highlighting the importance of complying with social, environmental, and governance reporting of large companies and the banking sector alike in the context of adopting the European Green Deal. Furthermore, we continue by showcasing how the new disclosure requirements and recommendations have been adapted and translated into non-financial ESG reporting (environmental, social, and governance impact of economic activity). Finally, we present a series of best practices in this area. As the present study has revealed the need to improve ESG reporting, good-practice recommendations were identified and formulated.
Management of Sustainable Development
If the concept of sustainability and sustainable development has been used for over 50 years, its use in the financial world is more recent. Today, companies and investors focus on ESG that stands for Environmental Social Governance. Capital markets can be a powerful tool for creating change. By restricting access to capital, companies are stimulated to improve their performance under measures Environmental, Social or Governance. Rewarding companies and managers that perform well on ESG factors encourages continuous progress and improvement. But in order to do that, it is necessary for companies and stakeholders to have at their disposal standards and indexes that measure the performance of companies in the ESG field and ensure comparability.
Sustainability Reporting: Case of European Stock Companies
European Journal of Sustainable Development, 2021
Sustainability reporting regulations defined within NFRD (Non-Financial Reporting Directive) allow different stakeholders to assess ESG (Environmental, Social and Governance) performance of companies and their impact on people and environment. ESG data is increasingly used in strategy definition of entities, investment decision-making process and valuation of stock companies. ESG information is also reflected in ESG ratings which create comprehensive measure of ESG performance of specific entity. It outlines the need for dissemination of true and fair corporate sustainability reporting system. The main purpose of undertaken work is to evaluate the trend and evolution of sustainability reporting and ESG ratings of European listed companies in 2000-2020 period. In order to deliver results comparative analysis is used. Research proves that vast majority of European stock companies do not provide enough ESG performance which does not allow to assign them with appropriate ESG rating. Findings of analysis indicate the size of sustainability reporting accountability gap and confirm that wider group of public interest entities should be subject of NFRD.
Environmental, Social and Governance Disclosures in Europe
Sustainability Accounting, Management and Policy Journal, 2015
Structured Abstract Purpose (mandatory) This conceptual paper sheds light on the European Union’s (EU) latest regulatory principles for Environmental, Social and Governance (ESG) disclosures. It explains how some of the EU’s member states are ratifying the EU Commission’s directives on ESG reporting by introducing intelligent, substantive and reflexive regulations. Design/methodology/approach (mandatory) Following a review of EU publications and relevant theoretical underpinnings, this paper reports on the EU member states’ national policies for ESG reporting and disclosures. Findings (mandatory) The EU has recently revised a number of tools and instruments for the reporting of financial and non-financial information including; the EU’s modernisation directive, the EU’s directive on the disclosure of non-financial and diversity information, the EU energy efficiency directive, the European pollutant release and transfer register (E-PRTR), the EU emission trading scheme and the integrated pollution prevention and control directive, among others. Practical Implications Although all member states are transposing these new EU directives; to date there are no specific requirements in relation to the type of non-financial indicators that can be included in annual reports. Moreover, there is a need for further empirical evidence which analyse how these regulations may (or may not) affect government entities and big corporations. Social Implications Several EU countries are integrating reporting frameworks that require the engagement of relevant stakeholders (including shareholders) in order to foster a constructive environment that may lead to continuous improvements in ESG disclosures. Originality/value (mandatory) EU countries are opting for a mix of voluntary and mandatory measures that improve ESG disclosures in their respective jurisdictions. This contribution indicates that there is scope for national governments to give further guidance to civil society and corporate business to comply with the latest EU developments in ESG reporting. When European entities respond to regulatory pressures they are also addressing societal, environmental, governance and economic deficits for the benefit of all stakeholders. Keywords: Corporate Social Responsibility, Corporate Sustainability and Responsibility, Global Reporting Initiative, Global Compact, EU CSR Policy, ESG, Sustainability Reporting, CSR Reporting, UN Global Compact, EU Modernisation Directive. Article Classification: Literature Review / Case Study
2016
Recently, the new European Directive on non-financial disclosure, the American Sustainability Accounting Standard Board (SASB), the Global Reporting Initiative GRI G4 and the International Integrated Reporting Council (IIRC) have stressed the importance of extending the disclosure of ethical, social and environmental risks inside social and environmental reporting. Institutional pressure has been notably increased among organisations, especially those already recognized for their sustainability practice. Given such challenges, the reaction of corporations in providing additional sustainability risk disclosure shall be examined. Our study aims at addressing such issues from an exploratory perspective. We based our analysis on a sample of organisations that in accordance with the new GRI4 guidelines issued related disclosure in 2015. The study examined the reports and provided a risk disclosure metric to be analysed against other relevant variables. Consistently with the recent literature, we found that sustainability leaders provide a significant volume of reporting and that the quality of risk disclosure is significantly influenced by their international presence and their sustainability reporting experience. However , if we consider specific risk related areas of disclosure, only few of them seems to consistently link strategy, measures and disclosure. Moreover, organisations that face high social and environmental risks because of their business sectors behave differently. In conclusion, we aim at demonstrating the level of sustainability reporting usefulness as an external tool for banks, investors, rating agencies, and all the stakeholder interested in those internal processes and mechanisms which can affect corporate performances against risk avoidance.
Sustainability, 2022
This study investigates the relationship between corporate environmental, social and governance (ESG) performance disclosure and profitability, highlighting the significant differences between the financial and non-financial sectors. This study uses an extensive Australian sample during the 2007–2017 period from Bloomberg’s database. A panel regression model is used to evaluate the association between the corporate ESG performance disclosure and profitability to conduct an industry analysis. The robustness of the results is rigorously assessed using several robustness tests to evaluate the methodological, sample selection, endogeneity and causality issues associated with corporate ESG performance disclosure. This study finds that higher corporate ESG performance disclosure is associated with higher company profitability. However, the industry comparison analysis shows significant differences between financial and non-financial industries. This study finds that for companies operatin...