ESG Legislation, Regulation, and Legal Implications

Emma Elizabeth Antin Daschbach and Cynthia Hanawalt

Chapter 2 in Sustainable Investing:Problems and Solutions, 2024, pp 29-60 from World Scientific Publishing Co. Pte. Ltd.

Abstract: There are reams of legislative and regulatory frameworks in the United States (U.S.), Europe, and elsewhere addressing matters of environmental and social concern. But, in referring to Environmental, Social, and Governance (ESG) legal frameworks, the narrower sets require (or at least encourage) in-scope companies to either (i) make some disclosure about how those companies are addressing environmental or social issues or (ii) address how in-scope companies do that, including, for example, what terminology they use to signal where those companies stand on environmental or social issues. This chapter covers some of the most prominent examples of both sets of legal frameworks with discrete attention to those relevant to the financial sector. This chapter also covers some of the key tests on those frameworks and ESG more generally, including legislation aimed at prohibiting the use of ESG factors in the U.S.There are reams of legislative and regulatory frameworks in the United States (U.S.), Europe, and elsewhere addressing matters of environmental and social concern. In fact, the challenge might be in identifying a legal regime that does not address one or both in some measure. But, in referring to Environmental, Social, and Governance (ESG) legal frameworks, the narrower sets do one of two things: The first set requires (or at least encourages) in-scope companies to make some disclosure about how those companies are addressing environmental or social issues. The second set addresses how in-scope companies do that, including, for example, what terminology they use to signal where those companies stand on environmental or social issues.This section covers some of the most prominent examples of both sets of frameworks with discrete attention to those relevant to the financial sector. This includes frameworks already in place and others still pending as of the publication of this section. It bears emphasizing that there are a multitude of ESG frameworks beyond those noted here — frameworks in place, pending in other jurisdictions, and extending beyond those having singular relevance to the financial sector.Overall, the body of ESG frameworks is evolving so quickly that any research should assume the information provided here is but a starting point for understanding those in place and what they require of companies generally or the financial sector especially. Note further that in an increasingly global market, frameworks can have extra-jurisdictional impact. In some instances, frameworks may require (either expressly or as a practical matter) that companies reach into their value and supply chains for disclosure data. They may also establish (again, either expressly or as a practical matter) an effective bar to market access in any given jurisdiction for any company that does not comply. Given that, it is advisable to consider frameworks beyond the bounds of a company’s home jurisdiction.

Keywords: Sustainable Investing; Impact Investing; Corporate Social Responsibility; Materiality; Externalities; Sustainability; ESG; ESG Funds; ESG Factors; ESG Scores; SASB; SDG; DEI; Private Equity; General Partners; Active Ownership; Investment Stewardship; Machine Learning; Natural Language Processing; Large Language Models; Transition Economy; Climate Risk; Net-zero Investing; Divestment; Greenhouse Gas Emissions; Scope 3 Emissions; Modern Portfolio Theory; Venture Investments; Carbon Dioxide Removal; Carbon Credits; Fuel Production; Portfolio Management; Market Sentiment; Factor Investing; Portfolio Optimization; Post-investment Management; Digital Transformation; Fixed Income; Portfolio Performance Measures (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.worldscientific.com/doi/pdf/10.1142/9789811297786_0002 (application/pdf)
https://www.worldscientific.com/doi/abs/10.1142/9789811297786_0002 (text/html)
Ebook Access is available upon purchase.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:wschap:9789811297786_0002

Ordering information: This item can be ordered from

Access Statistics for this chapter

More chapters in World Scientific Book Chapters from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().