Follow-Up: Exploring the Future of Global ESG

UW GBLI — ESG Symposium, Nov. 3, 2023, Follow-up: Follow-Up: Exploring the Future of Global ESG — Disclosing and Reporting Requirements

Jeannine Lemker, Co-Director, Global Business Law Institute, University of Washington Law School, and Mariola Lisewska, Assistant Director, Global Business Law Institute, University of Washington Law School with contributions from Meriem Debbih, University of Washington Law School.

ESG issues and regulations rapidly move — at times, in different directions. To better appreciate the real world and regulatory impact of modern ESG, the Global Business Law Institute brought together experts from multinational corporations, the International Standards Organization, the Japan Research Institute, leading outside counsel, and academia to discuss the landscape of ESG in Greater Asia, the European Union, and United States. Inspired by this event Jeannine Lemker and Mariola Lisewska with contributions from Meriem Debbih prepared a commentary on the wisdom and emerging trends discussed by these practitioners and researchers in regulations and standards, policy and political tailwinds (and headwinds), and how corporations are adapting and thriving in the midst of it all.  This commentary will be published by the end of the year in Germany as part of the Yearbook 2024 for Global Ethics, Compliance and Integrity[1] [link to be provided once published]. This publication offers an up-to-date overview of the most recent and significant developments in the interdisciplinary area of organizational governance, ethics, compliance and integrity management.

As during the ESG Symposium, the article discusses the rapidly evolving landscape of ESG regulations and reporting requirements across the globe, highlighting key trends and challenges for organizations.

1. European Union (EU): The EU has emerged as a leader in ESG regulation, transitioning from voluntary frameworks to mandatory auditing and reporting requirements. The cornerstone regulations—CSRD, SFDR, and the EU Taxonomy—require companies to disclose their impact on the environment and society. The EU's "double materiality" approach mandates corporations to report both financial and non-financial impacts, setting a global standard.
2. Asia: The regulatory landscape in Asia is diverse, with countries like Japan actively embracing ESG principles to stimulate sustainable investment, while others like Hong Kong and Singapore are progressively moving toward mandatory climate-related disclosures.
3. United States: The U.S. presents a complex picture with no unified national ESG regulation. The Securities and Exchange Commission (SEC) has proposed climate-related disclosure rules, but these are currently facing legal challenges. The U.S. approach to ESG is marked by a mix of regulatory encouragement and resistance, with some states passing anti-ESG legislation.
4. Global ESG Trends: The article highlights the growing importance of governance ("G") in ESG, which involves ensuring that companies have proper oversight and risk management for their environmental and social initiatives. The future of global ESG compliance will likely see more regulations and a potential move toward a global framework, necessitating deeper integration of ESG into corporate strategies.

In conclusion, ESG compliance is becoming increasingly crucial for businesses worldwide, with significant differences in regulatory approaches across the globe. Organizations must prepare for more stringent and complex ESG requirements, with a focus on sustainability, social responsibility, and governance.

[1] The Yearbook for Global Ethics, Compliance & Integrity offers an up-to-date overview of the recent and most significant developments in the interdisciplinary area of organizational Governance, Ethics, Compliance & Integrity Management. The authors include excellent ethics, compliance and integrity professionals, scholars and advisors from different countries around the world. The publication offers exclusive insights both from practical and theoretical perspectives. It is divided in focus chapters. In each chapter, the yearbook provides a comprehensive range of views and expertise regarding the mentioned areas in all kinds of organizations. Expected publication is October 2024.