ANALYSIS: Pending ESG Developments Impact 2023 Disclosures

The regulatory landscape for ESG in the US is far from settled. But with the recent passage of the California climate disclosure statute and a lingering SEC climate rule, we may be on the cusp of an entirely new ESG disclosure regime—provided these forthcoming rules survive awaiting legal challenges.

However, these and other pending developments are already impacting 2023 ESG-related public disclosures, according to a recent Bloomberg Law survey.

Climate, Politics Lead ESG Disclosure Impacts

Over half of the nearly 70 surveyed attorneys said that the SEC’s proposed climate rule impacted their clients’ ESG-related disclosures in 2023.

The runner-up category for disclosure impacts was the political landscape—and heading into an election year where candidates on both sides are vocal about ESG, this percentage will likely increase.

Although much of the current political discourse around ESG centers around the weight of ESG criteria in investment decision-making, surprisingly only 16% of attorneys reported state investment laws as impacting client ESG-related disclosures this year.

Changes to ESG-Related Disclosure Data

Many of the ESG developments that attorneys were asked about have yet to be finalized—making them all the more uncertain for disclosure purposes.

The attorneys who responded to the disclosure impact question were then asked how their clients’ disclosures were impacted by the enumerated ESG developments. Surprisingly, the most popular response was that clients opted to include additional supporting data in their ESG-related disclosures—likely a strategic choice to reduce future reputational risks and compliance costs.

A sizable percentage of respondents indicated that these ESG developments had an impact on their clients’ 2023 ESG-related disclosures—but many of them didn’t know exactly what that impact was when it came to supporting data. This could mean that while attorneys and their clients are discussing how much and what ESG data to disclose based on these developments, attorneys are just not ready to measure those impacts.

Attorneys only reported a few specific ESG developments linked to clients opting to exclude supporting data from their ESG-related disclosures: the SEC climate rule, greenwashing, state disclosure laws, the potential SEC human capital management rule, and greenhushing.

Despite the lingering uncertainty regarding ESG regulation, ESG developments are impacting 2023 disclosures in a positive way, with more, not less, ESG data being divulged.

Bloomberg Law subscribers can find related content on our Surveys, Reports & Data Analysis page. Bloomberg Law subscribers can find a variety of Practical Guidance documents, workflow tools, and reference materials for corporate counsel on our Environmental, Social, & Governance (ESG) Practice Page.

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