The International Bar Association (IBA) has published a report on how countries across the world regulate disclosures on ESG (environmental, social and governance) issues.
Covering more than 30 jurisdictions, the report focuses on whether, and to what extent, such disclosures are now mandatory.
The survey of practitioners was compiled by the IBA’s Capital Markets Forum and its Securities Law Committee.
Transparency trend
The lawyers’ group said that ESG disclosures were mandatorily required to be made in the vast majority of jurisdictions reviewed in the survey, indicating a growing global trend towards greater transparency in ESG reporting.
The IBA highlighted the lack of globally accepted standards for ESG reporting that emerged from the survey.
It stated that this “could create challenges” for companies operating in multiple jurisdictions, and for investors seeking to compare ESG performance across companies.
The survey found that some large companies were already making voluntary public disclosures, even when this was not mandatory.
Criminal sanctions
According to the report, monetary sanctions are the most commonly used penalties imposed for false or misleading ESG disclosures, but criminal sanctions are also prevalent in some countries – including Ireland.
Most countries surveyed required some type of quantitative, or qualitative, climate-change disclosures as part of their ESG regime.
The majority of survey respondents said, however, that ESG disclosures were not standardised.
A small majority also said that it was unclear whether ESG disclosure regulations in their respective jurisdictions benefited investors or resulted in a greater compliance burden.
The Irish part of the survey, contributed by Keavy Ryan of A&L Goodbody, stated that large Irish firms were currently covered by EU rules on the disclosure of non-financial and diversity information (NFRD).
Ryan pointed out that the EU’s Corporate Sustainability Reporting Directive (CSRD) would extend the scope of the information required to be disclosed, and would apply to more companies and organisations.