Chapter 13: Can Investors Rely on Corporate Sustainability Commitments?

Companies in the United States and in Europe have been disclosing sustainability performance data in voluntary reports and in formal securities filings for decades. These reports include quantifiable ESG metrics, such as annual greenhouse gas emissions and employee diversity data, as well as aspirational targets and future commitments. In both the European and U.S. legal contexts, companies have generally been considered exempt from liability for boilerplate language and aspirational statements. Companies take advantage of this legal standard by making vague statements, limiting any commitment to concrete actions, and omitting ESG disclosures that might reflect poorly on the company. This chapter describes nascent legal frameworks in the United States and Europe that aim to require more complete ESG reporting and to protect investors against inaccurate or misleading corporate sustainability disclosures.