Rise of the Shadow ESG Regulators: Investment Advisers, Sustainability Accounting, and Their Effects on Corporate Social Responsibility

February 2019
Citation:
49
ELR 10155
Issue
2
Author
Paul Rissman and Diana Kearney

Actions that fall under the catchall of “corporate social responsibility” have been viewed with skepticism. In the United States, part of the blame lies with lax laws and regulations surrounding social and environmental disclosure. Disclosure may soon be vastly improved with finalization of the Sustainability Accounting Standards Board’s (SASB's) financially material social and environmental reporting standards. While the standards are voluntary, the fact that they have been endorsed as “material” by many of the world’s largest investment advisers will transform them into legally actionable standards. This Article describes the current situation in which corporations have a deepening financial interest in fighting against authoritarianism and climate change, highlights a significant root of the problem as to why most companies still have far to go in strengthening their corporate social responsibility standards, discusses potential solutions to this problem, describes SASB's mandate, and explores the implications of this new regulatory role that large asset managers have unwittingly assumed.

Paul Rissman is Co-Founder of Rights CoLab, where he researches financial tools for advancing environmental and human rights. Diana Kearney is Legal and Shareholder Advocacy Advisor at Oxfam America, where she specializes in business and human rights law.

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