S. Beyond the ESG Crisis – Corporate Disclosure, Financial Markets and Social Responsibility

This seminar will provide students with a thorough grounding in an important and controversial area of legal practice and policy-making: corporate disclosures and commitments about climate change.
• For decades, some investors and activists have been asking corporations and investment managers to provide public disclosures and commitments about a range of topics that are often grouped under terms like sustainability, or ESG (environmental, social and governance), or CSR (corporate social responsibility). Many have responded by providing information and making claims about their practices in areas like greenhouse gas emissions, environmental impact, supply chain management, indigenous cultures, and diversity.
• The years from roughly 2010 to 2023 saw the emergence of what might be called an ESG Machine. Investors increasingly sought to deploy funds in ESG, sustainable, or green investments. Investment managers developed products to appeal to them. Companies developed disclosure practices to address the growing demand for new kinds of information, and they made specific commitments to goals like net-zero emissions. To organize and govern the information and make it comparable, disclosure frameworks arose, developed by new non-governmental organizations in an intense and sometimes uneasy collaboration among companies, financial institutions, investors and activists.
• Regulators began to adopt mandatory disclosure requirements – first and most broadly in the European Union, but also around the world, notably in major Asian markets. Prudential banking regulators developed climate-risk templates. A potentially global set of sustainability standards was established. In the United States, mandatory disclosures on climate-related matters were imposed under California state law and, in 2024, under SEC regulations.
• In the past several years, however, there has been a powerful countertrend. Investment in funds and instruments with green, ESG or sustainability themes peaked. Broad initiatives like net-zero commitments attracted scrutiny under competition laws. The EU began to reconsider the ambitious disclosure requirements of the European Green Deal program. In the United States in particular, a powerful anti-ESG backlash arose among academics, and among Republican-led state governments, and has now become federal policy under the second Trump administration.
The seminar will explore where these developments leave us today and what to expect going forward. We will focus particularly on disclosures about climate and the environment, where the global crisis continues to grow. How are corporate disclosure practices evolving, in view of the competing pressures in the U.S. and in other markets? What about net-zero commitments – who is maintaining them, and who is dropping them? Is the green finance movement dead? What will become of the voluntary carbon market? Are regulators outside the U.S. continuing to elicit climate-related information? How do regulators and other litigants police climate-related disclosures for misinformation?
Our investigations will give us a basis to ask bigger questions about the relationships between financial markets and social policy. We will consider the validity of the claim that finance capitalism can be mobilized to combat climate change, or to protect the environment, or to advance other social objectives. Maybe that claim has instead served as a distraction from political mobilization around meaningful policy changes.