Environmental, social, and governance (ESG) programs have gotten a great deal of attention in recent years, in part due to the proliferation of regulations in the United States and Europe. Given the increased regulatory requirements, it is imperative that companies be proactive in monitoring current and emerging ESG regulations to ensure compliance and remain competitive.
Global regulations are increasingly requiring companies to disclose information regarding the nonfinancial aspects of their business to interested stakeholders. This includes the European Union’s Corporate Sustainability Reporting Directive (CSRD), which expands the existing Non-Financial Reporting Directive. The CSRD significantly broadens the number of in-scope companies and requires them to disclose on topics including human rights, environmental impacts, climate change, and the double materiality concept.
The Securities and Exchange Commission’s (SEC’s) proposed climate-related disclosure rules, issued on March 21, 2022, would impose new ESG reporting requirements on U.S.-based companies. Additionally, there has been a proliferation of global regulations focused on responsible sourcing and mandatory human rights due diligence, including conflict minerals, Germany’s Supply Chain Act, and the Uyghur Forced Labor Prevention Act, among others.
