Corporate Environmental Reporting as Informational Regulation: A Law and Economics Perspective
David W. Case
University of Mississippi - School of Law
University of Colorado Law Review, Vol. 76, p. 379, 2005
The substantial growth of voluntary formal corporate environmental reporting presents an opportunity to significantly expand informational regulation as a tool of American environmental protection policy. The goal of this Article is to encourage policymakers to leverage this voluntary trend for public policy purposes, ultimately leading to development of a comprehensive system of mandatory reporting of environmental performance information. Importantly, however, such an objective is not offered as a panacea for infirmities inherent in traditional environmental regulation. Indeed, extant scholarship reflects that disclosure strategies are imperfect substitutes for direct legal controls on environmental conduct. Nonetheless, concerning the search for viable alternatives to traditional regulatory choices, such scholarship also reflects the substantial promise of information disclosure as a supplement to the existing regulatory system. Indeed, as part of a reflexive law strategy, a primary objective of information disclosure is to encourage "self-regulatory" behavior to complement existing direct control systems and attendant enforcement regimes. Accordingly, use of corporate environmental reporting as an informational regulatory approach should stand alongside of, rather than in substitute for, command-and-control regulation.
Section I of this Article examines the still evolving trend toward voluntary disclosure of environmental performance information in formal corporate environmental reports. This discussion pays particular attention to the most important recent development in the evolution of voluntary formal corporate environmental reporting - the Global Reporting Initiative. Section II examines two existing examples - the European Union's Eco-Management and Audit Scheme ("EMAS") regulation and environmental disclosure under United States securities laws - of governmental policy instruments requiring disclosure of environmental performance information. Section III utilizes a law and economics framework to evaluate the viability of utilizing the existing voluntary formal corporate environmental reporting regime to establish a comprehensive strategy of environmental informational regulation. Following analysis of formal corporate environmental reporting through consideration of economic and legal perspectives on environmental informational regulation, the Article concludes with a brief discussion of the intrinsic worth of a mandatory regulatory approach as opposed to mere governmental support for a voluntary reporting regime.
Number of Pages in PDF File: 33
Keywords: Corporate Environmental Reporting, Informational Regulation
Date posted: September 21, 2007