Mixed Company: The Audience for Sustainability Disclosures

Abstract

This short Comment was prepared as a response to Jill Fisch’s article, Making Sustainability Disclosure Sustainable, and to Hillary Sale’s article, Disclosure's Purpose, both of which were presented at the Institute for Law and Economic Policy’s 24th Annual Symposium and subsequently published in the Georgetown Law Journal. The Comment is based upon remarks delivered at the symposium.

In their symposium articles, Professors Sale and Fisch offer mirror-image visions of the role of mandated disclosure. Professor Sale addresses information that is typically relevant to an investing audience and recognizes its importance to the wider public. Professor Fisch, by contrast, addresses information that is most relevant to a noninvestor audience but only contemplates its importance to corporate financial performance. The gulf between their approaches highlights one of the significant tensions in our system of securities regulation: the distance between its intended purpose and its current function.

Sustainability disclosures are often championed for noneconomic reasons, but they are filtered through a disclosure system that is not designed to accommodate anything other than a preference for economic returns. The incongruity ripples throughout the securities regulation framework with unfortunate results.

Keywords: securities, disclosure, corporate social responsibility, sustainability