Achieving corporate environmental responsibility through emerging sustainability laws

Abstract

The concept of Environment, Social and Governance (ESG) is gaining significant momentum in policy fields, and the legal landscape is catching up in laying down sound foundations. Whilst business and human rights, the ‘S’ in ESG, has forged itself a path forward, the ‘E’ in ESG remains at its nascency. This article aims to evaluate legal measures around corporate environmental responsibility (CER) and contribute to the development of the legal literature on the topic. This article begins by defining CER and clarifying the understanding of ‘environment’ and ‘environmental impact’. It further examines the current legal approaches used to ‘keeping tabs’ on CER. These approaches include voluntary initiatives, where companies voluntarily commit to implement ESG initiatives, certifications and other standards; mandatory reporting and disclosure requirements, which mandate companies to report and disclose their ESG performance; consumer and investor protection laws that aim to safeguard the interests of consumers and investors in relation to ESG claims and commitments made by companies; mandatory due diligence laws that require companies to assess, address and mitigate ESG risks in their operations and supply chains; and corporate liability laws that hold companies liable for environmental harms caused by their activities. By examining these different legal approaches, the article sheds light on the existing frameworks and their effectiveness in promoting CER – and highlights the challenges and gaps that need to be addressed to strengthen CER.