Description

Many of today’s pressing environmental issues, including climate change, destruction of biodiversity and pollution, are clearly global. As the main and direct producer of ecological and environmental problems, companies especially listed companies, should play a meaningful role in green development. As a result, legal mechanisms such as the environmental, social, and governance (ESG) disclosure has been produced by states that aim to improve sustainable corporate governance.
Some argue that the mandatory disclosure is necessary, while others argue that ESG disclosure should be voluntary. The research will provide an overview of the debate among legal academics – whether the voluntary disclosure or mandatory disclosure is better? Moreover, the research will focus on the comparative study of the current practices of ESG disclosures system among the European Union, Singapore, Japan, China, and the United States. Drawing on this comparative analysis, we find that a “comply or explain” approach to ESG disclosure is much more suitable for the listed companies in China. This approach requires companies to comply with an ESG disclosure requirements in the sustainability report, or explain reasons why they do not comply. It seems that a more flexible model of ESG disclosures with both public and private regulation is worth considering and accepting.