United States: U.S. Chamber Of Commerce Releases Best Practices Guidelines For ESG Disclosures

In Short

The Situation: Intensifying public interest in companies' Environmental, Social, and Governance ("ESG") information has prompted many to make voluntary ESG disclosures.

The Result: The Project for Growth and Opportunity ("Project GO"), a new initiative from the U.S. Chamber of Commerce ("the Chamber"), has released a set of Best Practices to support companies in making voluntary ESG disclosures. Project GO delivers a message that sweeping government mandates or other "one-size-fits-all" standards are not necessary and can be counter-productive.

Looking Ahead: Project GO's Best Practices guide provides helpful considerations for companies that choose to make ESG disclosures. Highlighted Best Practices include ways to make ESG disclosures accessible to stakeholders, and to ensure that disclosures are tailored to reflect companies' particular growth and risk-management strategies.

Amidst growing political debate over the role corporations should play in solving the myriad of socio-economic challenges present today, the U.S. Chamber of Commerce has published helpful guidance designed to assist companies in becoming constructive, creative agents of change without heavy-handed government intervention.

In October 2019, the Chamber launched the Project for Growth and Opportunity, which is a multi-year campaign to identify practical, sustainable ways to address socio-economic challenges and reinvigorate the American commitment to free enterprise. In announcing Project GO, Chamber of Commerce President Suzanne Clark emphasized that companies should lead best practices in key areas such as growing board diversity, expanding investment opportunities for "Main Street" investors, and voluntary ESG reporting. Project GO is a welcome initiative and a useful counter-weight to calls by some politicians and activists for greater government control over corporations.

Summary of Best Practices

In November 2019, Project GO released a Best Practices guide, prompted, in part, by the increasing public interest in corporate sustainability and company approaches to relevant ESG topics. These best practices champion a commitment to ESG reporting that is voluntary and variable: voluntary because companies can handle their ESG reporting without additional regulation and variable because ESG disclosures should fit the needs of particular companies and industries. The Best Practices guide operates from the premise that a mandatory or "one-size-fits-all" approach to ESG reporting is inefficient and does not serve a company or its investors.

With these principles in mind, Project GO highlighted the following Best Practices that companies should consider:

  • Stay Focused.  ESG disclosures should focus on long-term value creation and risk management. 
  • Consider the Intended Audience.  Tailor the ESG disclosure according to the intended audience(s), and pay particular attention to information that would be most useful for investors and other stakeholders. 
  • Own ESG Reporting.  Preparers of ESG disclosures should work with relevant in-house subject matter experts, including legal counsel, to collect all relevant material information and ensure a diversity of perspectives. 
  • Use Plain English.  Define in plain English any jargon or terms that do not have well-understood definitions.
  • Make ESG Disclosures Readily Accessible. Make ESG information easy for users to find, such as through dedicated web pages.
  • Maintain Flexibility. Modulate disclosure based on ESG factors and metrics that are genuinely relevant to the company and meaningful for stakeholders Companies should not necessarily defer to what is identified in various third-party frameworks and standards.
  • Explain the Rationale.  Articulate why the company selected the metrics and topics it ultimately discloses and why management believes those metrics and topics are important to the company and its stakeholders. Consider including in reports peer-reviewed quantitative information and engage with peers or investors to shape ESG disclosure frameworks and baselines. 
  • Describe the Internal Review and Audit Process.  When appropriate, include a description of the company's internal review and audit process or any external verification that the company received of its ESG-related information.

Additional Considerations

As the Best Practices suggest, companies should confer with legal counsel regarding the potential risks associated with specific ESG disclosures. For listed companies, the Best Practices guide particularly notes that ESG disclosure should not be incorporated into SEC filings or required in SEC filings unless the disclosure is "material" under the United States Supreme Court's definition of materiality in federal securities law cases.

It is crucial to keep in mind that voluntary ESG disclosures that are misleading or false could form the basis of a lawsuit under securities, consumer protection, and antifraud statutes. The Chamber's guidance provides a useful starting point for minimizing that risk. For further information about minimizing potential legal risks from voluntary ESG disclosures, see Jones Day's July 2019 White Paper.

As the Best Practices guide notes, public interest in companies' ESG disclosures is rising. Issuing thoughtful disclosures can help companies respond to their stakeholders' interests and concerns, but companies should take precautions to minimize the attendant legal risks in today's social and political climate. 

Three Key Takeaways

  1. Project GO's Best Practices are largely in line with existing guidance, although the guide highlights in particular the increasing interest that investors, as opposed to other stakeholders, have for this information. This investor interest raises the bar for companies seeking to respond to this rising demand for ESG reporting in terms of potential legal and reputational liability.
  2. Companies should be aware that voluntary ESG disclosures can form the basis for a lawsuit under securities, consumer protection, and antifraud statutes. Companies should therefore put careful thought into the content and context of their ESG disclosures, treating them as part of the company's overall strategy.
  3. Project GO's Best Practices demonstrate the U.S. Chamber of Commerce's position that ESG reporting should be voluntary and tailored to the particular needs of each company and industry-specific, in contrast to directives in other jurisdictions, such as the European Union, which has adopted various significant ESG disclosure requirements.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions