Sustainability disclosure is in vogue, with more than 80 percent of major global companies reporting on some aspects of their social and environmental impacts. This is partly driven by growing calls for transparency by civil society organizations and environmental, social, and governance (ESG) investors, who are demanding detailed and verified corporate sustainability information. ESG investments—assets that fulfill certain minimum social and environmental criteria—grew by more than 40 percent in 2020 in the U.S., and currently make up one-third of all assets under management. However, the process of classifying financial assets as ESG is unregulated in the U.S. Moreover, the data required to assess if ESG assets have achieved a positive social and environmental impact is often missing, incomplete, unreliable, or unstandardized.
The risks of US-EU divergence on corporate sustainability disclosure (brookings.edu)
