Essential ESG regulations for businesses working in the US
Summary Table
Regulation Name | Businesses Affected | Regulatory Body | Implementation | Regulation Purpose | Voluntary/Mandatory | Potential Benefits | Penalties for Non-Compliance |
---|---|---|---|---|---|---|---|
SEC Disclosure Requirements | Public companies | U.S. SEC | Ongoing | Enhance ESG transparency and risk disclosure | Mandatory | Investor confidence, reputation, informed decisions | SEC enforcement actions |
Nasdaq Board Diversity | Listed companies | Nasdaq | Pending | Promote board diversity | Mandatory | Improved governance, diverse perspectives | Delisting or fines |
Department of Labor (DOL) | ERISA fiduciaries | U.S. DOL | Proposed rules | Allow ESG integration in investment decisions | Proposed rules | Enhanced investment strategies, fiduciary duty | Legal consequences |
SASB (Sustainability Accounting Standards Board) | All companies | SASB | Ongoing | Industry-specific ESG reporting standards | Voluntary | Transparency, comparability, stakeholder trust | reduced investor trust |
State-Level Regulations | Varies by state | State governments | Varying by state | State-specific ESG laws | Mandatory (state-specific) | Compliance with local requirements | State-specific penalties |
If you are looking for an experienced ESG expert who can help your business get the best out of these regulations, learn more about our services here
Details about the regulations
Here’s a concise summary of the ESG regulations and frameworks mentioned above:
- SEC Disclosure Requirements:
Background: The U.S. SEC aims to enhance transparency by requiring public companies to disclose material ESG risks.
Impact on Businesses: Companies must assess and disclose ESG factors, affecting investor decisions and reputation.
Important Dates: Ongoing, with proposed rules in 2022.
Required ESG Expertise: A corporate governance or sustainability consultant can guide compliance. - Nasdaq Board Diversity:
Background: Nasdaq mandates board diversity disclosures for listed companies.
Impact on Businesses: Companies must report on board diversity, impacting recruitment and governance.
Important Dates: Currently pending litigation.
Required ESG Expertise: A diversity and inclusion specialist can assist in implementing policies. - Department of Labor (DOL):
Background: Proposed rules allow ERISA fiduciaries to consider ESG factors.
Impact on Businesses: Fiduciaries can integrate ESG into investment decisions.
Important Dates: Rules proposed.
Required ESG Expertise: An investment advisor with ESG expertise can guide fiduciaries. - SASB (Sustainability Accounting Standards Board):
Background: Industry-specific standards for ESG reporting.
Impact on Businesses: Voluntary adoption improves transparency.
Important Dates: Ongoing.
Required ESG Expertise: A sustainability consultant familiar with SASB standards. - State-Level Regulations:
Background: Some states introduce ESG laws (e.g., California’s board diversity requirement).
Impact on Businesses: Compliance with state-specific rules.
Important Dates: Vary by state.
Required ESG Expertise: Legal counsel or compliance specialist for state-specific guidance.
Disclaimer- Please remember that ESG regulations are evolving over time, and to stay updated on which specific regulations influence your business the most, you need to consult with an ESG expert. You can find EU’s top ESG specialists here.