ESG Disclosure Bills Introduced to States

For U.S. retailers, stakeholder expectations concerning corporate transparency continue to accelerate on topics ranging from climate to racial equality to supply chain visibility. Over the last several cycles, state governments have introduced and enacted a wide range of new legislation focused on holding corporations more accountable for their impacts by requiring them to track and publicly disclose them. RILA has identified four district categories of legislation related to government mandated disclosures: Corporate Board Diversity, Human Capital Management, Environmental, and Supply Chain Transparency.

Corporate board diversity requirements promote an increase in diversity on corporate boards. Legislation that falls under the human capital management category often requires employers to submit internal compensation statistics across a variety of categories, including gender identity, race, ethnicity, and seniority. Additionally, some of the workforce disclosure bills also require a government agency to publish the data collected from companies onto a publicly accessible site.

Recent legislation in the environmental disclosure category would require companies to publicly disclose their greenhouse gas emissions and/or prepare a climate-related financial risk report to be reviewed by a state agency and then made available on the company’s own website.

Lastly, the supply chain disclosure bills we see are often written to address specific human rights concerns such as with the global supply chain such as human trafficking, the use of forced labor in China, or the use of child labor in mining operations in the Congo. Supply chain bills may also focus on environmental disclosures within a company supply chain.

The tables below provide legislative examples of the different types of ESG disclosure bills introduced to date in the current legislative cycle. These types of proposals will only become more and more common, especially if progressive states continue to feel that their priorities are not adequately addressed at a federal level. For U.S. companies, this means that there could be a patchwork of disclosure requirements laid out in a select number of states that make compliance across state programs costlier and less efficient. It is important that companies are aware of the various types of disclosure legislation happening now, so that they can be properly prepared for the future.

An overview of introduced, and previously enacted, ESG disclosure bills can be downloaded below.