ESG Disclosure Bills Introduced to States

American companies are facing unprecedented pressure to act on issues like race and gender, inequality, pollution, and human rights. In 2022, state governments introduced a plethora of new legislation aimed to hold corporations accountable. RILA has identified four district categories of legislation related to government mandated disclosures in 2022: Corporate Board Diversity, Human Capital Management, Environmental Disclosures, 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.

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 that we have reviewed are often written to address specific human rights concerns 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 so far in 2023. These types of proposals will only become more and more common, especially if progressive states continue to feel like their priorities are not adequately addressed at a federal level. For American companies, this means that there could be a patchwork of cumbersome disclosure requirements laid out in a select number of states. 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.