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Background
Implementing effective sustainability disclosure
policies is not an easy task for policymakers.
Sustainability data often falls into a “grey zone”
insofar as financial materiality is concerned. This
means that many companies can legally circumvent
well-intentioned disclosure policies—even, in some
cases, mandatory disclosure policies put forward by
securities regulators—by invoking the materiality
principle.
45
In other instances, the lack of proper
enforcement for non-compliance often leads to less
than optimal results.
Stock exchanges face an additional burden. Unlike
governments and securities regulators, they
increasingly operate as for-profit companies, and
are sometimes owned by listed entities. Many
stock exchanges have expressed the legitimate
concern that implementing sustainability reporting
requirements into their listed standards could
discourage future listings.
Perhaps most importantly, a complex, almost
overwhelming set of tools is at the policymaker’s
45 According to a recent study, almost 75% of U.S. publicly traded
companies are ignoring a three-year-old Securities and Exchange
Commission requirement that they inform investors of the risks that
climate change may pose to their bottom lines. For more information,
see
disposal. Permutations include voluntary, sector-
specific disclosure policies, mandatory “all inclusive”
policies, the increasingly referenced “comply or
explain” model, and policies that use enforcement
mechanisms vs. those that do not. While good work
is being done to help policymakers identify best
practices,
46
there is a dearth of quantitative evidence
to help the global policymakers in this regard.
Our analytical approach is inspired from available
policy research and academic literature that
discusses, among other things, the merits of policy
type, clarity and scope in effectively achieving the
desired policy objectives—in our case, encouraging
corporate sustainability disclosure.
In 2000, the Organisation for Economic Co-operation
and Development (OECD) issued a report entitled,
“Reducing the risk of policy failure: challenges for
regulatory compliance”.
47
The paper presents the
results of research conducted to inform regulatory
reform among OECD countries, more specifically to
achieve regulatory effectiveness, defined as “how well
46 For instance, see
47 Organisation for Economic Co-operation and Development. “Reducing
the risk of policy failure: challenges for regulatory compliance,” 2000.
Retrieved from
on September 27, 2013.
Figure 15:
Stock exchange-led sustainability disclosure policies by year and country classification
0
1
2
3
4
5
6
7
8
9
10
1970
1974
1979
1983
1985
1986
1995
1997
1998
1999
2001
2003
2004
2006
2008
2009
2010
2011
2012
NUMBER OF SUSTAINABILITY DISCLOSURE POLICIES
DEVELOPED MARKETS
EMERGING MARKETS
Source: CK Capital
1...,27,28,29,30,31,32,33,34,35,36 38,39,40,41,42,43,44,45,46,47,...71