The comparison of ESG disclosure across the globe and the relative effects on investors. The case of Europe, U.S., and China.

Abstract

Over the past decade, sustainable finance has been a very significant topic mostly for investors, institutions, and companies, where ESG reports have been the main way to regulate ESG investment strategies. This paper analyzes the evolution of guidelines on corporate standards for disclosure of ESG reports directed at big listed companies in the stock exchange markets of United States of America, European Union, and China. Disclosed ESG data by companies is explored, as well as the influence of Chinese companies that over the past decade have proceeded with mergers and acquisitions of companies in the U.S. soil state, leading to a response through policy innovation on disclosure of reports to protect U.S. interests. Europe affirms itself as role model for implementations of ESG disclosure guidelines and laws, incentivizing protection toward investors, prompting the U.S. SEC and Chinese government to act on the same direction; differences among ESG policies and regulatory bodies pushing toward adoption of guidelines in China, U.S., and EU are exhaustively inspected, highlighting policy-level dissimilarities among the three, as well as discrepancies between rating agencies. Although China and the U.S. prove to be relatively autonomous in regulating their listed firms, European Commission has undertaken the role of an intermediary between all three economic powers, aiming to make foreign direct investments (FDI) easier, faster, safer, and aligning international economic interests by decreasing transaction costs and speeding up bureaucratic administrative processes. The role of investors will be seen to be a center point in innovating disclosure regulations, and we’ll see if the present green bond market is sufficient for reaching a common international transparent market between Europe, U.S., and China.