Impact Investing and Information Disclosure as Tools of Environmental Governance

Sarah Light and Lauren Kaufmann, Legal Studies and Business Ethics, The Wharton School; Steven Kimbrough, Operations, Information, and Decisions, The Wharton School; and Christine Chou, National Dong Hwa University

Abstract: Climate change remains a grand challenge of our time. Numerous actors relevant to business—both public and private—have worked to reduce or otherwise mitigate greenhouse gas emissions, and to focus management attention on the issue of climate change. For instance, the SEC mandates that publicly traded corporations report to investors and the public on those climate risks that are financially “material” to firm performance. The goal for this project to is think deeply about what the term “materiality” should mean in the law with respect to climate-related disclosures. Specifically, our research seeks to answer the question: given current disclosure practices (both disclosures required by law and those sought through private governance by investors), how can the SEC more effectively regulate material disclosures on climate change? In order to answer this question, our project will include both empirical and regulatory analyses. We will look not only to public law, but also to private environmental governance with respect to climate disclosures and performance to determine “best practices” for disclosures.