The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2022”.
In 2021, investors and regulators continued to focus on the scope and quality of public company disclosure of environmental, social and governance information. In the background, the controversial debate intensified over whether ESG information, while of interest to many stakeholders, should be considered “material” for the purposes of the securities laws such that disclosure of inaccurate or misleading ESG information could be a basis for liability. Some commentators have recently defended the traditional view of financial materiality that focuses on the impact of disclosure on the economic value of a company, for which share price is often used as a proxy, whereas others have suggested a broader notion of materiality that would include any information investors decide is important to them.
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