The Limited Regulatory Impact of ESG Information Duties

Disclosure duties were initially designed in private law to prevent individual information asymmetry but these obligations have transformed into a regulatory instrument serving public interests. In ESG regulation, disclosure duties aim to indirectly advance regulatory goals such as climate protection and preservation of human rights through market mechanisms. We will look at two categories of such obligations: (1) regulating information recipients, especially investors, through disclosure of ESG risks; and (2) regulating the disclosing entities themselves by incentivizing behavioural change through transparency.

ESG reporting often substitutes for substantive behavioural rules but faces significant legal and practical challenges: lack of standardization, unclear regulatory goals, and limited market reactions undermine effectiveness. This begs the question whether information duties are really ‘softer’ instruments compared to ‘hard’ prohibitions.

Alexander Hellgardt holds the Chair of Private Law, Corporate Law and Jurisprudence at the University of Augsburg since 2024. He earned his PhD at the Hamburg Max Planck Institute for Private Law and worked as a senior research fellow at the Munich Max Planck Institute for Tax Law. Before joining the University of Augsburg, he held a Chair at the University of Regensburg for eight years.

Find out more about the organizers of this event, the Max Planck Law Initiatives: Corporate Responsibility | ESG and Law, Climate Change, and the Environment.