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36 Yale J. on Reg. 625 (2019)
Harnessing Investor Interest in Sustainability: The Next Frontier in Environmental Information Regulation

handle is hein.journals/yjor36 and id is 635 raw text is: Harnessing Investor Interest in Sustainability: The Next Frontier in Environmental Information Regulation Daniel C. Estyt & Quentin Karpilow This Article rethinks the theory and application of environmental information regulation in light of growing investor interest in sustainability. Academics and policymakers have long viewed mandatory information disclosure as a powerful regulatory toolfor improving corporate environmental performance, with some going so far as to call environmental information regulation the third phase ofAmerican environmental law. Current thinking on environmental information regulation has failed, however, to keep pace with recent transformations in the investment community. Over the past decade, sustainable investing has rapidly movedfrom the fringes of the investment world to the mainstream as an increasing number of investors seek to align their values with the holdings of their portfolios. We argue that environmental information regulation, in the form of a mandatory corporate environmental, social, and governance (ESG) disclosure regime, could significantly facilitate this broader realignment of capital markets with sustainability principles. As we explain, standard models of environmental information regulation are ill-equipped to address the information needs of today's investment community. Instead, this Article calls for a new design of environmental information regulation capable of harnessing mainstream investor interest in sustainability and, in doing so, creating a new vector of leverage in support of a sustainable future for our society. Introduction ..................................... ...... 626 I. Current Thinking on Environmental Information Regulation .......... 631 A. How It Works ......................... ......... 631 B. What It Should Focus On ....... ................... 636 II. Investor Interest in Sustainability: Opportunities & Obstacles......... 638 A. Does Sustainability Leadership Pay Off?....... ......... 639 B. Growing Interest in Sustainable Investing .................. 648 C. Informational Barriers to Sustainable Investing................... 654 t Hillhouse Professor of Environmental Law and Policy, Yale University; daniel.esty@yale.edu. I Yale Law School, Class of 2018; quentin.karpilow@yale.edu. The authors thank Tim Mason for his excellent research support. 625

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