trends and future of sustainable development - TransEco

disclosure regime established by the Securities Act of 1933 and Exchange Act of 1934. From the abovenoted CSR issues, the US authorities mandate only the disclosure of certain information related to theenvironment and climate change. The rules most relevant to the disclosure of the aforementioned issuesare incorporated in Regulation S-K, promulgated by the Securities Act of 1933, since disclosureaccording to several line items thereof may convey environmental and climate change relatedinformation.Item 101 requires the disclosure of a company’s business in general and material costs of complyingwith environmental laws. This line item might be highly relevant in respect of the mandatory disclosureof CSR information, since it requires the disclosure of the cost and methods of a company’s compliancewith environmental laws. Item 103 requires the disclosure of any material legal proceedings in progressagainst the company. It might also be relevant from the perspective of the disclosure of CSR information,since it might reveal legal proceedings started for non-compliance with CSR related legal regulations,such as anti-bribery or environmental protection. Item 303 prescribes the disclosure of theManagement’s Discussion and Analysis of Financial Condition and Result of Operations (MD&A), whichmight be the most relevant line item in respect CSR information, since it requires the disclosure of anytrends, events, demands, commitments and uncertainties that are reasonably likely to have a materialeffect on the company’s financial condition and performance (SEC, 2010). Under this item companiesmay have to disclose how they are addressing such trends as the rise of a social demand for socially andenvironmentally responsible company conduct and how they are planning to address future change inlegislation in this respect. Item 503 requires the disclosures of the risk factors relevant to a companywhich make an investment in that company speculative or risky (SEC, 2010). This item may also concernCSR information, since companies may have to disclose how their operations might be affected bychanges, such as new legislation, international accords and indirect consequences of business trends(SEC, 2010), in connection with CSR related issues and how they are addressing these risks.In addition to the above listed line items, the US disclosure regime contains a general disclosure rulefor further material information necessary to make the other specifically required statements of thecompany not misleading (Securities Act of 1933, 17 CFR 230.408, Exchange Act of 1934, 17 CFR240.12b-20). Accordingly, any further CSR information may be required to be disclosed, provided it ismaterial and needed to provide fair and not misleading review of a company’s operations.It can be concluded that the US disclosure regime may require the disclosure of CSR information,especially environmental and climate change information, in several parts thereof, but not in a coherentand consistent manner. This does not mean that companies have to make extremely long disclosures oftheir CSR related activities. The SEC has already expressed that it does not require the disclosure ofunnecessarily detailed information (SEC, 2003). As can be seen from the aforementioned disclosurerules, the necessity of the disclosures based thereon is tied to the notion of materiality. Nevertheless,there is no rule in securities law to disclose information only because it is material – disclosure ofmaterial information is only required if there is an affirmative duty to disclose (Cox et al., 1997). Inrespect of the noted line items and the general disclosure requirement this statement seems to be truevice versa as well. Even though there are requirements for disclosure of CSR related information underthe US regime, a duty to disclose only arises if the information is material as well. Thus the notion ofmateriality has to be discussed further bellow.387