With political battle lines drawn over environmental, social and governance (ESG) disclosures, it is fair to ask whether the sustainability movement is itself sustainable. As a registered Republican (Crowley) and a registered Democrat (Eccles), we do hope that it proves to be sustainable because we see this movement as fundamental to how the capital markets can support the well-being of all Americans. But the movement is currently facing grave political challenges. The underlying reason for this is the conflating of material risk disclosures wanted by investors and resisted by companies with related political issues. Being clear about the distinction between the two would be useful to both parties.

Many Democrats see ESG as an opportunity to pursue desired social change through collective action in the form of democratic capitalism.  Most Republicans view the ESG movement as an offshoot of the Green New Deal and therefore akin to thinly-veiled Marxism.  While there may be some truth to both views, neither accurately reflects marketplace and regulatory developments over the past quarter century.  Indeed, the history of major downturns in our financial markets is largely a history of management failure to disclose known business risks in time for investors to avoid catastrophic losses.  When such failures have become widespread, Congress and the U.S. Securities and Exchange Commission (SEC) have routinely stepped in to require additional corporate disclosures.  This article will retrace some of the key developments in order to demonstrate that sustainability is not new, nor is it mainly about scoring social justice warrior points.  Rather, it is about what regulations are necessary to ensure that the assumption of risk by investors is adequately informed.

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