The Imperative of Mandatory ESG Disclosure for Enterprises: Theoretical Debates and Institutional Frameworks

DOI: https://doi.org/10.62517/jel.202514612

Author(s)

Shuang Zhou

Affiliation(s)

Shanghai University of Finance and Economics, Shanghai, China *Corresponding Author

Abstract

Against the backdrop of China's "dual carbon" objectives and the global imperatives of sustainability, the currently prevalent voluntary ESG disclosure mechanism has been found to be insufficient. It has given rise to issues such as data distortion, impairments of stakeholders' rights, and extensive instances of "greenwashing". This study systematically expounds on the necessity of a mandatory ESG disclosure system. Going beyond mere criticism of voluntarism, it endeavors to construct a comprehensive theoretical and institutional framework. By adopting a comprehensive, multi-methodological approach that encompasses a critical synthesis of academic literature, policy documents, and empirical research, this study redefines the theoretical basis. It does so by introducing "environmental information rights" as a fundamental human right, thus surpassing traditional rationales for government intervention. This research further delves into core controversies, encompassing legal legitimacy, the compliance costs of small and medium-sized enterprises (SMEs), and the ambiguous definition of "materiality." The investigation findings lead to the proposition of a novel Differentiated Mandatory Disclosure System. This is a tiered framework meticulously designed to align with industry risks and enterprise scale. For Systemically Important ESG Entities (SISEs), it enforces immediate and guaranteed disclosure, while for other firms, it adopts phased and voluntary-plus strategies. This architectural design is underpinned by dynamic monitoring mechanisms, synergistic incentive-penalty frameworks, and integration with digital tools. The study reaches the conclusion that this system, which is legally sound, economically efficient, and technically viable, is essential for facilitating green transformation, safeguarding the public interest, and rectifying market failures. Specifically, the research offers concrete recommendations for legislative reforms in China, including the revision of the Environmental Protection Law. By doing so, it presents a comprehensive blueprint for a disclosure regime that harmonizes global standards with local requirements, thereby strengthening the foundation for high-quality and sustainable economic development.

Keywords

Mandatory ESG Disclosure; Environmental Information Rights; Differentiated Disclosure Framework; Institutional Design

References

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