On Friday, April 3, the Environmental Law and Policy Annual Review held its yearly conference on innovative environmental law and policy proposals in academic literature. This year, the conference included a panel on improving Securities and Exchange Commission (“SEC”) disclosure requirements on corporate sustainability.

An important issue relating to whistleblowers was the panelists’ discussion of the paper Making Sustainability Disclosure Sustainable. This paper emphasized the need for regulations requiring corporations to, at minimum, make mandatory disclosures on the three sustainability issues that are most significant for the firm’s operations, explain the basis for that selection, and explain the impact of those issues on firm performance. If such a regime was in place, whistleblowers could act as a check on corporations to make sure such disclosures, on which investors rely, are complete and truthful. This oversight would function in a similar way to the internal controls regimes currently in place under Sarbanes-Oxley and the Securities Exchange Act of 1934, for which insider whistleblowers are fundamental to ensuring true compliance. Given the focus of these proposed requirements on qualitative responses, whistleblowers would be vital in uncovering fraud in the determination of these material disclosures by company insiders.

Several panelists at the event also pointed out that the current disclosure requirements compel companies to report material risks. More and more, environmental risks, including the social and economic risks of undertaking projects that may damage the environment or be unsustainable, are recognized as material risks. Therefore, would-be whistleblowers should remember that corporate negligence towards sustainability risks may be material to investors, and a failure to appreciate and disclose such risks may act as a fraud upon shareholders for which the SEC can take action. A mandatory sustainability disclosure would cement this obligation while providing investors and potential whistleblowers the unambiguous legal framework to hold companies accountable.

While no current proposals for a mandatory sustainability disclosure rule are in front of the SEC, a growing number of environmental regulations are cropping up worldwide, and environmental whistleblowers are increasingly essential to ensuring a sustainable future.