ESG Transnational Regulation Project Launched

Impact investments and Environmental, Social and Governance (ESG) benchmarks have become common objectives for both governments, investors and companies around the Globe after the United Nations (UN) launched their 17 Sustainable Development Goals – including zero hunger, good health and well-being, and clean water and sanitation, amongst others.

The UN estimates that these goals can be achieved with approximately USD 6 trillion of investment, especially in developing economies. However, the global warming and pandemics phenomena are showing humankind that we will need much more than simply financial investment in the UN's Sustainable Development Goals in order to fix what modern industrial society has created over the last few decades.

We'll need a global effort in order to transform developed and developing economies together. We'll need to rethink how we (re)design and (re)organize institutions and industrial life in modern societies around the Globe.

ESG recent emergence in the debate within multilateral agencies and institutions, such as the UN, but also within corporate practices in the capital and financial markets, might be a new angle to rethink and define a new line of reasoning for principles of economic regulation and public policies. Such debate and the design of new forms of economic regulation can profoundly impact the decision making of capital allocation and business activities globally.

The TLI's ESG Transnational Regulation - Applied Research, Seminars, and Workshops project has the objective to bring together academics, policy makers, government officials and private actors such as creditors, fund managers and corporate executives that are thinking, designing and/or operating institutions concerned with ESG global change.

Its activities will be developed under the TLI project the Laws of Sustainable Human Development which cuts across the three main research focus areas in the TLI: transnational human rights, democracy and the rule of law (TLI-HRs), transnational environmental law (TLI-EL) and transnational health (TLI-Health) projects.

The main two questions to be addressed are:

1. How to create incentives through transnational economic regulation, public policies and tax systems to foster capital allocation (a) on the use of more sustainable materials in the industries and global supply chains, (b) on the development of more sustainable products and services capable of changing consumer behaviors and the adoption of a full global circular economy, and (c) on the global use of renewable energy to power up industries and social life?
2. How to create an ESG transnational regulatory framework and new governance to avoid and monitor global warming and environmental destruction within the rule of law and metrics of human development, environmental impacts and quality and access to public services?

The recent published book "Fixing the Climate: Strategies for an Uncertain World" by Charles Sabel and David Victor brings an innovative path to address the two questions above within the theoretical framework that the authors have designed as a "theory of experimentalist governance". The authors propose a more flexible form of organizational structures and relations among different stakeholders/institutions and forms of deliberation and incentives. The experimentalist governance brings a new angle to design and enforce regulations, mixing legal rules with moral pressure, codes of conduct and standards defined in a flexible deliberative why.

It goes beyond the concepts of deliberative democracy and philosophical debates around theories of law and democracy that we can find in authors like John Rawls, Juergen Habermas and Amartya Sen. Furthermore, the concept of experimentalist governance proposed by the authors is directly connected with practical and applied case studies in the definition of new and flexible regulations towards climate change.

We believe that this innovative theoretical proposition of experimentalist governance introduced by Sabel and Victor can be a powerful starting point for a framework to design new forms of ESG Transnational Regulation that can impact the decision making of capital allocation and business activities globally and craft new strategies to make the UN Sustainable Development Goals work.

The ESG Transnational Regulation project within the TLI's Law of Sustainable Human Development will investigate Sabel's and Victor's experimentalist governance theory and discuss theoretical alternatives and critical and practical propositions to address the two main questions indicated above that are at the core of what we believe should be challenges to be faced given the concerns in a world of growing uncertainties and risks more and more difficult to predict.

A critical analysis of Sabel's and Victor's applied experimentalist governance framework to case studies will also be addressed considering practical implications and theoretical debates on cost-benefit and social choice.

PROPOSED READER:

Main:

1. SABEL, C. F, and VICTOR, D. G. Fixing the Climate: Strategies for an Uncertain World, Princeton University Press, 2022

Support:

2. SABEL, C. F, and VICTOR, Governing Global Problems under Uncertainty: Making Bottom-Up Climate Policy Work, 2015, http://www2.law.columbia.edu/sabel/papers/Self%20Organisation%20under%20Deliberate%20Direction_Sabel-O'Donnell-O'Connell_15%20Feb%202019.pdf
3. SABEL, C. F, and VICTOR, D. G. An Evolutionary Approach to Governing Global Problems, Climate Policy After Paris, Innovative approaches to peace and security from the Stanley Foundation, POLICY ANALYSIS BRIEF THE STANLEY FOUNDATION, AUGUST 2016, http://www2.law.columbia.edu/sabel/papers/Stanley.pdf
4. VICTOR, D. G., Global Warming Gridlock, Creating More Effective Strategies for Protecting the Planet, Cambridge University Press, 2011
5. CULLENWORD, D. and VICTOR, D. G. Making Climate Policy Work, Polity Press, 2021

Practical:

6. Development of Tools and Mechanisms for the Integration of ESG Factors into the EU Banking Prudential Framework and into Banks' Business Strategies and Investment Policies, Final Study, https://op.europa.eu/o/opportal-service/download-handler?identifier=ce43e64f-06e0-11ec-b5d3-01aa75ed71a1&format=pdf&language=en&productionSystem=cellar&part=
7. Overview of Sustainable Finance, European Commission, https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/overview-sustainable-finance_en
8. Policy paper, Greening Finance: A Roadmap to Sustainable Investing, GOV.UK, https://www.gov.uk/government/publications/greening-finance-a-roadmap-to-sustainable-investing
9. The Division of Examinations' Review of ESG Investing, GOV, https://www.sec.gov/files/esg-risk-alert.pdf

Theoretical Debate:

10. SEN, A. "Environmental Evaluation and Social Choice" In.: Rationality and Freedom, Harvard University Press, 2002
11. SEN, A. "The Discipline of Cost-Benefit Analysis" In.: Rationality and Freedom, Harvard University Press, 2002
12. SUNSTEIN, C. R. "Cost-Benefit Analysis and the Environment". In.: Ethics 115, The University of Chicago Press, 2005
13. BROOME, J. Weighing Lives. Oxford University Press, 2006
14. BROOME, J. Climate Matters: Ethics in a warming world. New York, Norton, 2012
15. PISTOR, K. The Code of Capital: How the Law Creates Wealth and Inequality, Princeton University Press, 2019