From Sustainability to Conflict minerals: The Creeping Codification of Non-Financial Disclosure
Sustained pressure from activist investors and consumer groups has resulted in an increasing array of rules designed to compel disclosure of non-financial information by companies. The SEC’s conflict minerals rules and the recently issued proposal for a rule on the disclosure of resource extraction payments are examples of this phenomenon in the US. The EU’s October 2014 Directive on the disclosure of non-financial and diversity information exhibits the same animating purposes. These are not isolated instances – there is evidence of creeping codification in many jurisdictions and they are all derived from a convergence around similar normative goals.
This paper examines the normative underpinnings of hard law rules designed to achieve public policy goals that are strictly not within the traditional province corporate law. It addresses such questions as to whether corporate law is an appropriate tool for pursuing goals such as the elimination of trade in conflict minerals, bribery in resource rich developing countries, greater representation of women on corporate boards, whether the enforcement structures for corporate disclosure are capable of bearing the policing burden generated by these new rules, etc.