Knowledge and Power in Measuring the Sustainable Corporation: Stock Exchanges as Regulators of ESG Factors Disclosure

“Sustainability” surely figures amongst the most discussed themes by corporate lawyers and policymakers at the global level in the last years. In particular, much attention has been devoted to the performance of firms managed in a “sustainable” way and on how to design an ESG (environmental, social, governance) factors disclosure framework that provides meaningful information to investors. At the same time, policymakers around the world believe that non-financial factors disclosure would foster a reallocation of capital to “sustainable” firms, contributing to the solution of some of the most pressing issues of our time. However, what should be measured and how to measure it is not a merely technical issue but depends on political choices: the concept of sustainability should be declined as plural. In order to assess which concept of sustainability is embedded into indicators it is necessary to understand the institutional structures and dynamics of the single reporting frameworks, and which issues they purport to disclose. This paper tackles these issues providing the first academic analysis of the ESG factors disclosure framework elaborated by the Sustainable Stock Exchanges Initiative – a project developed since 2009 under the aegis of the United Nations – and the World Federation of Exchanges – the stock exchanges and clearing houses trade association. In order to understand how and why the analyzed disclosure framework was produced, the paper develops an original conceptual framework that takes into account the nature of indicators as technologies of global governance, the “four actors” model advanced by Büthe and the role of transnational financial associations in the production of global governance rules. Using this theoretical framework, three distinct contributions are made. First, the paper provides a historical and political analysis of this new framework that is able to explain its adoption and implementation, disentangling ESG factors disclosure from corporate social responsibility and socially responsible investment. Second, it analyzes how the articulated structure of the actors involved in the production of the framework determined its content and the underlying concept of sustainability. Finally, it analyses why the structure of the actors involved and the specific conception of ESG factors disclosure hinder full and accurate information disclosure and narrow down the concept of sustainability embedded into the indicators. While the analysis is specific to the Sustainable Stock Exchange Initiative and the World Federation of Exchanges indicators, the theoretical model can be deployed to approach other sustainability frameworks as well.