Materiality in Environmental Information Disclosure: A Comparative Analysis of the Securities Law of the United States and China

The purpose of this study lies in exploring the role of materiality in environmental information disclosures under the securities laws of the United States and China, discussing the differences in the regulatory mechanism, limits of enforcement, and challenges of seeking global harmonization. The paper does a comparative legal analysis of statutory provisions, judicial interpretations, and regulatory frameworks of the U.S. Securities and Exchange Commission (SEC) and the China Securities Regulatory Commission (CSRC). Furthermore, it provides frameworks of global sustainability reporting such as the Task Force on Climate-related Financial Disclosures (TCFD) and the Global Reporting Initiative (GRI). The findings show that U.S. securities law uses a financial materiality standard with respect to what companies must disclose to investors. On the other hand, China’s regulatory approach has a double materiality in considering not only financial impacts but also wider environmental and social factors. Although there are these distinctions, both of these jurisdictions face issues of common obstruction such as ambiguities in materiality determination, inconsistent enforcement, and fear of greenwashing. This paper asserts that the U.S. and China regulatory frameworks need to converge more to promote greater corporate transparency and ESG disclosures. Regulators can even align disclosure practices with internationally recognized standards of work to add confidence for investors, fight off misleading sustainability claims and ensure accountable reporting in pertinent environments. The study concludes that the green challenges of global markets can only be tackled by regulating cooperative actions and using standardized reporting guidelines.