Guardians of truth: how to ensure the accuracy of ESG information

As mandatory ESG disclosure proliferates, jurisdictions often adapt financial enforcement devices to complex ESG information, creating regulatory gaps and excesses. Japan relies on resource constrained public sanctions, leading to under-enforcement; the US employs investor litigation, which chills disclosure; and the EU mandates costly, narrow third-party assurance. To resolve this dilemma, this article proposes a hybrid model. The analysis begins with a comparative 2×2 matrix (ex-ante/expost × public/private) that maps the enforcement measures of Japan, the US, and the EU, revealing distinct trade-offs among cost, coverage, and deterrence. An empirical study of Japanese enforcement reveals systemic under-enforcement and SESC’s capacity deficits. Findings demonstrate that neither singular reliance on private-led mechanisms (such as third-party assurance or investor litigation) nor resource-constrained public enforcement alone can reliably secure ESG information without distorting incentives. The proposed hybrid strategically allocates tools to their comparative advantage: (i) reserving ex-ante assurance for high-impact, readily verifiable metrics; (ii) enlarging public audit resources for broader disclosures; and (iii) tying private liability thresholds to context specific materiality reflecting ESG’s qualitative character. Such an integrated framework can achieve a more balanced alignment between investor protection, stakeholder transparency, and compliance costs, thereby reinforcing market trust and avoiding the twin perils of greenwashing and disclosure chill.