The Sustainability Accounting Standards Board (SASB), a non-profit organization founded in 2011, creates and maintains industry-specific standards that guide companies' disclosure of financially material sustainability information to investors and other financial stakeholders.
Serving as an environmental, social and governance guidance framework, the SASB Standards (link resides outside ibm.com) identify sustainability issues that might impact financial performance and enterprise value for companies in 77 industries. These industry-specific standards include 6 disclosure topics and 13 accounting metrics across 5 key dimensions of sustainability—environment, social capital, human capital, business model and innovation, and leadership and governance.
The SASB Standards were framed by using an open standard-setting process that included evidence-based research, open participation from companies, investors and subject matter experts, and oversight and approval from the SASB Standards Board. Organizations might use these standards for guidance as they disclose sustainability risks and opportunities impacting their enterprise value.
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Climate change presents several ESG issues for the global economy. Investors need to understand how these issues impact the financial performance of companies but they struggle to access standardized, comparable ESG reports needed to inform their capital decisions.
Sustainability disclosures like the SASB Standards help address this need by helping companies identify, measure, manage and report the subset of ESG topics that most directly impact long-term enterprise value creation.
SASB’s standard-setting approach—grounded in industry-specificity and financial materiality—provides a solid foundation for disclosing sustainability information. SASB features include:
Global applicability
The SASB Standards aim to provide investors with sustainability disclosures that are relevant, reliable and comparable across companies on a global basis. Most of the SASB metrics are relevant for companies and investors globally, and the remaining are being reviewed to enhance their global applicability.
Financial materiality
The SASB Standards strive to identify the ESG issues most relevant to the financial performance of companies in 77 industries. Sustainability information is considered financially material if omitting or misrepresenting it might substantially alter the risk profile of a company or influence capital allocation.
Evidence-based
The SASB Standards Board (the standard-setting arm of SASB) gathers evidence from external sources to establish the financial impact of each sustainability issue identified across all industries addressed. To ensure the relevance of the ESG issues to an industry over time, it also considers the regulatory, environmental and financial drivers for the particular industry.
Industry-specificity
The SASB Standards focus on improving the disclosure of industry-specific ESG issues because not all sustainability issues matter equally to each industry, and sometimes the same sustainability issue manifests differently across industries.
Market-informed
The Standards Board solicits inputs from relevant stakeholders—including companies, investors and other market participants—in considering sustainability issues that should be disclosed for an industry.
The SASB Standards address the materiality of ESG issues based on the nuances of each industry. This industry-specificity differentiates the SASB Standards from other sustainability reporting frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD) (link resides outside ibm.com) and International Integrated Reporting Council (IIRC) (link resides outside ibm.com).
The SASB framework includes two tools to help organizations make industry-specific disclosures and report in alignment with a globally accepted reporting framework:
Materiality map
The materiality map visually depicts how 26 general sustainability issues are financially material for 77 industries, aligned to the US-based Sustainable Industry Classification System.
The sustainability issues are categorized under five main dimensions, sometimes referred to as the SASB index:
- Environment
- Social capital
- Human capital
- Business model and innovation
- Leadership and governance.
The industries are grouped into these broader categories:
- Consumer goods
- Extractives and mineral processing
- Financials
- Food and beverage
- Health care
- Renewable resources and alternative energy
- Resource transformation
- Services
- Technology and communications
- Transportation
The map helps organizations understand what ESG issues are relevant to their industries and why they need to measure and report them.
Materiality finder
The materiality finder is a tool for comparing companies or industries on the materiality map and finding disclosure topics relevant to specific industries. Users can compare up to four industries to understand the differences and similarities in their disclosure topics.
SASB Standards appeal to companies and investors for different reasons.
Companies
Companies can use SASB Standards to help meet investor needs for comparable, consistent and financially material sustainability disclosures. Because SASB Standards are tailored for specific industries and complement other ESG standards and frameworks, companies of all types in all industries can easily adopt their guidance. Currently, up to 2,230 companies across 70 jurisdictions and 66 markets are reporting in alignment with the SASB metrics.1
Investors
Investors see SASB Standards as industry-based, metric-driven and focused on financial materiality, enabling the integration of sustainability considerations into investment and stewardship decisions across global portfolios and asset classes. Investors view SASB Standards as the main way for companies to communicate their sustainability information in a standardized, comparable format. At this writing, 327 institutional investors—representing 28 markets and USD 82 trillion in assets under management—rely on SASB-based disclosures to inform their investment decision-making.1
Experts increasingly view ESG performance as a key indicator of an organization’s long-term financial viability. Governments, investors, financial institutions and the general public are increasingly using ESG guidance and reporting frameworks to compare companies’ business models and distinguish leaders from underperformers. Sustainability standards make reporting frameworks actionable, enabling comparable and standardized disclosure of ESG data in corporate social responsibility, ESG or annual reports.
The SASB Standards identify the ESG information that is financially material to assess how an organization creates enterprise value. They are a practical tool for implementing principle-based ESG reporting frameworks, such as the TCFD and IIRC. SASB’s framework is built to support companies in sharing their outward ESG impacts in the language of investors, creditors and other financial stakeholders.
The SASB Standards are complementary to the TCFD framework and provide guidance on meeting TCFD requirements in SASB reporting. The SASB standards also complement the Global Reporting Initiative (GRI) standards, and many companies use a combination of SASB, GRI and TCFD to meet the information needs of multiple stakeholders and audiences.
SASB Standards provide an industry-specific set of climate-related disclosure topics and associated metrics to help a company more effectively implement TCFD recommendations. Investors have increasingly converged around a combination of the TCFD recommendations and SASB Standards as foundational tools to provide capital markets with effective climate- and sustainability-related financial disclosure. While the SASB Standards focus on the disclosure of industry-specific, financially material ESG information, the TCFD recommendations lean toward addressing climate-related risks and opportunities.
Effective since August 2022, the Value Reporting Foundation—home to the SASB Standards—and the Climate Disclosure Standards Board consolidated into the International Financial Reporting Standards (IFRS) Foundation to establish the first International Sustainability Standards Board (ISSB). SASB Standards are now under the oversight of the ISSB.
The ISSB builds on the recommendations of the TCFD and the industry-based requirements of the SASB frameworks to respond directly to the need for transparency and simplification in the sustainability disclosure landscape. The ISSB encourages preparers and investors to continue to provide full support for and to use the SASB Standards until IFRS Sustainability Disclosure Standards replace the SASB Standards.
Among all other ESG reporting frameworks, the GRI framework is the most similar to SASB. While organizations in any sector use the GRI framework, the SASB Standards are industry-specific and cover specific disclosure topics for 77 industries. GRI covers an organization’s impact on the economy, the environment and society, whereas the SASB Standards focus on financially material sustainability topics.
Sustainability and carbon accounting software can be used to monitor an organization’s ESG metrics and collect relevant data for analysis. Organizations can use software to automate the disclosure process and ensure they are in line with SASB standards.
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The TCFD seeks to keep investors better-informed about companies' climate-related risks.
Net zero is the point at which greenhouse gases emitted into the atmosphere are balanced by an equivalent amount removed from the atmosphere.
Decarbonization is both a method of climate change mitigation and the process of significantly reducing or eliminating carbon dioxide (CO2) and other greenhouse gas (GHG) emissions from the atmosphere.
Footnotes
1 "Global Use of SASB Standards" (link resides outside ibm.com), The SASB Standards: Now part of IFRS Foundation