The Sustainability Accounting Standards Board (SASB) is a non-profit organization, founded in 2011, that strives to establish and maintain industry-specific standards for guiding the disclosure of financially material sustainability information by companies to investors and other financial stakeholders.
Serving as an ESG guidance framework, the SASB Standards (link resides outside ibm.com) identify sustainability issues that may impact financial performance and enterprise value for companies in 77 industries. These industry-specific standards include six disclosure topics and 13 accounting metrics across five key dimensions of sustainability—environment, social capital, human capital, business model and innovation, and leadership and governance.
The SASB Standards were framed using a transparent 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 may use these standards for guidance as they disclose sustainability risks and opportunities impacting their enterprise value.
Climate change presents several environmental, social and governance (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 not only identify but also 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”. The majority 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 could 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 given industry.
Industry-specificity: The SASB Standards are focused 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 can manifest differently across industries.
Market-informed: The Standards Board solicits inputs from relevant stakeholders—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 twenty-six general sustainability issues are financially material for seventy-seven industries (aligned to the US-based Sustainable Industry Classification System, or SICS).
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, and leadership and governance.
The industries are grouped into the following 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, and transportation. The map helps organizations understand what ESG issues are relevant to their industries and why they need to be measured and reported.
Materiality finder: This 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 differences and similarities in their disclosure topics.
SASB Standards appeal to companies and investors for different reasons.
Companies can use SASB Standards to help meet investor needs for comparable, consistent and financially material sustainability disclosures. Because SASB Standards are tailored for unique industries and complement other ESG standards and frameworks, companies of all types in all industries can easily adopt their guidance. Currently, up to 2230 companies across 70 jurisdictions and 66 markets are reporting in alignment with the SASB metrics.1
Investors perceive SASB Standards as being industry-based, metric-driven, focused on financial materiality and enable 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 (AUM)—rely on SASB-based disclosures to inform their investment decision-making.2
ESG performance is increasingly being viewed 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 laggards. Sustainability standards make reporting frameworks actionable, enabling comparable and standardized disclosure of ESG data in CSR, 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 principles-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 coalesced 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 towards addressing climate-related risks and opportunities.
Effective August 2022, the Value Reporting Foundation–home to the SASB Standards–and the Climate Disclosure Standards Board (CDSB) consolidated into the 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 ecosystem. 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 the GRI framework is designed to be used by organizations in any sector, 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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