Sustainability Accounting Standards Board (SASB) develops industry-specific sustainability accounting standards to help companies disclose financially material information to investors. These standards are designed to be used by publicly traded companies in their annual filings to the U.S. Securities and Exchange Commission (SEC).
Industry-Specific Focus:
SASB standards are industry-specific, tailoring their requirements to the unique sustainability risks and opportunities within each industry. This approach recognizes that material issues can vary significantly between sectors.
Materiality and Financial Relevance:
SASB emphasizes materiality, requiring companies to focus on disclosing sustainability factors that are financially material to their industry and business. The aim is to provide investors with information that is relevant to their decision-making processes.
Financially Material Topics:
SASB standards cover a range of financially material topics relevant to each industry.
These topics are organized into five categories: Environment, Social Capital, Human Capital, Business Model and Innovation, Leadership and Governance.
Disclosure Topics and Metrics:
SASB standards provide specific disclosure topics and associated metrics for each industry. These metrics help companies measure and report on their performance in key areas such as greenhouse gas emissions, labor practices, product safety, and corporate governance.
Integration with Financial Filings:
SASB standards are designed to be integrated into existing financial filings, such as annual reports and Form 10-K submissions to the SEC. This integration allows for a more streamlined reporting process and facilitates the incorporation of sustainability information into mainstream financial analysis.
Global Applicability:
While SASB is a U.S.-based organization, its standards are designed to be globally applicable. Many multinational companies use SASB standards alongside other global reporting frameworks to provide a comprehensive view of their sustainability performance.
Collaboration with Other Standards:
SASB collaborates with other sustainability reporting organizations to align and harmonize reporting standards. This includes working with organizations like the Global Reporting Initiative (GRI) and the Task Force on Climate-related Financial Disclosures (TCFD) to promote consistency and reduce reporting complexity.
Investor Focus:
SASB standards are developed with a primary focus on the information needs of investors. By providing standardized and comparable sustainability information, SASB aims to help investors integrate material sustainability factors into their investment decision-making processes.
Regular Updates:
SASB regularly reviews and updates its standards to reflect changes in market conditions, stakeholder expectations, and emerging sustainability issues. This ensures that the standards remain relevant and effective over time.
SASB standards are part of the broader landscape of sustainability reporting frameworks, each with its own strengths and focus areas. The goal is to enable companies to communicate their sustainability performance in a way that is meaningful and decision-useful for investors.