Sustainability Accounting Standards Board

Introduction to SASB

The Sustainability Accounting Standards Board (SASB) is a non-profit organization that established industry-specific standards for companies to use when disclosing financially material sustainability information to investors. Founded in 2011, SASB's mission is to help businesses around the world identify, manage, and report on the sustainability topics that matter most to their financial performance.

SASB standards enable businesses to communicate with investors about how environmental, social, and governance (ESG) factors affect their financial condition and operating performance. Unlike other sustainability frameworks that focus on broader environmental impacts, SASB's approach prioritizes issues deemed financially material to investors.

History and Development

SASB was founded in 2011 by Dr. Jean Rogers who recognized the need for industry-specific sustainability accounting standards. The organization brought together experts from various fields including accounting, finance, ESG research, corporate reporting, and academia to develop a robust framework.

The standards development process was extensive, involving multiple rounds of public consultation, research, and testing. Over a six-year period, SASB engaged with over 3,000 participants across 20 countries. The resulting standards were released between 2013 and 2016 and covered 10 sectors and 77 industries.

In August 2018, SASB released updated standards based on additional stakeholder feedback. These refined standards provide clearer guidance and improved consistency across industries.

Mission and Goals

SASB's mission is to establish and improve industry-specific disclosure standards that meet the needs of investors by helping public corporations disclose material, decision-useful environmental, social, and governance information to their investors.

The organization has several key goals:

• Develop industry-specific standards that identify financially material sustainability topics
• Provide guidance on accounting metrics and technical protocols
• Facilitate integration of financial and sustainability reporting
• Promote consistency and comparability across companies and industries
• Reduce the cost of sustainability disclosure while increasing its utility for investors

Structure and Governance

SASB is governed by a Board of Directors with diverse backgrounds in finance, accounting, corporate management, and sustainability. The organization maintains independence in its standards-setting process, similar to other standard-setters like the Financial Accounting Standards Board (FASB).

The SASB Standards Board is responsible for developing and maintaining the SASB standards. This group includes technical experts from various industries and sustainability domains who ensure that the standards remain rigorous and relevant.

In December 2021, SASB's standards were placed under the governance of the International Sustainability Standards Board (ISSB) following the consolidation of SASB into the IFRS Foundation. This move aims to create a comprehensive global baseline of sustainability disclosures while maintaining the industry-specific nature of SASB standards.

SASB Standards Overview

The SASB standards provide a framework for companies to identify and report on sustainability factors that have a financially material impact on their business. These standards are organized around 11 sectors and 77 industries, recognizing that sustainability issues vary significantly across different business models.

Each industry standard includes:

• Sustainability topics that are likely to be financially material
• Accounting metrics to measure and manage these topics
• Technical protocols that define measurement methods

The 11 SASB Sectors

This structure allows companies to focus on the sustainability factors most relevant to their specific business model and industry context.

Implementation and Adoption

Companies can implement SASB standards by following a series of steps that help identify relevant sustainability topics and appropriate reporting metrics:

1. Identify the relevant SASB industry standard based on the company's primary business activities
2. Assess materiality of each sustainability topic listed in the standard for the company's specific situation
3. Collect data for the accounting metrics associated with material topics
4. Apply technical protocols to ensure consistent measurement and reporting
5. Disclose information in financial filings or other investor communications

Adoption of SASB standards has grown significantly, with companies across multiple sectors incorporating SASB metrics into their annual reports, sustainability reports, and integrated reports. According to SASB's most recent data, as of 2020, hundreds of companies representing over $30 trillion in market capitalization referenced SASB standards in their reporting.

Comparison with Other Reporting Frameworks

SASB is one of several prominent frameworks for sustainability reporting, each with a unique approach and focus:

Framework	Focus	Audience	Materiality Approach
SASB	Financial materiality	Investors	Industry-specific financial impact
GRI	Triple bottom line impact	Stakeholders	Broad stakeholder impact
TCFD	Climate-related risks	Investors, regulators	Financial risk from climate change
CDSB	Integration of environmental info	Investors	Capital allocation relevance
UN SDGs	Global development priorities	All stakeholders	Contribution to global goals

Many organizations choose to use a combination of frameworks to meet the needs of different stakeholders. The SASB focuses specifically on information that influences a company's financial condition and is therefore most relevant to investor decision-making.

Recent Developments and Future Outlook

In September 2021, the IFRS Foundation announced that it would consolidate SASB along with other sustainability reporting frameworks under the newly established International Sustainability Standards Board (ISSB). This consolidation created a comprehensive global baseline of sustainability disclosures while preserving the industry-specific nature of SASB standards.

The integration of SASB into the global sustainability reporting infrastructure is expected to accelerate adoption worldwide. The ISSB is building upon SASB's industry-specific approach while developing additional requirements for broader sustainability reporting.

Regulatory developments are also driving adoption of SASB standards. The U.S. Securities and Exchange Commission (SEC) has referenced SASB in its proposed climate-related disclosure rules, and the European Union's Corporate Sustainability Reporting Directive (CSRD) includes concepts aligned with SASB's materiality approach.

Looking ahead, SASB standards are expected to continue evolving as the understanding of financially material sustainability factors deepens. The ISSB's commitment to maintaining and updating SASB standards ensures they will remain relevant tools for companies communicating with investors about ESG issues.

Conclusion

The Sustainability Accounting Standards Board has transformed how companies approach ESG disclosure by focusing on financially material information for investors. By providing industry-specific standards, SASB enables businesses to identify and manage the sustainability factors that truly impact their financial performance.

As capital markets increasingly recognize the importance of ESG factors in long-term value creation, SASB standards serve as an essential tool for improving the quality, consistency, and usefulness of sustainability reporting. The integration of SASB into the global sustainability reporting infrastructure through the IFRS Foundation ensures its continued relevance and influence in shaping corporate disclosure practices worldwide.

For companies navigating the evolving sustainability reporting landscape, SASB standards offer a practical, investor-focused approach that can enhance transparency, strengthen risk management, and demonstrate commitment to sustainable business practices.