SASB: Setting the Standard for Sustainability Disclosure

The Sustainability Accounting Standards Board (SASB) framework is a widely recognized framework for sustainability disclosure. The Sustainability Accounting Standards Board (SASB) was established in 2011.

Key Milestones

1. 2011: SASB was founded by Jean Rogers, a former investment consultant.
2. 2012: SASB launched its first industry working groups to develop sustainability accounting standards.
3. 2013: SASB published its first set of provisional standards for the healthcare industry.
4. 2018: SASB completed its set of 77 industry-specific standards.
5. 2020: SASB merged with the International Integrated Reporting Council (IIRC) to form the Value Reporting Foundation (VRF).

Today

SASB is recognized as a leading framework for sustainability disclosure, used by companies, investors, and regulatory bodies around the world.

Key Components

1. Industry-specific standards: SASB has developed industry-specific standards for 77 industries, covering environmentally, socially, and governance (ESG) topics.
2. Materiality map: SASB’s materiality map helps companies identify the most relevant sustainability topics for their industry.
3. Disclosure topics: SASB’s disclosure topics are organized into five categories: environment, social capital, human capital, business model and innovation, and leadership and governance.

Disclosure Categories

1. Environment: Climate change, energy, water, biodiversity, and pollution.
2. Social Capital: Community engagement, customer privacy, and supply chain management.
3. Human Capital: Labor practices, employee engagement, and diversity.
4. Business Model and Innovation: Research and development, supply chain resilience, and product design.
5. Leadership and Governance: Board composition, executive compensation, and audit committee oversight.

Benefits

1. Improved transparency: SASB helps companies provide transparent and comparable sustainability information.
2. Enhanced decision-making: Investors and stakeholders can make informed decisions using SASB’s industry-specific standards.
3. Risk management: SASB’s framework helps companies identify and manage sustainability risks.
4. Cost savings: By focusing on industry-specific topics, companies can reduce reporting costs.

Here are the strengths and weaknesses of the Sustainability Accounting Standards Board (SASB) framework:

Strengths:

1. Industry-specific standards: SASB’s industry-specific standards provide tailored guidance for companies, making it easier to report relevant sustainability information.
2. Materiality-focused: SASB’s framework helps companies identify and report on the most material sustainability topics, reducing reporting burden and increasing relevance.
3. Comparable data: SASB’s standards enable companies to report comparable data, making it easier for investors and stakeholders to compare sustainability performance.
4. Wide adoption: SASB’s framework is widely adopted by companies, investors, and regulatory bodies, demonstrating its credibility and effectiveness.
5. Research-based: SASB’s standards are developed through rigorous research and stakeholder engagement, ensuring they are evidence-based and relevant.

Weaknesses:

1. Limited global coverage: SASB’s standards currently cover 77 industries, but may not be applicable to all industries or regions.
2. Voluntary adoption: SASB’s framework is voluntary, which may lead to inconsistent adoption and reporting across companies.
3. Lack of assurance: SASB’s framework does not provide assurance on the accuracy or completeness of reported data, which may reduce its credibility.
4. Complexity: SASB’s standards can be complex and require significant resources to implement, which may be a barrier for smaller companies.
5. Evolutionary nature: SASB’s standards are evolving, which may require companies to update their reporting processes and systems.

Opportunities for Improvement:

1. Global expansion: Expanding SASB’s standards to cover more industries and regions could increase its global relevance and adoption.
2. Assurance mechanisms: Developing assurance mechanisms, such as audits or certifications, could enhance the credibility and reliability of reported data.
3. Simplification: Simplifying SASB’s standards and reporting requirements could make it more accessible to smaller companies and reduce reporting burden.
4. Integration with other frameworks: Integrating SASB’s framework with other sustainability reporting frameworks could enhance its relevance and reduce reporting complexity.
5. Stakeholder engagement: Continuing to engage with stakeholders, including companies, investors, and regulatory bodies, could ensure SASB’s standards remain relevant and effective.

Who Uses SASB?

1. Publicly traded companies: Many publicly traded companies use SASB’s framework to disclose sustainability information.
2. Investors: Investors use SASB’s framework to evaluate companies’ sustainability performance.
3. Regulatory bodies: Some regulatory bodies, such as the Securities and Exchange Commission (SEC), have referenced SASB’s framework in their guidance.

Resources

1. SASB website: https://sasb.ifrs.org/

2. SASB standards: Available for download on the SASB website.

3. SASB implementation guide: Provides guidance on implementing SASB’s framework.

In conclusion, the Sustainability Accounting Standards Board (SASB) framework is a widely recognized and respected standard for sustainability disclosure. While it has its strengths, such as industry-specific standards and materiality-focused reporting, it also has weaknesses, including limited global coverage and voluntary adoption. Nevertheless, SASB remains a crucial tool for companies to disclose sustainability information and for investors to make informed decisions.