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The Sustainability Accounting Standards Board is an independent, non-profit organization founded in 2011 with the aim of setting standards to guide the disclosure of financially material sustainability information by companies to their investors. The organization is based in San Francisco, California, United States.
SASB promotes a shared understanding of sustainability performance, that it says enables companies and investors to make informed decisions to drive long-term value and better outcomes for businesses and their shareholders, the global economy and society at large.
SASB is intended for U.S. public companies, which get to use them for free, but the foundation that oversees SASB aims toward global applicability. In December 2019, SASB reported that 120 companies, including GM, Merck, Nike and Bloomberg, were using the standards in their ESG reporting. Of the 120 firms using the standards, 76 were based in the U.S., while 44 were overseas, according to an article published in IR Magazine. By 2020, the number of unique SASB reporters – companies that have disclosed SASB metrics in public company communications – was 556, SASB indicates on its website.
“SASB standards provide a common language for companies and investors to communicate about these financial impacts of sustainability performance. Because not all sustainability issues manifest equally in every single sector of industry, it is important to understand how specifically for each sector each sustainability issue is manifesting itself and what is means to that … sector in terms of future financial performance,” Ekaterina Hardin, research analyst and sector lead for extractives and mineral process at SASB, told Lubes’n’Greases.
SASB allows for comparison of industry peer performance and benchmarking through Form 10-K1 and does not use a scoring system. The organization has also published dozens of case studies by investors across asset classes, strategies and markets.
SASB’s standards identify the subset of ESG issues that are most relevant to financial performance in 77 industries. These standards are “financially material” because they are reasonably likely to affect a company’s financial performance and are deemed of interest to investors. They are also “industry specific” because the issues that impact financial performance vary by industry.
The SASB conceptual framework sets out the basic concepts, principles, definitions and objectives that guide SASB in its approach to setting standards for sustainability accounting.
SASB Standards include:
Each of these categories, in turn, covers sub-topics such as greenhouse gas emissions, air quality, water management, workforce health and safety, management of the legal and regulatory environment and refining operating capacity.
In November 2018, SASB published its first set of 77 Industry Standards, which form its methodology and provide metrics for reporting sustainability performance within 11 specific industry sectors. It also created an implementation guide that explains issues and approaches to consider when implementing SASB standards. For example, in the Extractives and Minerals Processing category, it includes standards for oil and gas refining and marketing companies, and it details this sector’s industry-specific environmental and social impacts.
Unlike the GRI, which is arguably the world’s most widely used framework for sustainability reporting, SASB is focused more on economic factors. But subscription is growing rapidly. In 2019, there were 117 companies reporting with SASB’s standards and in 2020 this number rocketed past 500, spurred on by the announcement by the CEO of Blackrock, the biggest fund management company in the world, that it would be pursuing sustainable investments as a central strategy, explained Amanda Medress, SASB’s director of global communications.
“The world of the ESG space is rapidly evolving. Sustainability is increasingly more important to people, businesses and governments and investors. And this really created the need for an expanded accounting language to communicate what yesterday’s performance on sustainability issues means for tomorrow’s future performance,” Hardin said.
The current iteration can be downloaded here.
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