The Sustainability Accounting Standards Board (SASB)
SASB Standards
The global standards for sustainability impacts.
SASB standards help companies disclose relevant sustainability information to their investors. Available for 77 industries, the SASB Standards identify the sustainability-related risks and opportunities most likely to affect an entity’s cash flows, access to finance and cost of capital over the short, medium or long term and the disclosure topics and metrics that are most likely to be useful to investors.
SASB FEATURES
What Is SASB Standards
Introduction of SASB Standards
SASB Standards enable organizations to provide industry-based disclosures about sustainability-related risks and opportunities that could reasonably be expected to affect the entity’s cash flows, access to finance or cost of capital over the short, medium or long term.
SASB Standards identify the sustainability-related issues most relevant to investor decision-making in 77 industries. The Standards were developed using a rigorous and transparent standard-setting process that included.
- evidence-based research;
- broad and balanced participation from companies, investors and subject-matter experts; and
- oversight and approval from the independent SASB Standards Board.
Global investors recognize SASB Standards as essential requirements for companies seeking to make consistent and comparable sustainability disclosures.
As of August 2022, the International Sustainability Standards Board (ISSB) of the IFRS Foundation assumed responsibility for the SASB Standards. The ISSB has committed to maintaining, enhancing and evolving the SASB Standards. And encourages preparers and investors to continue to use the SASB Standards.
The SASB Standards play an important role in the first two IFRS Sustainability Disclosure Standards, IFRS S1 General Requirements for Sustainability-related Disclosures and IFRS S2 Climate-related Disclosures. Learn more about how the SASB Standards support the application of IFRS Sustainability Disclosure Standards.
Why Sustainability Accounting Standards Board Matters
Sustainability reporting has become increasingly important in recent years. Traditional financial reporting alone is insufficient to capture the complete picture of a company’s value. Environmental, social, and governance (ESG) factors are now recognized as critical indicators of a company’s financial performance and risk profile.
By incorporating ESG factors into financial reporting, companies can provide stakeholders with a more comprehensive understanding of their sustainability practices, risks, and opportunities. This information allows investors to evaluate a company’s long-term viability, adaptability to changing market conditions. And potential exposure to ESG-related risks.
The Role of the Sustainability Accounting Standards Board SASB
SASB plays a crucial role in advancing sustainability reporting by developing industry-specific standards. These standards are designed to identify the sustainability topics that are most likely to have a material impact on a company’s financial condition and performance within specific industries.
SASB standards cover a wide range of industries, including but not limited to energy, transportation, healthcare, financials, and technology. Each industry-specific standard includes a set of disclosure topics and associated metrics, providing companies with clear guidance on what information to report.
SASB Standards Criteria
(SASB) criteria encompass a comprehensive framework for evaluating and reporting on sustainability factors across various industries. Here’s a breakdown of the criteria based on SASB’s categories:
Sustainability Accounting Standards Board Environmental Criteria:
1. GHG Emissions: Measures direct greenhouse gas emissions, including sources like combustion and non-combustion activities, and evaluates management of regulatory and reputational risks.
2. Air Quality: Focuses on managing air quality impacts from stationary and mobile sources, including pollutants like NOx, SOx, VOCs, heavy metals, and particulate matter.
3. Energy Management: Addresses energy consumption, efficiency, mix, and grid reliance, encompassing both manufacturing and grid energy use.
4. Water & Wastewater Management: Evaluates water use, consumption, and wastewater generation, as well as strategies for water efficiency, recycling, and wastewater treatment.
5. Waste & Hazardous Materials Management: Covers management of hazardous and non-hazardous waste generated by operations, including treatment, disposal, and regulatory compliance.
6. Ecological Impacts: Focuses on managing impacts on ecosystems and biodiversity, such as habitat destruction and deforestation, throughout the project lifecycle.
Sustainability Accounting Standards Board Social Capital Criteria:
1. Human Rights & Community Relations: Addresses the management of direct and indirect impacts on core human rights and treatment of indigenous peoples, including socio-economic community impacts and environmental justice.
2. Customer Privacy: Evaluates risks related to the use of customer data for secondary purposes and management of evolving regulations, focusing on data collection, consent, and regulation compliance.
3. Data Security: Covers risks related to sensitive data collection, retention, and use, including incidents such as data breaches and measures to ensure data security and regulatory compliance.
4. Access & Affordability: Focuses on ensuring broad access to products and services, especially in underserved markets or populations, including issues related to healthcare, financial services, and utilities.
5. Product Quality & Safety: Addresses health and safety risks from unintended product characteristics, including liability management, product testing, and chemical management.
6. Customer Welfare: Evaluates issues concerning the health, safety, and welfare of consumers, such as health and nutrition, antibiotic use, and prevention of counterfeit products.
7. Selling Practices & Product Labeling: Focuses on transparency, accuracy, and comprehensibility of marketing statements, advertising, and product labelling, including issues like misleading labelling and deceptive selling practices.
Sustainability Accounting Standards Board Human Capital Criteria:
1. Labour Practices: Addresses compliance with labour laws and standards, including child labour, forced labour, fair wages, and freedom of association.
2. Employee Health & Safety: Focuses on creating and maintaining a safe and healthy workplace environment, including safety management, training, and monitoring.
3. Employee Engagement, Diversity & Inclusion: Evaluates efforts to build a diverse and inclusive workforce, including hiring and promotion practices and management of discrimination.
Sustainability Accounting Standards Board Business Model and Innovation Criteria:
1. Product Design & Lifecycle Management: Incorporates ESG considerations into product characteristics and lifecycle impacts, including packaging, distribution, and end-of-life management.
2. Business Model Resilience: Addresses the capacity to manage risks and opportunities associated with social, environmental, and political transitions into long-term business planning.
3. Supply Chain Management: Covers management of ESG risks within the supply chain, including environmental responsibility, human rights, and ethics and corruption.
4. Materials Sourcing & Efficiency: Focuses on the resilience of materials supply chains to external environmental and social factors and strategies for resource efficiency.
5. Physical Impacts of Climate Change: Addresses the management of risks and opportunities associated with direct exposure to physical impacts of climate change, including adaptation measures and incorporation of climate considerations into business activities.
Sustainability Accounting Standards Board Leadership and Governance Criteria:
1. Business Ethics: Covers the management of ethical conduct in business, including fraud, corruption, and fiduciary responsibilities.
2. Competitive Behaviour: Addresses management of legal and social expectations around monopolistic and anti-competitive practices.
3. Management of the Legal & Regulatory Environment: Evaluates engagement with regulators and compliance with relevant regulations.
4. Critical Incident Risk Management: Focuses on identifying, understanding, and preventing or minimizing low-probability, high-impact accidents and emergencies.
5. Systemic Risk Management: Addresses contributions to or management of systemic risks resulting from large-scale weakening or collapse of systems upon which the economy and society depend.
These criteria provide a robust framework for companies to evaluate and report on their sustainability performance, helping investors and stakeholders make informed decisions about environmental, social, and governance factors.
SASB Standards Levels
(SASB) standards are organized into different levels to provide guidance tailored to specific industries and sectors. These levels help companies report on financially material sustainability factors relevant to their operations. Here are the standard levels of SASB:
1. Industry Standards: SASB has developed industry-specific standards for various sectors, covering topics such as environmental, social, and governance (ESG) factors that are material to each industry. These standards provide a comprehensive framework for reporting sustainability information relevant to a particular sector.
2. Disclosure Topics: Within each industry standard, SASB identifies specific disclosure topics that companies should consider when reporting on their sustainability performance. These topics represent key areas of focus for investors and stakeholders interested in understanding the sustainability risks and opportunities facing companies in a particular industry.
3. Accounting Metrics: For each disclosure topic, SASB provides accounting metrics that companies can use to measure and report on their performance. These metrics are designed to be quantitative and comparable, allowing investors to assess companies’ sustainability performance over time and across different industry peers.
4. Implementation Guidance: SASB also offers implementation guidance to help companies effectively use the standards to report on their sustainability performance. This guidance includes explanations of key concepts, examples of best practices, and recommendations for integrating sustainability reporting into existing financial reporting processes.
By providing industry-specific standards with detailed disclosure topics, accounting metrics. And implementation guidance, SASB aims to promote consistency, comparability, and transparency in corporate sustainability reporting. This helps investors and stakeholders make more informed decisions about the environmental, social, and governance risks. And opportunities associated with their investments.
Different SASB Standards
There are two different standards: Codification Standards and Provisional Standards used for the following categories
Consumer Goods Industries:
Apparel, Accessories & Footwear • Appliance Manufacturing • Building Products & Furnishings • E-Commerce • Household & Personal Products • Multiline and Specialty Retailers & Distributors • Toys & Sporting Goods
Extractives & Minerals Processing Industries:
Coal Operations • Construction Materials • Iron & Steel Producers • Metals & Mining • Oil & Gas – Exploration & Production • Oil & Gas – Midstream • Oil & Gas – Refining & Marketing • Oil & Gas – Services
Financials Industries:
Asset Management & Custody Activities • Commercial Banks • Consumer Finance • Insurance • Investment Banking & Brokerage • Mortgage Finance • Security & Commodity Exchanges
Food & Beverages Industries:
Agricultural Products • Alcoholic Beverages • Food Retailers & Distributors • Meat, Poultry & Dairy • Non-Alcoholic Beverages • Processed Foods • Restaurants • Tobacco
Health care Industries:
Biotechnology & Pharmaceuticals • Drug Retailers • Health Care Delivery • Health Care Distributors • Managed Care • Medical Equipment & Supplies
Infrastructure industries:
Electric Utilities & Power Generators • Engineering & Construction Services • Gas Utilities & Distributors • Home Builders • Real Estate • Real Estate Services • Waste Management • Water Utilities & Services
Renewable Resourcing & Alternative Energy industries:
Biofuels • Forestry Management • Fuel Cells & Industrial Batteries • Pulp & Paper Products • Solar Technology & Project Developers • Wind Technology & Project Developers
Resource Transformation Industries:
Aerospace & Defense • Chemicals • Containers & Packaging • Electrical & Electronic Equipment • Industrial Machinery & Goods
Services Industries:
Aerospace & Defense • Chemicals • Containers & Packaging • Electrical & Electronic Equipment • Industrial Machinery & Goods
Technology and Communications Industries:
Electronic Manufacturing Services & Original Design Manufacturing • Hardware • Internet Media & Services • Semiconductors • Software & IT Services • Telecommunication Services
Transportation Industries:
Air Freight & Logistics • Airlines • Auto Parts • Automobiles • Car Rental & Leasing • Cruise Lines • Marine Transportation • Rail Transportation • Road Transportation
SASB Standards Registration and Reporting Procedure
The Sustainability Accounting Standards Board (SASB) provides a framework for companies to disclose financially material sustainability information to investors. However, SASB does not have a registration or rating system akin to certification programs like LEED or ISO. Instead, SASB standards are guidelines that companies voluntarily adopt to report on ESG factors. Here’s an overview of how companies can engage with SASB standards and how their ESG disclosures might be evaluated:
1. Adoption of SASB Standards:
- Voluntary Adoption: Companies can voluntarily adopt SASB standards to improve their ESG disclosures. There’s no formal registration process with SASB; instead, companies choose to use the standards to align their reporting with investor expectations.
- Integration into Reporting: Companies integrate SASB standards into their existing financial or sustainability reports, typically in the form of a SASB index that maps specific disclosures to SASB standards.
- If you need assistance with the registration process, please contact us.
2. Reporting Process:
- Materiality Assessment: Companies assess which SASB standards are most material to their industry and specific operations. Materiality is determined by the potential financial impact of ESG issues on the company’s performance.
- Data Collection and Disclosure: Companies collect data according to the industry-specific SASB standards and disclose this information in their reports. The disclosure includes specific accounting metrics and activity metrics as outlined by SASB.
3. Third-Party Assurance (Optional):
- Some companies may seek third-party assurance to verify the accuracy and completeness of their ESG disclosures in accordance with SASB standards. This is not a requirement by SASB but can enhance the credibility of the reported data.
4. Investor Evaluation:
- ESG Ratings: While SASB itself does not rate companies, third-party ESG rating agencies, such as MSCI, Sustainalytics, and others, often use SASB disclosures as part of their evaluation criteria. These agencies assess companies based on the quality and transparency of their ESG disclosures, including those aligned with SASB standards.
- Investor Scrutiny: Investors and asset managers use SASB-aligned disclosures to assess a company’s ESG performance and its potential financial risks and opportunities. Companies with robust SASB-aligned reporting may be viewed more favorably by investors.
5. Continuous Improvement:
- Updating Disclosures: Companies are encouraged to regularly update their ESG disclosures to reflect any changes in their operations, industry trends, or new SASB standards. This continuous improvement ensures that the disclosures remain relevant and useful for investors.
- Engagement with SASB: Companies can engage with SASB through public consultations, providing feedback on standards, and participating in industry working groups to help shape the evolution of the standards.
Summary:
- No Formal Registration: Companies do not “register” with SASB. They voluntarily adopt the standards and integrate them into their reporting practices.
- No Direct Rating: SASB does not rate companies. Instead, third-party agencies and investors use SASB-aligned disclosures to evaluate a company’s ESG performance.
- Focus on Materiality: The primary focus is on materiality, ensuring that companies disclose ESG information that is financially relevant to their specific industry.
In essence, SASB provides a framework for transparency and accountability in ESG reporting, which is then utilized by investors and rating agencies to evaluate a company’s sustainability performance.
Professional Credentials
(SASB) offers a number of professional credentials for professionals who work in the field of sustainability accounting. These credentials are designed to help professionals demonstrate their expertise in sustainability accounting and to advance their careers.
The Sustainability Accounting Standards Board professional credentials include:
- Fundamentals of Sustainability Accounting (FSA) Credential: The FSA Credential is a two-part exam that tests professionals’ knowledge of the materiality of sustainability information for corporate performance and investment analysis.
- Sustainability Accounting Professional (SAP) Credential: The SAP Credential is a three-part exam that tests professionals’ knowledge of sustainability accounting, sustainability reporting, and sustainability risk management.
- Sustainability Accounting Fellow (SAF) Credential: The SAF Credential is a four-part exam that tests professionals’ knowledge of sustainability accounting, sustainability reporting, sustainability risk management, and sustainability strategy.
To be eligible to take the SASB professional exams, professionals must have a bachelor’s degree or equivalent experience in a related field. Professionals who pass the exams are awarded a digital badge that they can use to demonstrate their expertise in sustainability accounting.
The SASB professional credentials are recognized by a number of organizations, including the Global Reporting Initiative (GRI). The International Integrated Reporting Council (IIRC), and the Sustainability Accounting Standards Board (SASB). These credentials can help professionals advance their careers in the field of sustainability accounting.
Benefits of Sustainability Accounting Standards Board Professional Credentials
There are some benefits to earning a SASB professional credential. These benefits include:
- Increased job opportunities: SASB professional credentials can help professionals increase their job opportunities in the field of sustainability accounting.
- Higher salaries: SASB professional credentials can help professionals earn higher salaries in the field of sustainability accounting.
- Enhanced reputation: SASB professional credentials can help professionals enhance their reputation with employers, clients, and other stakeholders.
Key Features
The key features of Sustainability Accounting Standards Board standards include:
1. Industry-Specific Focus:
SASB standards are tailored to specific industries, providing guidance on the most financially material sustainability factors relevant to each sector. This industry-specific approach ensures that disclosure requirements are relevant, comparable, and actionable for companies within the same industry.
2. Materiality-Based Approach:
SASB standards focus on disclosing sustainability issues that are financially material to a company and its stakeholders. Materiality assessments are based on the potential impact of sustainability factors on a company’s financial performance, risk profile, and long-term value creation.
3. Disclosure Guidance:
SASB standards provide clear and concise guidance on the disclosure of sustainability-related information, including key performance indicators (KPIs), metrics, and relevant contextual information. This guidance helps companies communicate effectively with investors, analysts, and other stakeholders.
4. Integrated Reporting:
SASB standards promote the integration of sustainability information into mainstream financial reporting processes, facilitating a more comprehensive understanding of a company’s performance, risks, and opportunities. Integrated reporting enables investors to make more informed investment decisions and encourages companies to adopt sustainable business practices.
5. Consistency and Comparability:
SASB standards promote consistency and comparability in sustainability reporting by providing standardized metrics and disclosure requirements for companies within the same industry. This allows investors to benchmark companies’ performance against industry peers and assess their relative sustainability performance.
6. Stakeholder Engagement:
SASB standards are developed through a transparent and collaborative process that involves input from a wide range of stakeholders, including investors, companies, industry experts, and regulators. Stakeholder engagement ensures that the standards reflect current best practices, market trends, and emerging issues.
7. Continuous Improvement:
SASB standards are subject to ongoing review and refinement to ensure their relevance and effectiveness in addressing evolving sustainability challenges and stakeholder needs. Continuous improvement efforts involve periodic updates, stakeholder consultations, and incorporation of feedback from users of the standards.
Overall, SASB standards provide a comprehensive framework for companies to disclose material sustainability information that is decision-useful for investors and other stakeholders, ultimately contributing to more transparent and accountable corporate reporting practices.
Pros and Cons of Implementation
The Sustainability Accounting Standards Board (SASB) is a non-profit organization that develops sustainability accounting standards for public companies. The SASB standards are designed to help companies disclose their environmental, social, and governance (ESG) performance in a consistent and comparable way.
There are a number of pros and cons to implementing the SASB standards.
Sustainability Accounting Standards Board Pros
- Increased transparency: SASB standards provide a consistent and comparable framework for companies to disclose their ESG performance. This increased transparency can help investors, customers, and other stakeholders to make better decisions about where to invest their money and do business.
- Improved risk management: SASB standards can help companies to identify and manage ESG risks. By disclosing their ESG performance, companies can better understand their exposure to ESG risks and take steps to mitigate those risks.
- Enhanced reputation: SASB standards can help companies to enhance their reputation with investors, customers, and other stakeholders. By demonstrating a commitment to ESG performance, companies can attract more customers, investors, and employees.
Sustainability Accounting Standards Board Cons
- Cost: Implementing the SASB standards can be costly, as companies need to collect and report on a wide range of ESG data.
- Time commitment: Implementing the SASB standards can be time-consuming, as companies need to develop new systems and processes to collect and report on ESG data.
- Complexity: The SASB standards are complex, and companies may need to hire consultants to help them implement the standards.
Overall, the pros of implementing the SASB standards outweigh the cons. However, companies should carefully consider the costs and time commitment involved before deciding to implement the standards.
