ESG Reporting and the Sustainability Accounting Standards Board (SASB)

The Sustainability Accounting Standards Board (SASB) provides standardized metrics for sustainability reporting, ensuring consistency and comparability. By focusing on materiality, SASB standards link sustainability information directly to financial performance, enhancing its relevance for investors. This standardization promotes corporate transparency and accountability, encouraging companies to disclose their environmental, social, and governance (ESG) impacts. Furthermore, SASB aligns sustainability reporting with traditional financial reporting, offering a holistic view of a company's overall health and long-term sustainability.

The need for SASB arises from growing investor demand for reliable ESG information to assess risks and opportunities. Companies using SASB standards can better manage sustainability-related risks, leading to more resilient business models. Standardized metrics facilitate benchmarking and comparability, essential for informed investment decisions and encouraging best practices. Additionally, SASB helps companies comply with increasingly stringent global ESG disclosure regulations, streamlining reporting processes. By driving transparent reporting on sustainability issues, SASB contributes to broader global efforts toward sustainable development.

In this article, we'll get more detailed about the SASB standards and how Discloser uses advanced, generative AI to help with your reporting needs.

The history of the Sustainability Accounting Standards Board (SASB)

• The Sustainability Accounting Standards Board was formed in 2011 as a non-profit organization to help provide comparable standards for investors to evaluate financial risk and opportunities as a result of the financial impacts of sustainability in various industries. 
• In June 2021, the International Integrated Reporting Council (IIRC) and SASB merged into the Value Reporting Foundation (VRF). 
• On January 31, 2022, the Climate Disclosure Standards Board (CDSB) was consolidated into the International Financial Reporting Standards (IFRS) Foundation.
• The VRF officially consolidated into the IFRS Foundation on August 1, 2022. 
• Since August 2022, the International Sustainability Standards Board (ISSB) of the IFRS Foundation has assumed responsibility for the SASB Standards. 

SASB Standards

The SASB Standards can be used to identify sustainability-related risks and opportunities for seventy-seven industries and are downloadable from their website. The SASB Standards vary depending on the industry to offer a more precise and in-depth view of a company’s sustainability. They are also applicable worldwide to provide a comparable and dependable set of standards for decision-making amongst investors. 

• They include approximately six disclosure topics per industry. 
• Each SASB Standard provides about thirteen quantitative and qualitative metrics for each topic.
• Each metric has a set of technical protocols to ensure accurate reporting. 
• Each SASB Standard incorporates activity metrics, designed to measure the extent of particular activities or operations within a company. These metrics are meant to be used alongside normalization and comparison metrics, enhancing data normalization and facilitating comparisons necessary for analyzing associated disclosures.

The SASB Standards were developed through a transparent standard-setting procedure, incorporating evidence-backed research that was compiled by the SASB Standards Board from external sources, and involving active engagement from corporations, investors, and subject matter specialists. Oversight and endorsement from the SASB Standards Board ensure credibility. These standards offer organizations valuable guidance in disclosing sustainability factors that influence their overall sustainability worth as an enterprise.

What are the SASB Sustainability Dimensions?

The SASB crafted its standards based on five core sustainability dimensions and twenty-four subdimensions. These dimensions cover a wide range of ESG factors, which can be customized for different industries to address the most significant issues. The five core dimensions encompass:

Environment - This dimension focuses on the environmental aspects of sustainability, such as climate change, resource depletion, pollution, and ecosystem health. It includes metrics related to greenhouse gas emissions, water usage, waste management, and biodiversity conservation.

Social capital - The social dimension addresses the social impacts and responsibilities of businesses, including labor practices, human rights, community relations, and product safety. It encompasses issues such as employee diversity and inclusion, labor rights, supply chain management, and community engagement.

Leadership and governance - Governance refers to the systems and processes by which companies are directed and controlled. This dimension covers aspects such as corporate governance structure, board composition, executive compensation, risk management, and transparency in financial reporting.

Business model and innovation - The economic dimension evaluates the financial performance and resilience of companies within the context of sustainability. It includes metrics related to financial stability, access to capital, innovation, value chain management, and economic value creation for stakeholders.

Human capital - Focused on the workforce, this dimension explores matters pertaining to employee welfare, productivity, and overall job contentment. This may span from health and safety measures, labor standards, and employee perks to diversity, equity, and inclusion initiatives.

SASB and materiality

SASB focuses on financial materiality specifically. Financial materiality is concerned with the financial aspects of reporting and accounting. It involves assessing the impact and reasons for excluding something from a report and determining its impact on the financial status of a company as a whole. It is becoming a necessary aspect of preparing ESG reports and submissions. SASB recognizes that not all sustainability topics apply to every industry. By concentrating on financial materiality, SASB aims to ensure companies disclose what they can in order to focus on their sustainability and financial risk profile.

The SASB provides a Materiality Finder tool enabling companies to identify industry-relevant topics pertinent to their industry, by logging into the SASB database and using their filters. This facilitates comparing and analyzing feasible short- and long-term actions across various topics.

The Materiality Finder has been said to be easier to use by the SASB than the traditional Materiality Map, which displays the dimensions and their subcategories across different industries. 

Why should companies use SASB Standards?

In addition to the SASB Standards benefitting investors, they also benefit the company because they showcase their sustainability efforts across their industry, to their peers and stakeholders. As with other reporting frameworks, it empowers organizations to avoid greenwashing and gain a competitive advantage in the sustainability sphere of their market. 

The SASB Standards are also aligned with the Task Force on Climate-Related Financial Disclosures (TCFD) and the Global Reporting Initiative (GRI). This enables companies to disclose thoroughly to various stakeholders what is most important to their organization or sustainability concerns within their market. 

Discloser is compliant with all ESG reporting frameworks so no matter where you do business, the platform will use AI to tailor your reports to any frameworks necessary, including customizable ones that are company-compliant. It also allows for entire teams to contribute, adding in the correct information to build your report, cutting time and energy that would have been needed in the past. This ensures that organizations can submit reports with confidence knowing that they have been formed to SASB Standards or any others you have chosen. 

The SASB’s relation to the ISSB’s IFRS Sustainability Disclosure Standards

An additional set of standards under the ISSB’s umbrella, the IFRS Sustainability Disclosure Standards, has a foundation set in the SASB Standards. According to the IFRS, “The SASB Standards help companies identify and disclose material information about sustainability-related risks and opportunities in the absence of specific IFRS Sustainability Disclosure Standards.”

In IFRS S1, businesses will need to consult and take into account the SASB Standards to identify pertinent sustainability-related risks and opportunities for reporting purposes, as well as to choose appropriate disclosures related to those risks and opportunities.

IFRS S2, tailored to address climate-related concerns, presents industry-specific disclosure mandates along with guidance for meeting these obligations. This material draws upon and harmonizes with the climate-related content outlined in the SASB Standards.

Get help from Discloser 

Discloser ESG reporting software leverages generative AI to streamline and enhance the reporting process, significantly reducing the time and effort required by traditional methods. The platform is designed to align with various frameworks, ensuring compliance with both government and corporate standards. It stands as the fastest and most accurate reporting tool available for the SASB framework. Try it for free to experience its ease and reliability.