Understanding the SASB standards
What is SASB?
The Sustainability Accounting Standards Board, or SASB as it is more commonly referred to, was launched in October of 2012. It is an independent ASNI (American National Standards Institute) accredited organisation that develops sustainability accounting standards for publicly-listed US companies. SASB’s aim is to develop and publish accounting standards for material sustainability issues. These standards are industry specific, with the aim of integrating them into accounting standards.
When should the standards be used?
SASB standards can be used by any global company looking to report on material, environmental, social and governance issues. They can also be used by organisations in the US in their statutory filings to comply with SEC’s Regulation S-K to disclose material information in form 10-K and 20-F filings.
These standards are intended to make it easier for organisations to provide investors with high-quality information and can be used to understand the sustainability factors that are most likely to add value to a business. SASB hopes that improved transparency will raise investor’s awareness of non-financial risks and will result in behaviour change to transpose these risks.
How have the standards been developed?
SASB has used several principles to guide the development of its standards; incorporating views from companies and investors as well as stakeholders. All standards issued by SASB meet a minimum set of criteria:
- They need to be relevant, useful and applicable while being cost effective and comparable.
- The metrics provide enough information to understand and interpret performance associated with the disclosure topic.
- They are directional and provide clarity about whether an increase/decrease in the numerical value signals changed performance.
- They are verifiable and can be easily quantified and verified.
SASB standards are sector specific and currently there are standards for 27 industries across 4 sectors. Continuing on into 2016, SASB is developing sustainability accounting standards that will total standards for more than 80 industries in 10 sectors.
The benefits of SASB
SASB standards do not represent additional reporting, instead they focus on material information that is already mandated. The standards integrate sustainability reporting with financial reporting and give companies the tools to identify sustainability areas that are relevant to them and that they can report on.
These standards are applicable to all investors and the standards provide a model for reporting that is useful to investors when decision making. To investors, SASB offers free comparable sustainability data that is suitable for benchmarking and evaluating sustainability performance which helps them to make more informed decisions.
SASB standards are useful for any organisations who want to report on sustainability in an integrated manner. They are actionable and designed to bring benefits that exceed the perceived costs. Some of the benefits that have emerged from the SASB standards are that investors will have a well-rounded view of a company’s financial and non-financial risks and opportunities.
For more information on the SASB standards visit the website here.