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A Guide to The Sustainability Accounting Standard Board (SASB)

Dec 16, 2021 | by Yosy Christy Natalia

Dec 16, 2021 | by

ESG evaluation framework series: A guide to SASB

With a growing number of socially-aware customers, businesses want to leave no stone unturned to highlight their sustainable vision. It is not just about exhibiting effort toward social responsibility and sustainability but committing to the cause in a true sense. Impact investors across the globe, therefore, want to be doubly sure of aligning only with corporates that live by the motto of people and planet, besides profitability. This is how ESG evaluation criteria come into the picture. It tests the waters and assesses an entity’s worthiness and credibility against impact parameters.

Previously, we talked at length about a host of sustainability reporting and impact evaluation frameworks such as the CDP, GIIN IRIS, GRI among others. This series is a baby step towards our vision of equipping our audience with a robust and well-rounded knowledge of ESG and sustainability evaluation frameworks. This blog is dedicated to The Sustainability Accounting Standard Board (SASB).  

Understanding SASB

The Sustainability Accounting Standard Board offers ESG standards specific to 77 industries. These are primarily focused on the financial aspects of sustainability and identify ESG issues that are most relevant to the financial performance of a corporate entity. The standards essentially help in mapping how an organization’s sustainable efforts impact its enterprise value. As mentioned on its website, the primary aim of SASB standards is to “help businesses around the world identify, manage and report on the sustainability topics that matter most to their investors.”

SASB standards are industry-specific and eliminate the pitfalls of the ‘one size fits all’ approach. These globally-recognized standards help companies identify and manage financial-material sustainability information and communicate the same to investors and stakeholders.  

Simply put, SASB standards are designed to focus on some of the most financially material topics for each of the 77 industries – “issues that are reasonably likely to impact the financial condition or operating performance of a company and therefore are most important to investors.”

How it works

The SASB standards were published in 2018 and are widely used and globally applicable. With SASB standards, a company gets industry-specific financially material sustainability topics and associated metrics.

Companies that use SASB standards are required to highlight specific disclosures and are provided with guidance on how to communicate those Environmental, Social, and Governance topics through standardized formatting in the best possible manner. SASB’s role is to provide companies with the knowledge on what needs to be disclosed, how and ways to communicate the ESG-related information with stakeholders. 

SASB Materiality Map is a graphic and interactive tool that is easy to navigate. Users can sift through the complete set of 77 industry standards on the materiality map and find the standards that are best suited to their business. The materiality map provides examples and guidance on best practices on reporting different ESG-related metrics. 

The benefits

  • What sets SASB standards apart is their focus on financial materiality. It pulls together industries and sectors and provides sustainability criteria specific to each industry, this assessment of materiality is the differentiating factor of these standards from other reporting frameworks.
  • The standards are flexible, in a way that they provide guidance, examples and recommendations to companies while letting them decide on ways to share data points that suit their purpose. Usually, companies choose from a range of other financial reporting systems such as annual reports, registration documents, among others.
  • SABS standards are crucial for the financial aspect of sustainability reporting. It is an imperative tool for companies to identify what is financially material out of a large pool of data around sustainability. It helps businesses improve their economic decisions and pivot their sustainability mission accordingly.  

The pitfalls

  • In a way, what sets these standards apart from other reporting frameworks is also something that arises as one of its limitations. The standards specifically look at ways to analyze the correlation between ESG issues and an organization’s financial performance. Therefore, SASB should be seen more as a complementary addition to other ESG frameworks.
  • SASB’s framework is built to help companies share their outward ESG impacts in a language that is more relevant to their financial stakeholders such as investors and debt holders.  
  • These standards are more focused on the financial aspects, therefore, oftentimes, there is a need to work it in combination with other frameworks. 
  • Other frameworks, such as the Global Reporting Initiative (GRI), could be similar to SASB but have a broader purview and supply material information for reporting to a variety of stakeholders and not just the financial ones.  

Our take

SABS standards are imperative and integral for assessing the financial aspect of sustainability reporting. These are ingeniously designed to cull out irrelevant information of a company’s sustainability data and help in focusing on what is financially material. 

We can comfortably say that SASB standards were founded to meet a specific set of requirements for corporates, businesses, and impact investors and if your requirement is something more than what standards offer, there are plenty of other globally acknowledged and credible frameworks that work well with SASB, some of which we have already talked about in rest of our explainers.

Read also:

ESG evaluation framework series: A Guide to Carbon Disclosure Project (CDP)

Artemis Impact is a network of corporate, donors &  non-profits. With our corporate enterprise solution, we aim to empower companies to build human-centered impact stories and create sustainable impact with their CSR programs & core business.

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