What are the SASB Standards, and how do they measure ESG performance? Here’s what you need to know about the Sustainability Accounting Standards Board (SASB).
Written by Rio ESG
Founded in 2011, the Sustainability Accounting Standards Board (SASB) sets standards that establish, guide, and improve the disclosure of financially material sustainability information by companies to their investors.
The independent nonprofit organisation’s SASB Standards identify the environmental, social, and governance (ESG) issues most relevant to financial performance in 77 different industries for clear, useful ESG reporting.
The board also offers education and resources that promote the understanding and application of its standards, with the overarching goal of aiding companies and investors in making informed sustainability decisions that drive long-term value creation and better outcomes for businesses and their shareholders, the economy, and society as whole.
What are the SASB Standards?
The 77 SASB Industry Standards cover a wide range of topics and are divided into what the organisation calls five broad “sustainability dimensions”:
- Environment: Addresses the environmental impact of a company, either through the use of nonrenewable, natural resources or through harmful releases into the environment.
- Social Capital: Relates to how a business will contribute to society and maintain relationships with key outside parties like customers, local communities, the public, and the government.
- Human Capital: Addresses the management of a company’s human resources (e.g., employees and individual contractors).
- Business Model and Innovation: Includes the integration of environmental, human, and social issues into a company’s value-creation process.
- Leadership and Governance: Involves the management of issues inherent to the business model or common practice in the industry and that are in potential conflict with the interest of broader stakeholder groups (e.g., regulatory compliance, risk management, safety management, supply-chain and materials sourcing, and corruption.)
These five dimensions are then broken down further into 26 general issue categories. For example, Environment includes general issue categories such as greenhouse gas emissions, air quality, and energy management, while Human Capital includes labor practices, employee health and safety, and employee diversity and inclusion.
There are unique, specific SASB Standards for 77 industries across 11 sectors. You can find your industry classification and download the standards on the SASB website.
What is the SASB Materiality Map?
The SASB Materiality Map is an interactive tool that visually shows companies in various industries the sustainability issues that are most likely to affect their financial condition or operating performance. For example, one general issue category under the Environment dimension is Waste & Hazardous Materials Management, which is more likely to affect a mining company than a bank.
This allows organisations to identify the specific ESG issues that will be most important for them to focus on, as well as understand the metrics that underpin each disclosure topic — both to make operations more sustainable and keep shareholders’ desires in mind.
Investors can utilise the Materiality Map as well, which can help them analyse portfolio exposure to specific sustainability risks and opportunities represented by each issue.
Who uses SASB for ESG reporting?
In 2020, 557 companies disclosed SASB metrics and 1,138 companies mentioned SASB in public company communications — an all-time high. Since 2019, the total number of unique SASB reporting companies has grown to 616; the majority of which are in the United States (55%).
Notable companies that use SASB include Adobe, Gap, Bloomberg, Apple, Delta Air Lines, Mastercard, Barclays, Xerox, Toshiba, and many more. View the full list of SASB reporting companies to see what type of SASB documentation they use to disclose.
Meanwhile, investor support of SASB takes various forms, including the Investor Advisory Group, the SASB Alliance, and licensing. In fact, 207 institutional investors — representing $63 trillion in assets under management (AUM) and 22 countries — support SASB and/or use SASB Standards to inform their investment decision-making.
SASB vs. GRI comparison
SASB and Global Reporting Initiative (GRI) are two of the most widely used reporting frameworks, and they’re both helpful in different ways.
The GRI framework is a set of standards for responsible environmental, social, economic, and governance conduct covering a wide range of topics. 73% of the world’s 250 largest companies report on sustainability using the GRI framework. It’s also used by governments, NGOs, and industry groups, and its rigorous stakeholder approach to reporting and transparency has contributed to its widespread adoption.
Where SASB Standards focus more heavily on the impact of sustainability on the company itself (i.e., financial and operations impact), GRI focuses more on the external impact the business has on the world. This means that SASB is usually desirable for investors, while GRI is more relevant for consumers and the general public.
However, the two frameworks are not in competition. As part of last September’s “Statement of Intent to Work Together Towards Comprehensive Corporate Reporting,” GRI and SASB — in collaboration with CDP, CDSB, and IIRC — are working on an initiative to create a new ESG reporting system that consolidates frameworks, streamlines reporting, and makes sustainability disclosure the norm of corporate reporting.
Can software help with SASB reporting?
The right software can play a crucial role in SASB reporting, as it allows you to get a deep look into your current sustainability practices, and manage the ESG issues that matter most to you. Some software can even offer intelligent, expert recommendations based on industry standards, company goals and investor needs.
Rio, for example, is an intelligent, accessible sustainability and ESG software platform that helps businesses and individuals become more sustainable through data analysis, learning, and governance.
As a central hub for your sustainability data, Rio allows you to track financial, compliance, and governance information at the transaction level, then develop and implement your standards, and manage your progress as you achieve your sustainability goals.
Need help deciding which frameworks are right for your organisation?