What is SASB reporting and why should you care?

In August 2022, SASB became part of the International Sustainability Standards Board (ISSB), which now oversees refining the SASB Standards. SASB Standards will eventually transition into the latest IFRS Sustainability Disclosure Standards, which will be the new global baseline of sustainability-related disclosure standards. However, in the meantime, SASB Standards remain valuable for companies as they inform the development of IFRS Sustainability Disclosure Standards. Adopting SASB Standards now will be better prepared for future IFRS reporting requirements.

Why should you use SASB Standards?

The 77 industry-based SASB Standards provide comparable information to investors and are cost-efficient for companies, as evidenced by their use in over 3,100 companies in more than 80 jurisdictions around the world, including 75% of the S&P Global 1200 Index.

They help companies measure, manage and report on the issues that matter most to their business and stakeholders. These standards are built upon extensive research, stakeholder engagement, and market input. They help companies transparently communicate their ESG performance consistently and comparably, identifying and addressing risks and opportunities affecting long-term value creation.?

• Meet investor needs:

Investors need access to comparable and standardized data they can use to inform their decisions. SASB Standards help address this need as they are industry-based, metric-driven and focused on the risks and opportunities most likely to affect cash flows, access to finance and cost of capital in a specific industry.

• Connection with other frameworks:

Before the International Sustainability Standards Board (ISSB) was established, investors increasingly adopted a combination of TCFD recommendations and SASB Standards as key tools for effective climate- and sustainability-related financial disclosures. SASB can also be used alongside GRI for comprehensive reporting beyond SASB’s financial materiality. Additionally, SASB has mapped its standards to the UN SDGs and works with the IFRS Foundation on creating a global sustainability reporting baseline.?

• Efficiency in reporting:

By focusing on defined material topics, companies can simplify their sustainability reporting process, avoiding over-reporting or delivering data that might not be of the most interest to stakeholders. On average, each standard has 6 disclosure topics and 13 metrics.

• Support IFRS/ISSB implementation:

The ISSB has confirmed that its standards will require industry-specific disclosures. In the absence of specific IFRS Sustainability Disclosure Standards, companies can refer to the SASB Standards to identify sustainability-related risks, opportunities and related metrics. Organizations using SASB Standards will be well-positioned to apply IFRS Sustainability Disclosure Standards.

Understanding SASB Standards:

The SASB Standards group sustainability topics into five “sustainability dimensions”: the environment, human capital, social capital, business model and innovation, and leadership and governance. The specific activities that drive long-term value creation will necessarily vary from one industry to the next, as well as from company to company. As a result, identifying what a given corporation should disclose requires thoughtful consideration of key issues within the context of the organisation’s unique circumstances. The SASB Standards are intended to be a useful guide to this process.?

Practical guides to use SASB Standards:

1. ? ? Determine which industry standards apply:

To determine which SASB Standard (or standards) apply to a company’s operations, it is helpful to explore the Sustainable Industry Classification System (SICS). The Materiality Finder is also a useful tool for identifying relevant industry standards. The Materiality Finder offers companies a fast way to browse industry descriptions and disclosure topics. It also allows companies to review and compare disclosure topics from various industries side by side. This tool could be particularly useful for companies that operate in multiple industries. We’ve integrated the SICS into etOso’s Report Module. Simply choose your industry from the list and you’ll get a customised reporting template to kickstart your reporting journey.?

2. ? ? Determine which disclosure topics are applicable:

The next step is to review the SASB disclosure topics for each industry and identify which disclosure topics apply to your company. Note that because the SASB Standards are designed to address sustainability factors that apply to the typical company within an industry, in some cases they may:

• Include topics that, for certain companies, may not be applicable; and/or
• Not necessarily include every sustainability factor that applies to the company.

Each company is responsible for determining which disclosure topics represent sustainability-related risks and opportunities for its business and which associated metrics to disclose, taking the company’s business model, business strategy and relevant legal requirements into account. Don’t worry if you have no experience in materiality assessment. Our experienced sustainability team and the AI-powered ESG Expert Chat are always on your hand.

3. ? ? What to do if multiple industries apply?

• If a company’s consolidated operations span multiple industries, it may be necessary to review multiple industry standards to identify topics beyond those defined in its primary industry standard that may warrant disclosure to investors.
• If a company has a unique business model that defies traditional industry classifications, it may wish to consider disclosure topics (and associated metrics) from an array of industries that have similar activities, choosing those disclosure topics most likely to communicate material information to investors. Some companies with very unique business models, such as emerging technology-based business models, may need to create a custom “SASB template” based on disclosure topics from multiple industries.

What can etOso help?

At etOso, we believe reporting should be an asset for your business, not a burden. Our integrated tool simplifies the entire process, from benchmarking to identifying material topics and generating customisable reporting templates. We help you to explore best practices across different industries, understand your impacts and produce a report that’s clear, compliant and cost-effective. Interested to learn more? Talk to the etOso team.?

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