SASB Reporting

Written By Claire Siegrist

SASB reporting communicates financially material sustainability information to investors. Companies should follow the specific standards for their industries and communicate results annually in a way convenient for investors. Reporting is not mandatory, but it can satisfy other regulatory requirements or investor expectations.

What is SASB reporting?

The Sustainability Accounting Standards Board (SASB) defines a set of standards for companies to disclose financially material sustainability information to their investors.

Two aspects that differentiate SASB from other reporting frameworks are 1) the audience, and 2) industry-specificity. These two aspects affect which issues are considered “material” for reporting.

The Standards are specifically designed for investors and other providers of financial capital. As such, the issues disclosed should impact the company’s ability to create long-term value for shareholders.
The Standards are industry-specific with topics tailored to the industry. There are separate standards for 77 industries.

To illustrate how this affects disclosure topics, consider greenhouse gas (GHG) emissions. SASB does not require GHG emissions disclosure from all industries, but only those that are financially impacted. For example, the Airline industry should disclose its Scope 1 GHG emissions because of regulatory and compliance risks, such as under the EU Emissions Trading Scheme. Such disclosure is not required of the Apparel industry as it does not face similar regulatory risk today.

For a complete view of the material issues covered by the Standards, SASB published the Materiality Map. The Materiality Map visualizes how 26 sustainability issues apply to the 77 industries.

Which industry standard is applicable?

A company should follow the SASB Standard written for its industry. The 77 industries are defined by SASB’s Sustainable Industry Classification System (SICS).

If a company operates in multiple industries, it can use all relevant standards. For an example, see Bloomberg’s 2020 SASB Impact Report, which covers the standards for three industries – Internet & Media Services, Media & Entertainment, and Professional & Commercial Services.

Which disclosure topics are applicable?

Each industry-standard includes disclosure topics that SASB considers financially material for a “typical” company in that industry. However, the disclosure topics are not exhaustive, and companies can choose to omit or add topics most relevant to their businesses.

Here is an example of SASB Standards for the Apparel, Accessories, and Footwear industry, and the suggested disclosure topics and metrics:

Source: SASB.org

How should SASB reports be published?

SASB does not require a specific reporting mechanism. Companies determine how they want to report depending on their existing communication channels and audience. Best practice is to issue reports annually in line with the fiscal year for easy analysis vis-à-vis financial results.

Here are some examples of different reporting channels and why companies choose one over the other:

Is SASB reporting mandatory?

SASB reporting is not mandatory. However, following the standards can help companies meet regulatory requirements. For example, SASB standards address the European Commission’s Non-Financial Reporting Directive (NFRD) disclosure obligations. (Note: the NFRD will be replaced by the CSRD in 2023

Beyond regulatory requirements, SASB may also be required by investors. At least three of the world’s largest asset managers – BlackRock, Vanguard, and State Street – have requested the companies in which they invest to publish ESG disclosures. Without these disclosures, companies could be considered to have inadequate ESG risk management.