Description
Sustainability Accounting Standards Board (SASB) is a non-profit organization, founded in 2011 by Jean Rogers to develop sustainability accounting standards. Investors, lenders, insurance underwriters, and other providers of financial capital are increasingly attuned to the impact of environmental, social, and governance (ESG) factors on the financial performance of companies, driving the need for standardized reporting of ESG data. Just as the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have established International Financial Reporting Standards and Generally Accepted Accounting Principles (GAAP), respectively, which are currently used in the financial statements, SASB's stated mission “is to establish industry-specific disclosure standards across ESG topics that facilitate communication between companies and investors about financially material, decision-useful information. Such information should be relevant, reliable and comparable across companies on a global basis.”
SASB standards are used by companies around the world in a variety of disclosure channels, including their annual reports, financial filings, company websites, sustainability reports, and more.
Organizational structure
SASB's work is overseen by the SASB Foundation Board of Directors and carried out by the Standards Board and SASB staff. In this regard, SASB's governance structure is similar to other internationally recognized standard-setting bodies such as FASB and IASB.
The SASB Foundation is responsible for the “financing, oversight, administration and appointment of the SASB Standards Board”. The Board of Directors, the organization's governance body, appoints members of the Standards Board and oversees the integrity of its due process. Some of the prominent members of the SASB Foundation Board of Directors have included a former SEC chair, former FASB chair, former mayor of New York City, a chair of the central bank of the Netherlands, De Nederlandsche Bank, chair of the World Benchmarking Alliance, as well as many other distinguished individuals. The current chair of the Foundation Board of Directors is Robert K. Steel.
History
SASB was founded in 2011 by Jean Rogers, who originated the concept and served as organization's first CEO. Its primary aim was to develop standards for use in corporate filings to the U.S. Securities and Exchange Commission (SEC). The intention was to provide investors with comparable, non-financial information about the companies whose stocks they or their investment funds owned and to allow investors and financial analysts to compare performance on critical environmental, social, and governance (ESG) issues within an industry. The founding chair of the organization's Board of Directors was Robert G. Eccles. Initial funding for the organization came from private donors. In 2017, the organization underwent a governance change to establish a more formal separation between oversight, administration, and finances (the SASB Foundation) and technical standard-setting work (the Standards Board), in order to better align its structure with traditional financial standard-setting organizations such as IASB and FASB.
As SASB worked towards codification of the first full set of its standards, its work involved extensive outreach to investors, many of whom hold globally diversified portfolios. SASB also engaged in consultation with corporations, many with multinational operations. One of the recurring messages that SASB heard was the idea that financial information, like financial capital – needs to be able to move across borders. As a result, beginning in 2018, SASB began to encourage (public and private) companies around the world to report using SASB disclosure topics and metrics in all communications with investors – not just in US public filings. This can include annual reports, integrated reports, investor relations sections of a company website and stand-alone SASB reports. In addition to these cases, many companies started including SASB disclosure tables in corporate social responsibility and sustainability reports. To ensure quality, SASB recommends that the companies use the same level of rigor and internal controls as used for traditional financial measures when reporting sustainability-related performance to investors.
After a six-year effort, SASB launched the standards in November 2018.
