The 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.

In June 2021, the SASB and the London-based International Integrated Reporting Council announced their combination to form the Value Reporting Foundation (VRF). In November 2021, the IFRS Foundation announced it would consolidate the VRF and Climate Disclosure Standards Board with its own newly formed International Sustainability Standards Board (ISSB) by June 2022. This was completed by August 2022, when all the open SASB Standards projects were transitioned to the ISSB.

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.

Guiding Principles SASB operates with a set of core principles that guide its approach to standard setting, as defined in its Conceptual Framework. These principles are designed to facilitate sustainability disclosures that provide material, decision useful information to investors and are cost effective for reporting companies. Global Applicability Financial Materiality Approach to Standard-Setting: Industry-Specific Evidence-Based Market-Informed

Global Applicability SASB's mission statement notes that investor-focused sustainability “information should be relevant, reliable and comparable across companies on a global basis.” SASB has pointed out that “more than three-quarters of SASB metrics are appropriate for use by companies and investors globally, and the remaining metrics are under review to enhance their global applicability.”

Financial Materiality SASB Standards are geared toward providing decision-useful information to investors. Because the standards are investor-driven, evidence of financial materiality is the underpinning for the standards. SASB states that its standards focus on “financially material issues because our mission is to help businesses around the world report on the sustainability topics that matter most to their investors.” This focus has been recognized by firms such as BlackRock, as referenced in Larry Fink's 2020 letter to CEOs, which said, “BlackRock believes that the Sustainability Accounting Standards Board (SASB) provides a clear set of standards for reporting sustainability information across a wide range of issues, from labor practices to data privacy to business ethics.” SASB's emphasis on financial materiality sets it apart from other sustainability reporting standards, such as those of the Global Reporting Initiative (GRI), which “focuses on a company’s impacts on the broader economy, environment and society to determine its material issues.”

Approach to Standard-Setting SASB uses its Conceptual Framework as guidance in its approach to setting sustainability accounting standards. The SASB Conceptual Framework “sets out the basic concepts, principles, definitions, and objectives that guide SASB in its approach to setting standards for sustainability accounting”. SASB's mission statement was revised in 2018, and the Conceptual Framework does not reflect the current mission statement. SASB initiated a project to update its Conceptual Framework in September 2019.

Industry-Specific SASB has developed a unique standard for each industry. This is due to the fact that sustainability issues manifest differently from one industry to another due to differences in business models, resource dependencies, and other factors. As Eccles has noted, “For each industry, standards have been established for the ESG issues most likely to be material to investors.” SASB developed standards for 77 industries across 11 sectors. SASB's Sustainable Industry Classification System® (SICS®) organizes industries using a combination of traditional classification factors and sustainability risks and opportunities. “To identify the disclosure topics that are likely to impact all or most companies in an industry, the SASB has developed its own industry classification system. The system differs from typical industry classification systems, such as the Global Industry Classification Standard (GICS), in that it classifies companies based on common sustainability issues. For example, the GICS identifies three industries in the technology hardware and equipment industry group, including communications equipment; technology hardware, storage, and peripherals; and electronic equipment, instruments, and components. But communications equipment, computers and peripherals, and office electronics have very similar sustainability issues. Accordingly, they are included in the same group (i.e., hardware) in SASB’s sustainability-based industry classification system.” SASB's website has a SICS® lookup tool that identifies the industry classification of tens of thousands of publicly listed companies. SICS® SectorSICS® IndustriesConsumer GoodsApparel, Accessories & Footwear

Appliance Manufacturing

Building Products & Furnishings

E-Commerce

Household & Personal Products

Multiline and Specialty Retailers & Distributors

Toys & Sporting GoodsExtractives & Minerals ProcessingCoal Operations

Construction Materials

Iron & Steel Producers

Metals & Mining

Oil & Gas – Exploration & Production

Oil & Gas – Midstream

Oil & Gas – Refining & Marketing

Oil & Gas – ServicesFinancialsAsset Management & Custody Activities

Commercial Banks

Consumer Finance

Insurance

Investment Banking & Brokerage

Mortgage Finance

Security & Commodity ExchangeFood & BeverageAgricultural Products Alcoholic Beverages

Food Retailers & Distributors

Meat, Poultry & Dairy

Non-Alcoholic Beverages

Processed Foods

Restaurants

TobaccoHealth CareBiotechnology & Pharmaceuticals

Drug Retailers

Health Care Delivery

Health Care Distributors

Managed Care

Medical Equipment & SuppliesInfrastructureElectric Utilities & Power Generators

Engineering & Construction Services

Gas Utilities & Distributors

Home Builders

Real Estate

Real Estate Services

Waste Management

Water Utilities & ServicesRenewable Resources & Alternative EnergyBiofuels

Forestry Management

Fuel Cells & Industrial Batteries

Pulp & Paper Products

Solar Technology & Project Developers

Wind Technology & Project DevelopersResource TransformationAerospace & Defense Chemicals

Containers & Packaging

Electrical & Electronic Equipment

Industrial Machinery & GoodsServicesAdvertising & Marketing Casinos & Gaming

Education

Hotels & Lodging

Leisure Facilities

Media & Entertainment

Professional & Commercial ServicesTechnology & CommunicationsElectronic Manufacturing Services & Original Design Manufacturing

Hardware

Internet Media & Services

Semiconductors

Software & IT Services

Telecommunication ServicesTransportationAir Freight & Logistics Airlines

Auto Parts

Automobiles

Car Rental & Leasing

Cruise Lines

Marine Transportation

Rail Transportation

Road Transportation

Evidence-Based SASB standards are designed to generate standardized and comparable data, which is decision-useful for investors and typically quantitative. Compliance Week notes that “SASB saves companies time and costs by: (a) performing evidence-based research and industry vetting to identify the likely material issues; and (b) identifying metrics that companies can use to disclose performance on these issues. In researching and developing its standards, SASB identifies the sustainability risks and opportunities for which clear evidence exists that companies in an industry are financially impacted and investors are interested in those impacts. SASB standards average five topics and 14 metrics (79 percent quantitative) per industry.”