A new set of provisional accounting standards unveiled yesterday provides guidance to companies in the technology and communications sector on how to disclose environmental, social, and governance (ESG) material issues.
The new guidance was released Wednesday by the Sustainability Accounting Standards Board (SASB), a San Francisco-based 501(c)3 not-for-profit organization that is planning on developing standards for eighty-plus industries in ten sectors over the next two years. Last July, the SASB unveiled its first set of provisional accounting standards for the health care sector, while its second set released in late February focuses on the financials sector.
The latest set of standards, targeted for use by public companies and investors, address the ESG issues likely to be material for businesses in the following six industries in the technology and communications sector:
- Electronic manufacturing services and original design manufacturing
- Internet media and services
- Software and IT services
Some of the ESG issues the standards address include waste and water management in manufacturing, data privacy and freedom of expression, and supply chain management and materials sourcing.
The SASB standards will be used by public companies for disclosing material ESG sustainability issues that benefit investors and the public. Under federal Regulation S-K, corporations are required to report all material issues in mandatory filings to the US Securities and Exchange Commission (SEC), like Form 10-K.
“Technology and communications is a unique sector in that it’s evolving so quickly,” Jean Rogers, PhD, founder and executive director of the SASB, said in a written statement. “Traditional business models and governance structures are being disrupted, and companies are innovating to stay relevant. Within this innovation, companies have the potential to impact society in profound ways. SASB standards help investors understand and compare the material sustainability risks and opportunities that companies face in this quickly changing field.”
The standards – which identify the minimum set of sustainability issues for each industry – are designed to be cost effective for companies and decision useful for investors. According to the SASB, the average number of sustainability issues in each technology and communications standard is between five and six. Seventy-eight percent of suggested accounting metrics are quantitative.
Cecily Joseph, vice president of corporate responsibility at computer security solutions firm Symantec Corp., said one of the company’s objectives is to more fully integrate corporate responsibility and sustainability efforts because they support and further its business purpose.
“To achieve this, we know it is important to keep investors apprised of this information, which they increasingly see as material,” she said in a written statement. “SASB’s standards – which are developed with significant company and investor input – are a resource for this effort.”
The SASB standards development process includes research supported by Bloomberg data, multistakeholder industry working groups, a public comment period, and review by an independent standards council.
The working groups for the technology and communications sector, which included 215 registrants, represented publicly traded companies with more than $1.9 trillion in market capitalization and investment firms with more than $2.3 trillion in assets under management.
The SASB is accredited to set standards by the American National Standards Institute (ANSI).