SASB Provides a Remedy for Sustainability Issues Reporting

By Jason Bramwell
 
In an effort to provide US public companies with a standardized framework for reporting the material environmental, social, and governance (ESG) issues that affect their industries, the Sustainability Accounting Standards Board (SASB) on July 31 unveiled its first set of provisional sustainability accounting standards that focus on the health care sector.
 
The San Francisco-based 501(c)3 not-for-profit organization is planning on developing standards for more than eighty industries in ten sectors over the next two years. The SASB is accredited to set standards by the American National Standards Institute (ANSI).
 
In the coming months, the SASB will release provisional sustainability accounting standards for the financials and technology and communications sectors. Standards for the nonrenewables sector are in the early stages of development.
 
The SASB standards will be used by public companies for disclosing material 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), such as forms 10-K and 20-F.
 
"A lot of the information that is out there on sustainability issues is not decision useful. Investors and analysts cover industries, not issues," Jean Rogers, PhD, SASB founder and executive director, told AccountingWEB. "By providing the sustainability issues to them industry by industry, we will make the information decision useful."
 
Former SEC Commissioner Aulana Peters said the SASB standards support the SEC's mission to protect investors and maintain effective markets.
 
"In today's world, where intangible assets comprise a significant portion of S&P market value, investors need industry-specific data on nonfinancial factors that are important to risk mitigation and long-term value creation," she said in a written statement. "SASB's sustainability accounting standards for the health care sector will yield useful and comparable information that supports the resilience of our capital markets."
 
Rogers said the sustainability accounting standards enable comparison of peer performance and benchmarking within an industry, with companies competing and improving performance on ESG issues that matter most to them and to investors driving capital to the most sustainable outcomes.
 
"By establishing standards for reporting industry-focused metrics on material, nonfinancial information, SASB helps provide investors with a more complete view of a company's risks and opportunities," said Robert Herz, former chairman of the Financial Accounting Standards Board (FASB).

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