SASB Adds Second Comment Period for Financials Standards

Nov 5th 2013
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By Jason Bramwell

The Sustainability Accounting Standards Board (SASB) on November 4 added a second public comment period for sustainability accounting standards the board is proposing for the financials sector, which encompasses seven industries.

Individuals and organizations can comment on the draft provisional standards during a forty-five-day comment period that starts November 15 and concludes December 27.

"Given the high volume of informal and formal feedback we've received on this particular set of standards, we believe our stakeholders would appreciate another opportunity to comment on the standards before they are finalized", Jean Rogers, PhD, founder and executive director of the SASB, said in a written statement.

This past July, the SASB unveiled its first set of provisional sustainability accounting standards that focus on the health care sector, and the San Francisco-based 501(c)3 not-for-profit organization is planning on developing standards for eighty-plus industries in ten sectors over the next two years. The SASB is accredited to set standards by the American National Standards Institute (ANSI).

The SASB standards will be used by public companies for disclosing material environmental, social, and governance (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.

The SASB opens each set of standards to public comment, and in response to stakeholder feedback, the board gradually lengthened the public comment period from thirty days to forty-five days to ninety days.

The working groups for the financials sector, which convened this past February, resulted in 302 survey responses from members representing publicly traded companies with more than $1.3 trillion in market capitalization and investment firms with more than $5 trillion in assets under management.

The proposed provisional sustainability accounting standards will target the following seven industries in the financials sector: 

  1. Commercial banks
  2. Investment banking and brokerage
  3. Asset management and custody activities
  4. Consumer finance
  5. Mortgage finance
  6. Security and commodity exchanges
  7. Insurance

The proposed standards will address several issues within each of the seven industries that fall under ESG, including the following:

  • Integrating ESG factors in investment management and advisory (asset management and custody activities industry).
  • Promoting transparent, efficient capital markets and preventing information asymmetry (security and commodities exchanges industry).
  • Managing conflicts of interest (investment banking and brokerage industry).

The initial public comment period for industries in this sector was held for forty-five days beginning in May. But because the changes undertaken since the initial comment period have been significant, the SASB Standards Council – an independent oversight body comprised of experts in standards development, securities law, and accounting – advised the SASB to re-expose the standards for a second comment period.

"SASB standards are designed to be cost-effective for issuers and decision-useful for users", Jerome Lavigne-Delville, SASB director of standards development, said in a written statement. "By holding a second comment period for standards for industries in the financials sector – a sector with a particularly complex set of sustainability issues – SASB hopes to collect the final input necessary to finalize standards that accomplish these objectives."

According to the SASB, following the public comment period, the provisional set of standards for industries in the financials sector will be issued on February 25, 2014.

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