By Jason Bramwell
The Sustainability Accounting Standards Board (SASB) is developing a corporate pilot program that will help US public companies use SASB standards to disclose material environmental, social, and governance issues in their annual filings to the US Securities and Exchange Commission (SEC).
The pilot program, which is a Clinton Global Initiative Commitment to Action, is open to publicly listed US corporations that operate in the health care and financial sectors, the SASB announced September 26. Ten companies will be selected in advance of the program's launch in the first quarter of 2014.
Over the next three years, the SASB, in collaboration with global business and financial news outlet Bloomberg and other partners, will run pilot programs for ten sectors. Joining the pilot program requires the participation of the CFO and the chief sustainability officer (or equivalent) in order to facilitate incorporation of material sustainability factors into the Form 10-K.
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 more than eighty industries in ten sectors over the next two years.
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 SEC, like Form 10-K.
"SASB standards fill an unmet need to provide investors with standardized, comparable information on material sustainability issues", Curtis Ravenel, global head of sustainability initiatives at Bloomberg, the lead strategic partner on this initiative, said in a written statement. "But the standards can't fulfill this goal unless they are used. The pilot program will provide a road map to prepare companies to use SASB standards in mandatory SEC filings."
The SASB will manage the pilot program, provide standards expertise, educate delivery partners, and create a structured review process for program success. Bloomberg will provide industry benchmarking on the state of disclosure, data sources, and data integrity expertise.
The SASB and Bloomberg will work with partners experienced in securities law, Form 10-K preparation, business process reengineering, data management and verification, and investor relations to deliver the program. According to the SASB, companies will come away from the program with the following three benefits:
- An appreciation for the legal framework governing Form 10-K disclosures.
- An understanding of their current quality of disclosure and readiness to report.
- The ability to recognize and disclose material sustainability factors using SASB industry standards.
Leading the pilot program for the SASB is Director of Education Douglas Park, PhD, JD, a recognized authority on corporate governance and an award-winning business professor.
"The launch of this corporate pilot program is another important milestone for SASB, helping us to meet the corporate and investor demand for adoption", Jean Rogers, PhD, SASB founder and executive director, said in a written statement. "For our first pilot, we are thrilled to partner with Bloomberg, which has an understanding of the data produced from corporate disclosures and how those data are utilized in investment decision making. At the same time, we are delighted to welcome Douglas Park as our new director of education. Douglas has extraordinary experience in governance and securities law and will be a tremendous asset as we help companies understand how to improve their disclosures on these material factors."