SASB Standards and other ESG frameworks

The sustainability reporting ecosystem

A wide range of constituencies—including investors, companies, policy makers, regulators, NGOs, and civil society—use corporate sustainability reporting to inform a wide range of decisions. A dynamic ecosystem of organisations has evolved to meet these various information needs. Disclosure standards and frameworks are the foundation of this ecosystem. They facilitate the disclosure of comparable, consistent and reliable sustainability-related information. Using this information, data providers and rating agencies can build tools, analytics and resources for the capital markets.

Narrowing in on standards and frameworks

It is important to distinguish between sustainability frameworks and sustainability standards. Frameworks provide principles-based guidance on how information is structured, how it is prepared and what broad topics are covered. Meanwhile, standards provide specific, detailed and replicable requirements for what should be reported for each topic, including metrics. Standards make frameworks actionable, ensuring comparable, consistent and reliable disclosure. Frameworks and standards are complementary and are designed to be used together.

Achieving simplification in the sustainability disclosure landscape

Businesses and investors have long called for clarity and simplification in the sustainability disclosure landscape. Several milestones over the last few years have resulted in significant progress towards this necessary clarity.

The first milestone was collaboration between leading framework providers and standard setters. In September 2020, CDP, CDSB, GRI, IIRC and SASB announced a shared vision for a comprehensive corporate reporting system that includes both financial accounting and sustainability disclosure, connected via integrated reporting. The joint statement outlined how existing sustainability standards and frameworks can complement generally accepted financial accounting principles (Financial GAAP). As outlined in this joint statement, various frameworks and standards offer complementary approaches, as they are designed for unique sets of stakeholders and are based on unique definitions of materiality. Companies can use different frameworks and standards as building blocks to develop a system of disclosure tailored to the unique needs of their stakeholders.

The second milestone was a collaborative work plan, announced in July 2020, to show how companies can use GRI and SASB Standards together. SASB Standards focus on sustainability issues expected to have a material impact on the company’s financial performance, aimed at serving the needs of most investors and other providers of financial capital. GRI Standards focus on the economic, environmental, and social impacts of a company in relation to sustainable development, which is of interest to a broad range of stakeholders, including investors. A Practical Guide to Sustainability Reporting Using GRI and SASB Standards shows how companies are using the two sets of standards together and provides reporters with insights from peer companies to support their sustainability reporting and disclosure journeys.

The third milestone was the IIRC and SASB’s consolidation into the Value Reporting Foundation, which was announced in November 2020 and finalised in June 2021. By integrating two entities that were focused on enterprise value creation, this merger represented significant progress towards simplifying the corporate reporting landscape. The Value Reporting Foundation was a global nonprofit organisation that offered a comprehensive suite of resources, including the Integrated Thinking Principles, the Integrated Reporting Framework and SASB Standards.

The fourth milestone was the IFRS Foundation’s decision–announced in November 2021–to establish the International Sustainability Standards Board (ISSB) to develop a comprehensive global baseline of sustainability disclosure to meet investors’ information needs, and to consolidate with the Value Reporting Foundation and the Carbon Disclosure Standards Board (CDSB) to help establish the ISSB. The VRF consolidated into the IFRS Foundation in August 2022. The ISSB builds on the work of SASB, TCFD, CDSB and the Integrated Reporting Framework. By incorporating SASB and TCFD into its standards in a significant way, the ISSB has directly responded to market demand for simplification of the sustainability disclosure landscape.

When formulating metrics for its disclosure topics, the SASB Standards Board and Technical Staff considered the existing body of reporting standards and used existing metrics whenever possible. SASB Standards reference metrics already in use by industry, from more than 200 entities, such as WHO, CDP, EPA, OSHA and industry organisations such as ICAO, IPIECA, EPRI and GRESB. Aligning SASB Standards with existing reporting standards avoided additional costs for companies and aligned SASB Standards with global corporate transparency efforts. Companies that are already using SASB and TCFD will be well positioned to apply IFRS Sustainability Disclosure Standards.