Industry Comparison

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Current language: English (2023)

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  • Engineering & Construction Services The Engineering & Construction Services industry provides engineering, construction, design, consulting, contracting and other related services that support various building and infrastructure projects. The industry has four major segments: engineering services, infrastructure construction, non-residential building construction, and building subcontractors and construction-related professional services. The infrastructure construction segment includes entities that design or build infrastructure projects such as power plants, dams, oil and gas pipelines, refineries, highways, bridges, tunnels, railways, ports, airports, waste treatment plants, water networks and stadiums. The non-residential building construction segment includes entities that design or build industrial and commercial facilities such as factories, warehouses, data centres, offices, hotels, hospitals, universities and retail spaces such as shopping centres. The engineering services segment includes entities that provide specialised architectural and engineering services such as design and development of feasibility studies for many of the project types listed above. Finally, the building subcontractors and other construction-related professional services segment includes smaller entities that provide ancillary services such as carpentry, electrical, plumbing, painting, waterproofing, landscaping, interior design and building inspection. The industry’s customers include infrastructure owners and developers in the public and private sectors. Large entities in this industry operate and generate revenue globally and typically operate in more than one segment.
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  • Insurance The Insurance industry provides both traditional and non-traditional insurance-related products. Traditional policy lines include property, life, casualty and reinsurance. Non-traditional products include annuities, alternative risk transfers and financial guarantees. Entities in the insurance industry also engage in proprietary investments. Insurance entities generally operate within a single segment in the industry, for example, property and casualty, although some large insurance entities have diversified operations. Similarly, entities may vary based on the level of their geographical segmentation. Whereas large entities may underwrite insurance premiums in many countries, smaller entities generally operate in a single country or jurisdiction. Insurance premiums, underwriting revenue and investment income drive industry growth, while insurance claim payments present the most significant cost and source of uncertainty for profits. Insurance entities provide products and services that enable the transfer, pooling and sharing of risk necessary for a well-functioning economy. Insurance entities, through their products, can also create a form of moral hazard, reducing incentives to improve underlying behaviour and performance, and thus contributing to sustainability-related impacts. Like other financial institutions, insurance entities face risks associated with credit and financial markets. Within the industry, regulators have identified entities that engage in non-traditional or non-insurance activities, including credit default swaps (CDS) protection and debt securities insurance, as being more vulnerable to financial market developments, and therefore more likely to amplify or contribute to systemic risk. As a result, some insurance entities may be designated as Systemically Important Financial Institutions, thus exposing them to increased regulation and oversight.
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Relevant Issues for both Industries (8 of 26)

Why are some issues greyed out? The SASB Standards vary by industry based on the different sustainability-related risks and opportunities within an industry. The issues in grey were not identified during the standard-setting process as the most likely to be useful to investors, so they are not included in the Standard. Over time, as the ISSB continues to receive market feedback, some issues may be added or removed from the Standard. Each company determines which sustainability-related risks and opportunities are relevant to its business. The Standard is designed for the typical company in an industry, but individual companies may choose to report on different sustainability-related risks and opportunities based on their unique business model.

Disclosure Topics

What is the relationship between General Issue Category and Disclosure Topics? The General Issue Category is an industry-agnostic version of the Disclosure Topics that appear in each SASB Standard. Disclosure topics represent the industry-specific impacts of General Issue Categories. The industry-specific Disclosure Topics ensure each SASB Standard is tailored to the industry, while the General Issue Categories enable comparability across industries. For example, Health & Nutrition is a disclosure topic in the Non-Alcoholic Beverages industry, representing an industry-specific measure of the general issue of Customer Welfare. The issue of Customer Welfare, however, manifests as the Counterfeit Drugs disclosure topic in the Biotechnology & Pharmaceuticals industry.
  • Engineering & Construction Services Remove
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    • Ecological Impacts The category addresses management of the company’s impacts on ecosystems and biodiversity through activities including, but not limited to, land use for exploration, natural resource extraction, and cultivation, as well as project development, construction, and siting. The impacts include, but are not limited to, biodiversity loss, habitat destruction, and deforestation at all stages – planning, land acquisition, permitting, development, operations, and site remediation. The category does not cover impacts of climate change on ecosystems and biodiversity.
      • Environmental Impacts of Project Development Infrastructure construction projects improve economic and social development; however, they also may pose risks to the local environment and surrounding communities. Industry activities can disrupt local ecosystems through biodiversity impacts, air emissions, water discharges, natural resource consumption, waste generation and hazardous chemicals use. Construction entities perform clearing, grading and excavation activities and may generate harmful waste during project construction. Effectively assessing environmental impacts before construction may mitigate unforeseen issues that may increase operational expenses and capital costs. In some cases, environmental concerns or local community pushback may result in project delays and, in extreme cases, project cancellations, which may affect an entity’s profitability and growth opportunities. Failure to comply with environmental regulations during construction may result in costly fines and remediation costs, and it can damage an entity’s reputation. Environmental impact assessments can provide an understanding of a project’s potential environmental impacts and necessary mitigation activities before it begins. Likewise, proper management of environmental risks during project construction may reduce regulatory oversight or community pushback. By assessing environmental considerations before project initiation, as well as continuing to evaluate them during project development, engineering and construction entities may be prepared to mitigate potential environmental issues and the associated financial risks that may occur, while also establishing a competitive advantage for obtaining new contracts with prospective clients.
    • Product Quality & Safety The category addresses issues involving unintended characteristics of products sold or services provided that may create health or safety risks to end-users. It addresses a company’s ability to offer manufactured products and/or services that meet customer expectations with respect to their health and safety characteristics. It includes, but is not limited to, issues involving liability, management of recalls and market withdrawals, product testing, and chemicals/content/ingredient management in products.
      • Structural Integrity & Safety Whether providing engineering, design, architectural, consulting, inspection, construction or maintenance services, entities in this industry have a professional responsibility to ensure the safety and integrity of their work. Errors or inadequate quality in the project design phase and construction of buildings or infrastructure may result in significant personal injury, loss of property value and economic harm. Entities that manage structural integrity and safety poorly may incur incremental costs because of redesign or repair work and legal liabilities, as well as reputational damage that could hurt growth prospects. Moreover, when designing and constructing buildings or infrastructure, entities in the industry increasingly must contemplate potential climate change impacts, which may affect the project’s structural integrity and public safety. Compliance with minimum applicable codes and standards may not be enough to maintain and grow reputational value (or even mitigate legal liabilities) in some circumstances, especially if the frequency and severity of climate-change-related events increases as expected. Meeting or exceeding new industry quality standards, and setting up internal control procedures to identify and fix potential design issues, including those resulting from climate risks, are practices that may help entities reduce these risks.
    • Selling Practices & Product Labeling The category addresses social issues that may arise from a failure to manage the transparency, accuracy, and comprehensibility of marketing statements, advertising, and labeling of products and services. It includes, but is not limited to, advertising standards and regulations, ethical and responsible marketing practices, misleading or deceptive labeling, as well as discriminatory or predatory selling and lending practices. This may include deceptive or aggressive selling practices in which incentive structures for employees could encourage the sale of products or services that are not in the best interest of customers or clients.
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    • Employee Health & Safety The category addresses a company’s ability to create and maintain a safe and healthy workplace environment that is free of injuries, fatalities, and illness (both chronic and acute). It is traditionally accomplished through implementing safety management plans, developing training requirements for employees and contractors, and conducting regular audits of their own practices as well as those of their subcontractors. The category further captures how companies ensure physical and mental health of workforce through technology, training, corporate culture, regulatory compliance, monitoring and testing, and personal protective equipment.
      • Workforce Health & Safety Construction, maintenance and repair services and other on-site activities require substantial manual labour. Fatality and injury rates in the Engineering & Construction Services industry are high compared with those in other industries because of the workforce’s exposure to powered haulage and heavy machinery accidents, fall accidents, exposure to hazardous chemicals, and other unique and potentially dangerous situations. Additionally, temporary workers may be at a higher risk because of a lack of training or industry experience. Failing to protect worker health and safety can result in fines and penalties; serious incidents may result in acute, one-time extraordinary expenses and contingent liabilities from legal or regulatory actions. In addition, health and safety incidents may result in project delays and downtime that increase project costs and decrease profitability. Entities that seek to train both permanent and temporary employees professionally and build a strong safety culture may reduce their risk profile while potentially gaining a competitive advantage in new project bids and proposals because of good workforce health and safety statistics.
    • Product Design & Lifecycle Management The category addresses incorporation of environmental, social, and governance (ESG) considerations in characteristics of products and services provided or sold by the company. It includes, but is not limited to, managing the lifecycle impacts of products and services, such as those related to packaging, distribution, use-phase resource intensity, and other environmental and social externalities that may occur during their use-phase or at the end of life. The category captures a company’s ability to address customer and societal demand for more sustainable products and services as well as to meet evolving environmental and social regulation. It does not address direct environmental or social impacts of the company’s operations nor does it address health and safety risks to consumers from product use, which are covered in other categories.
      • Lifecycle Impacts of Buildings & Infrastructure Buildings and major infrastructure projects are among the largest users of natural resources in the economy; during construction, these materials include iron and steel products, cement, concrete, bricks, drywall, wallboards, glass, insulation, fixtures, doors, and cabinetry, among others. Once completed, and during their daily use, these projects often consume significant amounts of resources in the form of energy and water (for a discussion on direct environmental impacts from project construction see the Environmental Impacts of Project Development topic). Therefore, the sourcing of construction materials and the everyday use of buildings and infrastructure may contribute to direct and indirect greenhouse gas (GHG) emissions, global or local resource constraints, water stress and negative human health outcomes. Client and regulatory pressures to develop a sustainable built environment are contributing to the growth of markets intended to reduce the lifecycle impacts of buildings and infrastructure projects. In response, various international sustainable building and infrastructure certification schemes assess, among other aspects, a project’s use-phase energy and water efficiency, impacts on human health, and the use of sustainable construction and building materials. As a result, various opportunities are being created for industries in the value chain—from suppliers that can provide such materials, to entities in the Engineering & Construction Services industry that can provide sustainability-oriented project design, consulting and construction services. Such services can provide a competitive advantage and revenue growth opportunities as client demand for economically advantageous sustainable projects increases and related regulations evolve. Entities unable to effectively integrate such considerations into their services may lose market share in the long term.
      • Climate Impacts of Business Mix Engineering & Construction Services industry clients may be exposed to potentially disruptive climate regulation as well as those that mitigate climate change. Some types of construction projects are significant climate change contributors because of the greenhouse gases (GHGs) emitted during their use phase. Projects that may contribute to global GHG emissions include those in extractive industries, as well as large buildings. Whereas some infrastructure projects, such as renewable energy projects, are designed to reduce GHG emissions, many types of projects present trade-offs. Mass transit systems, for example, may contribute to GHG emissions while reducing net emissions once the benefits offered by the system are factored. Several entities in the industry generate a substantial share of revenue and profits from clients in carbon-intensive industries and whose future capital investments may be at risk because of evolving climate regulations. Downside risks may manifest through project delays, cancellations and diminished long-term revenue growth opportunities. On the other hand, entities that specialise in infrastructure projects that contribute to GHG mitigation could develop competitive advantages as they continue to focus on these growing markets. As the industry and its customers continue to operate within an uncertain business environment and face increasing environmental and regulatory requirements, assessing and communicating the risks and opportunities stemming from climate change that are embedded in an entity’s backlog and future business prospects may help investors in assessing the overall business impact of climate change.
    • Physical Impacts of Climate Change The category addresses the company’s ability to manage risks and opportunities associated with direct exposure of its owned or controlled assets and operations to actual or potential physical impacts of climate change. It captures environmental and social issues that may arise from operational disruptions due to physical impacts of climate change. It further captures socio-economic issues resulting from companies failing to incorporate climate change consideration in products and services sold, such as insurance policies and mortgages. The category relates to the company’s ability to adapt to increased frequency and severity of extreme weather, shifting climate, sea level risk, and other expected physical impacts of climate change. Management may involve enhancing resiliency of physical assets and/or surrounding infrastructure as well as incorporation of climate change-related considerations into key business activities (e.g., mortgage and insurance underwriting, planning and development of real estate projects).
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    • Business Ethics The category addresses the company’s approach to managing risks and opportunities surrounding ethical conduct of business, including fraud, corruption, bribery and facilitation payments, fiduciary responsibilities, and other behaviour that may have an ethical component. This includes sensitivity to business norms and standards as they shift over time, jurisdiction, and culture. It addresses the company’s ability to provide services that satisfy the highest professional and ethical standards of the industry, which means to avoid conflicts of interest, misrepresentation, bias, and negligence through training employees adequately and implementing policies and procedures to ensure employees provide services free from bias and error.
      • Business Ethics Entities in the industry face risks associated with bribery, corruption and anti-competitive practices. Several factors contribute to these risks, including global operations, managing many local agents and subcontractors, project financing and project permitting complexity, the magnitude of the contracts involved in building large infrastructure projects, and the competitive process to secure contracts with private and public entities. Ethical breaches may result in regulatory authority investigations, as well as large fines, settlement costs and damaged reputations. Such breaches may include violations of anti-bribery laws, such as paying government officials to gain project contracts. They also may include unethical bidding practices, such as complementary bidding (for example, submitting an artificially high or otherwise unacceptable bid for a contract that a bidder does not intend to win) and bid-pooling (for example, coordinating to split contracts and ensure each bidder is awarded a specific amount of work). Moreover, entities with poor track records may be barred from future projects, resulting in lost revenue. Developing an ethical culture through employee training, effective governance structures and internal controls is critical for entities to mitigate business ethics risks.
    • Systemic Risk Management The category addresses the company’s contributions to or management of systemic risks resulting from large-scale weakening or collapse of systems upon which the economy and society depend. This includes financial systems, natural resource systems, and technological systems. It addresses the mechanisms a company has in place to reduce its contributions to systemic risks and to improve safeguards that may mitigate the impacts of systemic failure. For financial institutions, the category also captures the company’s ability to absorb shocks arising from financial and economic stress and meet stricter regulatory requirements related to the complexity and interconnectedness of companies in the industry.
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    • Ecological Impacts The category addresses management of the company’s impacts on ecosystems and biodiversity through activities including, but not limited to, land use for exploration, natural resource extraction, and cultivation, as well as project development, construction, and siting. The impacts include, but are not limited to, biodiversity loss, habitat destruction, and deforestation at all stages – planning, land acquisition, permitting, development, operations, and site remediation. The category does not cover impacts of climate change on ecosystems and biodiversity.
      None
    • Product Quality & Safety The category addresses issues involving unintended characteristics of products sold or services provided that may create health or safety risks to end-users. It addresses a company’s ability to offer manufactured products and/or services that meet customer expectations with respect to their health and safety characteristics. It includes, but is not limited to, issues involving liability, management of recalls and market withdrawals, product testing, and chemicals/content/ingredient management in products.
      None
    • Selling Practices & Product Labeling The category addresses social issues that may arise from a failure to manage the transparency, accuracy, and comprehensibility of marketing statements, advertising, and labeling of products and services. It includes, but is not limited to, advertising standards and regulations, ethical and responsible marketing practices, misleading or deceptive labeling, as well as discriminatory or predatory selling and lending practices. This may include deceptive or aggressive selling practices in which incentive structures for employees could encourage the sale of products or services that are not in the best interest of customers or clients.
      • Transparent Information & Fair Advice for Customers Insurance products play an important societal role in alleviating unexpected economic shocks, allowing individual policyholders to reduce the financial consequences of events such as illnesses, accidents and deaths. However, unclear insurance policies, ambiguous product terms and potentially misleading sales tactics may erode brand reputation, spur legal disputes, and reduce the number of services and products an entity can offer. Regulators may deem some policies overly complex and unsuitable for customers. Moreover, entities compete based on financial strength, price, brand reputation, services offered and customer relationships. Dissatisfied customers may reduce or avoid insurance coverage, potentially leading to negative financial outcomes such as personal bankruptcies. While financial regulators continue to emphasise consumer protection and accountability, entities that maintain transparent policy terms and sell products to customers best suited to them may better maintain their brand reputation, avoid regulatory scrutiny and protect shareholder value. Failure to inform customers about products in a clear and transparent manner may result in increased consumer complaints, customer churn, or regulatory fines and settlements.
    • Employee Health & Safety The category addresses a company’s ability to create and maintain a safe and healthy workplace environment that is free of injuries, fatalities, and illness (both chronic and acute). It is traditionally accomplished through implementing safety management plans, developing training requirements for employees and contractors, and conducting regular audits of their own practices as well as those of their subcontractors. The category further captures how companies ensure physical and mental health of workforce through technology, training, corporate culture, regulatory compliance, monitoring and testing, and personal protective equipment.
      None
    • Product Design & Lifecycle Management The category addresses incorporation of environmental, social, and governance (ESG) considerations in characteristics of products and services provided or sold by the company. It includes, but is not limited to, managing the lifecycle impacts of products and services, such as those related to packaging, distribution, use-phase resource intensity, and other environmental and social externalities that may occur during their use-phase or at the end of life. The category captures a company’s ability to address customer and societal demand for more sustainable products and services as well as to meet evolving environmental and social regulation. It does not address direct environmental or social impacts of the company’s operations nor does it address health and safety risks to consumers from product use, which are covered in other categories.
      • Incorporation of Environmental, Social and Governance Factors in Investment Management Insurance entities must invest capital to preserve accumulated premium revenues equivalent to expected policy claim pay-outs and maintain long-term asset-liability parity. Because environmental, social and governance (ESG) factors increasingly have a material impact on the performance of corporations and other assets, insurance entities increasingly must incorporate these factors into their investment management. Failure to address these issues may diminish risk-adjusted portfolio returns and limit an entity’s ability to issue claim payments. Entities, therefore, should enhance disclosure on how they incorporate ESG factors, including climate change and natural resource constraints, into the investment of policy premiums and how they affect the portfolio risk.
      • Policies Designed to Incentivise Responsible Behaviour Advances in technology and the development of new policy products have allowed insurance entities to limit claim payments while encouraging responsible behaviour. The industry is subsequently in a unique position to generate positive social and environmental externalities. Insurance entities can incentivise healthy lifestyles and safe behaviour as well as develop sustainability-related projects and technologies, such as those focused on renewable energy, energy efficiency and carbon capture. As the renewable energy industry continues to grow, insurance entities may seek related growth opportunities by underwriting insurance in this area. Additionally, policy clauses may encourage customers to incorporate environmental, social and governance (ESG) factors to mitigate overall underwriting portfolio risk, which may reduce insurance pay-outs over the long term. Therefore, disclosure on products related to energy efficiency and low carbon technology, as well as discussion of how entities incentivise health, safety or environmentally responsible actions or behaviours, may assist investors in assessing how insurance entities incentivise responsible behaviour.
      • Financed Emissions Entities participating in insurance activities face risks and opportunities related to the greenhouse gas emissions associated with those activities. Counterparties, borrowers or investees with higher emissions might be more susceptible to risks associated with technological changes, shifts in supply and demand and policy change which in turn can impact the prospects of a financial institution that is providing financial services to these entities. These risks and opportunities can arise in the form of credit risk, market risk, reputational risk and other financial and operational risks. For example, credit risk might arise in relation to financing clients affected by increasingly stringent carbon taxes, fuel efficiency regulations or other policies; credit risk might also arise through related technological shifts. Reputational risk might arise from financing fossil-fuel projects. Entities participating in insurance activities are increasingly monitoring and managing such risks by measuring their financed emissions. This measurement serves as an indicator of an entity’s exposure to climate-related risks and opportunities and how it might need to adapt its financial activities over time.
    • Physical Impacts of Climate Change The category addresses the company’s ability to manage risks and opportunities associated with direct exposure of its owned or controlled assets and operations to actual or potential physical impacts of climate change. It captures environmental and social issues that may arise from operational disruptions due to physical impacts of climate change. It further captures socio-economic issues resulting from companies failing to incorporate climate change consideration in products and services sold, such as insurance policies and mortgages. The category relates to the company’s ability to adapt to increased frequency and severity of extreme weather, shifting climate, sea level risk, and other expected physical impacts of climate change. Management may involve enhancing resiliency of physical assets and/or surrounding infrastructure as well as incorporation of climate change-related considerations into key business activities (e.g., mortgage and insurance underwriting, planning and development of real estate projects).
      • Physical Risk Exposure Catastrophic losses associated with extreme weather events will continue to have a material, adverse effect on the Insurance industry. The extent of this effect may evolve as climate change increases the frequency and severity of both modelled and non-modelled natural catastrophes, including hurricanes, floods and droughts. Failure to appropriately understand environmental risks, and price them into the underwritten insurance products, may result in higher-than-expected claims on policies. Therefore, insurance entities that incorporate climate change considerations into their underwriting process for individual contracts, as well as the management of entity-level risks and capital adequacy, may be better positioned to create value over the long-term. Enhanced disclosure of an entity’s approach to incorporating these factors, in addition to quantitative data such as the probable maximum loss and total losses attributable to insurance pay-outs, may provide investors with the information necessary to assess current and future performance on this issue.
    • Business Ethics The category addresses the company’s approach to managing risks and opportunities surrounding ethical conduct of business, including fraud, corruption, bribery and facilitation payments, fiduciary responsibilities, and other behaviour that may have an ethical component. This includes sensitivity to business norms and standards as they shift over time, jurisdiction, and culture. It addresses the company’s ability to provide services that satisfy the highest professional and ethical standards of the industry, which means to avoid conflicts of interest, misrepresentation, bias, and negligence through training employees adequately and implementing policies and procedures to ensure employees provide services free from bias and error.
      None
    • Systemic Risk Management The category addresses the company’s contributions to or management of systemic risks resulting from large-scale weakening or collapse of systems upon which the economy and society depend. This includes financial systems, natural resource systems, and technological systems. It addresses the mechanisms a company has in place to reduce its contributions to systemic risks and to improve safeguards that may mitigate the impacts of systemic failure. For financial institutions, the category also captures the company’s ability to absorb shocks arising from financial and economic stress and meet stricter regulatory requirements related to the complexity and interconnectedness of companies in the industry.
      • Systemic Risk Management Entities in the Insurance industry have the potential to pose, amplify or transmit a threat to the financial system. The size, interconnectedness and complexity of entities highlight the industry’s exposure to systemic risk. Regulators have identified entities that engage in non-traditional or non-insurance-related activities as being more vulnerable to financial market developments and subsequently more likely to contribute to systemic risk. As a result, entities may be designated as Systemically Important Financial Institutions. Central banking systems in various jurisdictions may subject such entities to stricter prudential regulatory standards and oversight. Such entities may face stricter limits on their risk-based capital, leverage, liquidity and credit exposure. In addition, regulators may require entities to maintain a plan for rapid and orderly dissolution in the event of financial distress. Regulatory compliance can be costly, and failure to meet qualitative and quantitative regulatory performance thresholds could lead to substantial penalties. To demonstrate how these risks are being managed, entities should disclose important aspects of their systemic risk management and their ability to meet stricter regulatory requirements.

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