Industry Comparison

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Current language: English (2023)

You are viewing information about the following Industries:

  • Hardware Hardware industry entities design and sell technology hardware products, including computers, consumer electronics, communications equipment, storage devices, components and peripherals. Many entities in the industry rely heavily upon the Electronic Manufacturing Services & Original Design Manufacturing (EMS & ODM) industry for manufacturing services. The industry is expected to continue to grow as technology use rapidly increases, especially among emerging market consumers.
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  • Investment Banking & Brokerage Investment Banking & Brokerage industry entities perform a wide range of functions in the capital markets, including raising and allocating capital and providing market-making and advisory services for corporations, financial institutions, governments and high net-worth individuals. Specific activities include financial advisory and securities underwriting services conducted on a fee basis; securities and commodities brokerage activities, which involve buying and selling securities or commodities contracts and options on a commission or fee basis; and trading and principal investment activities, which involve the buying and selling of equities, fixed income, currencies, commodities and other securities for client-driven and proprietary trading. Investment banks also originate and securitise loans for infrastructure and other projects. Entities in the industry generate revenues from global markets and, therefore, are exposed to various regulatory regimes. The industry continues to face regulatory pressure to reform and disclose aspects of operations that present systemic risks. Specifically, entities are facing new capital requirements, stress testing, limits on proprietary trading and increased scrutiny over compensation practices.
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Relevant Issues for both Industries (7 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.
  • Hardware Remove
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    • Data Security The category addresses management of risks related to collection, retention, and use of sensitive, confidential, and/or proprietary customer or user data. It includes social issues that may arise from incidents such as data breaches in which personally identifiable information (PII) and other user or customer data may be exposed. It addresses a company’s strategy, policies, and practices related to IT infrastructure, staff training, record keeping, cooperation with law enforcement, and other mechanisms used to ensure security of customer or user data.
      • Product Security The hardware products and related software offered by entities in the Hardware industry may have vulnerabilities that expose consumers to data security threats. Therefore, hardware manufacturers must help ensure user data security. Such vulnerabilities may occur at any stage of a product lifecycle, including product design, the manufacturing supply chain, product distribution and the product’s use-phase. Entities in the industry unable to identify vulnerabilities may risk exposing consumer data to security threats and potentially eroding the trust of their customer base. Cybersecurity threats create both risks and opportunities for the Hardware industry, as effective product security may be a source of competitive advantage for entities, potentially increasing their sales and market share. Additionally, user concerns about data security and related government actions may also serve as revenue-generating opportunities for securing government contracts and providing security products.
    • Employee Engagement, Diversity & Inclusion The category addresses a company’s ability to ensure that its culture and hiring and promotion practices embrace the building of a diverse and inclusive workforce that reflects the makeup of local talent pools and its customer base. It addresses the issues of discriminatory practices on the bases of race, gender, ethnicity, religion, sexual orientation, and other factors.
      • Employee Diversity & Inclusion Greater workforce diversity is important for innovation since it helps entities understand the needs of a diverse and global customer base, which results in the ability to design desirable products and communicate with customers effectively. Entities unable to attract and retain diverse talent may risk losing market share to competitors that successfully employ a staff capable of recognising the needs of diverse populations and capturing demand from segments of the population that have been traditionally overlooked. Furthermore, entities perceived as being more representative of a diverse, global customer base may increase brand loyalty which also may be a source of competitive advantage. Entities successful in recruiting and retaining a diverse and inclusive workforce also may achieve lower employee turnover rates, resulting in cost savings.
    • 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.
      • Product Lifecycle Management Entities in the Hardware industry face increasing challenges associated with environmental and social externalities attributed to product manufacturing, transport, use and disposal. Rapid obsolescence of hardware products may worsen these externalities. Entities are designing more products with the entire lifecycle in mind. Specific considerations include energy efficiency of products, hazardous material inputs, and designing for and facilitating safe end-of-life disposal and recycling. Entities that prioritise designing and manufacturing products with improved environmental and social impacts may avoid costs associated with externalities, and they may be more likely to grow consumer demand and market share, while eliminating potentially harmful materials. Furthermore, entities that minimise environmental and social externalities of products may be less exposed to increasing regulation and costs, such as those related to extended producer responsibility.
    • Supply Chain Management The category addresses management of environmental, social, and governance (ESG) risks within a company’s supply chain. It addresses issues associated with environmental and social externalities created by suppliers through their operational activities. Such issues include, but are not limited to, environmental responsibility, human rights, labour practices, and ethics and corruption. Management may involve screening, selection, monitoring, and engagement with suppliers on their environmental and social impacts. The category does not address the impacts of external factors – such as climate change and other environmental and social factors – on suppliers’ operations and/or on the availability and pricing of key resources, which is covered in a separate category.
      • Supply Chain Management Entities in the Hardware industry commonly have relatively narrow profit margins and remain competitive by relying on complex, global supply chains and outsourced production to electronics manufacturing services (EMS) entities. Because entities in the industry typically contract with suppliers in countries with lower direct costs, entities often manufacture products in countries that have limited labour regulations or enforcement protecting workers. Entities in the industry may have limited direct control over social and environmental standards in production, making management of this issue difficult. This dynamic may increase an entity’s exposure to reputational risks and impacts on short- and long-term costs and sales. Such effects may arise from increasing regulation and enforcement in response to high-profile safety or labour incidents, or through a shift in demand away from entities associated with such incidents. Entities that actively manage the impacts generated by the supply chain using supplier standards, monitoring and engagement may better protect shareholder value over the long term.
    • Materials Sourcing & Efficiency The category addresses issues related to the resilience of materials supply chains to impacts of climate change and other external environmental and social factors. It captures the impacts of such external factors on operational activity of suppliers, which can further affect availability and pricing of key resources. It addresses a company’s ability to manage these risks through product design, manufacturing, and end-of-life management, such as by using of recycled and renewable materials, reducing the use of key materials (dematerialization), maximizing resource efficiency in manufacturing, and making R&D investments in substitute materials. Additionally, companies can manage these issues by screening, selection, monitoring, and engagement with suppliers to ensure their resilience to external risks. It does not address issues associated with environmental and social externalities created by operational activity of individual suppliers, which is covered in a separate category.
      • Materials Sourcing Entities in the Hardware industry rely on numerous critical materials as important inputs for finished products. Many of these inputs have few or no available substitutes and often are sourced from only a few countries, many of which may be subject to geopolitical uncertainty. Other sustainability impacts related to climate change, land use, resource scarcity and conflict in regions where the industry’s supply chain operates are also increasingly shaping the industry’s ability to source materials. Additionally, increased competition for these materials because of growing global demand from other sectors may result in price increases and supply risks. The ability of entities to manage potential material shortages, supply disruptions, price volatility and reputational risks is made more difficult by the practice of commonly sourcing materials from supply chains that may lack transparency. Failure to effectively manage sourcing may constrain access to necessary materials, reduce margins, impair revenue growth or increase costs of capital.
    • 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.
      None
  • Investment Banking & Brokerage Remove
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    • Data Security The category addresses management of risks related to collection, retention, and use of sensitive, confidential, and/or proprietary customer or user data. It includes social issues that may arise from incidents such as data breaches in which personally identifiable information (PII) and other user or customer data may be exposed. It addresses a company’s strategy, policies, and practices related to IT infrastructure, staff training, record keeping, cooperation with law enforcement, and other mechanisms used to ensure security of customer or user data.
      None
    • Employee Engagement, Diversity & Inclusion The category addresses a company’s ability to ensure that its culture and hiring and promotion practices embrace the building of a diverse and inclusive workforce that reflects the makeup of local talent pools and its customer base. It addresses the issues of discriminatory practices on the bases of race, gender, ethnicity, religion, sexual orientation, and other factors.
      • Employee Diversity & Inclusion Entities in the Investment Banking & Brokerage industry face significant competition for skilled employees. As the industry continues to undergo rapid innovation through the introduction of more complex financial products and computerised algorithmic and high-frequency trading, material concerns such as profitability are more likely to determine the ability of entities to attract and retain skilled employees. By ensuring gender and racial diversity throughout the organisation, entities may expand their candidate pool, which may reduce hiring costs and improve operational efficiency. Evidence also suggests that entities with more diverse groups of employees may reduce risk-taking among employees involved in risk-prone trading activities (for example, trading), which may reduce the entity’s overall risk exposure. Entities with more diverse workforces may, therefore, be better able to attract skilled labour, adapt to advancements in technology and safeguard employee well-being.
    • 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 Banking & Brokerage Activities Environmental, social and governance (ESG) factors may have material impacts on the entities assets and projects across a range of industries to which investment banks provide services or in which they invest. Therefore, by accounting for these factors in underwriting, advisory, investing and lending activities, investment banks may manage significant positive and negative environmental and social externalities effectively. The potential for both value creation and loss associated with ESG factors suggests that investment banking and brokerage entities have a responsibility to shareholders and clients to consider these factors when analysing and valuing core products, including sell-side research, advisory services, origination, underwriting and principal transactions. Investment banking and brokerage entities that fail to manage these risks and opportunities effectively may expose themselves to increased reputational and financial risks. Appropriately pricing ESG risks may reduce investment banks’ financial risk exposure, help generate additional revenue or open new market opportunities. To help investors better understand how entities in the industry manage these issues, investment banks should disclose how they incorporate ESG factors in their core products and services.
    • Supply Chain Management The category addresses management of environmental, social, and governance (ESG) risks within a company’s supply chain. It addresses issues associated with environmental and social externalities created by suppliers through their operational activities. Such issues include, but are not limited to, environmental responsibility, human rights, labour practices, and ethics and corruption. Management may involve screening, selection, monitoring, and engagement with suppliers on their environmental and social impacts. The category does not address the impacts of external factors – such as climate change and other environmental and social factors – on suppliers’ operations and/or on the availability and pricing of key resources, which is covered in a separate category.
      None
    • Materials Sourcing & Efficiency The category addresses issues related to the resilience of materials supply chains to impacts of climate change and other external environmental and social factors. It captures the impacts of such external factors on operational activity of suppliers, which can further affect availability and pricing of key resources. It addresses a company’s ability to manage these risks through product design, manufacturing, and end-of-life management, such as by using of recycled and renewable materials, reducing the use of key materials (dematerialization), maximizing resource efficiency in manufacturing, and making R&D investments in substitute materials. Additionally, companies can manage these issues by screening, selection, monitoring, and engagement with suppliers to ensure their resilience to external risks. It does not address issues associated with environmental and social externalities created by operational activity of individual suppliers, which is covered in a separate category.
      None
    • 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 The regulatory environment surrounding the Investment Banking & Brokerage industry continues to evolve internationally. Entities must adhere to a complex and often inconsistent set of rules relating to performance and conduct, as well as provide disclosure on issues including insider trading, antitrust behaviour, price fixing and market manipulation. Entities are subject to strict legal requirements against tax evasion, fraud, money laundering and corrupt practices. In some jurisdictions, enhanced rewards for whistle-blowers may increase the number of complaints brought to regulators. Entities that ensure regulatory compliance through robust internal controls may build trust with clients, increase revenue and protect shareholder value by minimising losses incurred because of legal proceedings.
      • Professional Integrity The success of entities in the Investment Banking & Brokerage industry is dependent on cultivating client trust and loyalty. To ensure long-term, mutually beneficial relationships, entities must provide services that satisfy the highest professional standards, which means taking careful measures to avoid conflicts of interest, misrepresentation and negligence. Professional integrity also means following a code of ethics with respect to transparency and disclosure. These measures are important both for preserving an entity’s licence to operate, as well as for attracting and retaining clients. Failure to meet professional standards may lead to negative consequences such as legal penalties or reputational damage, harming the entity’s clients as well as its shareholders. To maintain professional integrity, entities must ensure employees are trained in, and committed to adhering to, applicable financial industry regulations. A description of management’s approach to assuring professional integrity may help investors understand risk exposure and processes in place to avoid misconduct. Disclosure of the entity’s amount of legal and regulatory fines and settlements may provide investors and stakeholders with more transparent information regarding which financial institutions are adhering to regulatory norms.
    • 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 Investment Banking & Brokerage entities that fail to manage risks to capital effectively may suffer significant value losses to their financial assets while increasing liabilities. Because of the interconnectedness of the global financial system, these failures can contribute to significant market disruption and financial crises. This systemic nature of risk has become a central concern for regulators. As a result, many jurisdictions require that banks undergo supervised stress tests to evaluate whether the entity has sufficient capital and liquidity to absorb losses, continue operations and meet obligations in adverse economic and financial conditions. Failure to meet regulatory requirements may lead to penalties and substantially increased future compliance costs. Investment banks should improve their disclosures by measuring how well they can absorb shocks arising from systemic stresses to demonstrate how risks associated with their size, complexity, interconnectedness, substitutability and cross-jurisdictional activity are being managed. Entities that commit to enhanced disclosures may experience improved investor and shareholder confidence, potentially leading to increased revenues.
      • Employee Incentives & Risk-taking Variations in employee compensation structures in the Investment Banking & Brokerage industry may incentivise employees to focus on short- or long-term entity performance. Structures that emphasise short-term performance may encourage excessive risk-taking, with adverse implications for long-term corporate value. Various financial crises in recent decades have increased regulatory and shareholder scrutiny towards excessive risk-taking behaviour. Enhanced disclosure of employee compensation, focusing on performance metrics and variable remuneration, policies regarding clawback provisions, supervision, control and validation of traders’ pricing of Level 3 assets may provide investors with a better understanding of how entities are preserving corporate value by prioritising long-term growth over short-term reward.

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