The SASB standards are developed in accordance with their conceptual framework that sets out the concepts, objectives and principles that provide guidance for their standard setting process. In setting its standards SASB takes an evidence-based, market driven approach to determine whether sustainability topics are likely to be of interest to an investor, and likely to have material impacts on the financial condition or operating results of a company. Significant research and market engagement at both the industry and company level are critical to this end.
Key to this research and market engagement process are the SASB Standards Advisory Group and the SASB Standards Investor Advisory Group. As the consolidation moves forward, the Standards Advisory Group will transition to support the ISSB standard setting process. The Investor Advisory Group will also participate in the ISSB standards setting process, provide strategic advice to the ISSB, and advocate for use of ISSB standards.
The SASB Conceptual Framework also outlines principles for topic selection, including the potential for the topic to affect the ability to create value. In addition to identifying issues that are reasonably likely to be material, and decision-useful for both companies and investors, the objectives also give credence to cost-effectiveness for the corporation. It also lays out criteria for accounting metrics, including completeness, comparability and verifiability.
Based on input from companies that have already implemented their standards, SASB offers the following approach for companies evaluating their adoption:
Review and understand SASB metrics.
Analyse the delta between existing information and planned disclosures.
Identify SASB metrics to be disclosed.
Ensure data reliability.
Evaluate internal control over SASB metrics.
Consider disclosure controls and procedures.
Consider independent, third-party assurance
While the SASB standards are broken down into the 77 sectors across the 11 industry categories, the specific issues that drive long-term value creation will clearly vary from company to company, as well as from one industry to the next. Accordingly, when evaluating SASB standards implementation, consideration needs to be given not only to the key issues, but also any unique circumstances relevant to the business model, strategy and other contextual factors of the company.