As highlighted in the Sustainability and business — the call to action; build back better report, we have embarked on a thought leadership programme that explores accountancy and sustainability. This is part of a series of briefs exploring the topic of sustainability, business and the finance professional’s key role. These briefs will help organisations consider the sustainability issues, how to integrate them into their long-term decision-making, and how to incorporate these issues into internal and external reporting.
This paper is designed to present a summary of a specific standard or framework. It is written from the management accounting perspective. As a finance professional, you are likely to encounter one or many of the sustainability frameworks and standards. It is a crowded and fragmented landscape, with slightly different terms, inconsistent language and various measures between the numerous methodologies. Adding to the confusion is whether adoption is voluntary or mandatory, and that some organisations work with combinations of standards and frameworks at the same time. Finally, the approaches to reporting also differ. They range from annual reports, integrated reports, sections on an organisation’s website aimed at a specific audience or a stand-alone sustainability report.
Fortunately, there are several initiatives underway to address this fragmented accounting and reporting landscape and build a coherent global approach to corporate reporting that encompasses both financial and non-financial reporting.1
A framework or a set of standards? You must understand this difference.
A framework is a set of principles-based guidance for how information can be structured and prepared, and what broad topics should be covered. A set of standards are specific, replicable and detailed requirements for what should be reported for each topic. They are rules-based requirements.
Background
The Sustainability Accounting Standards Board (SASB), based in the United States, was established in 2011 with the original intent of providing standards for the U.S. capital markets. The majority (55%) of companies using the standards are within the United States.2 However, the reach of the SASB is increasingly global, and its mission is, ‘to help businesses around the world identify, manage and report on sustainability topics that matter most to their investors’, with a focus on what is financially material. The standards were launched in 2018.3
There are two main users of the SASB standards:
