The SASB standards are developed in accordance with its conceptual framework that sets the concepts, objectives and principles that guide its 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 key to this end.
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. Not only focusing on financially material issues, SASB also attempts to harmonise its standards with existing metrics and frameworks, where possible, to minimise the corporate reporting burden.
The SASB Conceptual Framework also outlines principles for topic selection, including the potential for the topic to affect the ability to create value. 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:
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 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.
