Who is SASB and why do investors like it?
By: Marimar Torreblanca
Tags: Consulting, Sasb, Esg, Environment, Finance

August 6th, 2020

This week I want to talk about SASB’s standards and whether companies who report under the GRI’s methodology should look into them as a complement or a substitute.

Who is SASB?

SASB stands for Sustainability Accounting Standards Board. SASB was founded in 2011 as a non-profit organization focused on independent standards setting. According to its website, this organism’s mission is to “help businesses around the world identify, manage and report on the sustainability topics that matter most to their investors.”

To do this, SASB developed 77 sets of industry-specific standards gathering feedback from companies, investors, and other market participants. Each set of standards focuses on what SASB has determined to be the most financially material topics for each industry. In their own words, these are “issues that are reasonably likely to impact the financial condition or operating performance of a company and therefore are most important to investors.”

SASB’s industry standards include related accounting metrics (to have KPIs to measure the company’s performance), technical protocols for compiling data, and data units for normalization.

What is the SASB’s materiality map?

“The SASB Materiality Map® is an interactive tool that identifies and compares disclosure topics across different industries and sectors.” In other words, this map highlights the most relevant issues for any given industry and sector. It helps companies identify which issues they should be exploring and reporting on, and it helps investors identify where they should focus on when analyzing a given company or industry.

The map includes 26 sustainability issues which are organized under five sustainability dimensions (Social Capital, Human Capital, Business Model & Innovation, Leadership & Governance, and Environment). The list was refined by focusing on issues (out of all the issues that can be discussed when talking about ESG) that are most likely to have a financial impact on the company.

SASB vs GRI and the likes

The biggest difference between SASB and GRI is that SASB is much more focused. GRI’s standards are broader and they try to cover the needs for information for a wide set of stakeholders of all kinds of organizations. SASB really only focuses on issues that could impact financially a company. For this, the use of SASB is probably more relevant for investors, debt holders, and internal stakeholders.

The good news for companies who already report under other methodologies, is that many of SASB’s key indicators are already referenced in other standards (for example, in GRESB for real estate companies). Thus, companies that make an effort towards improving disclosure one way or another, will probably improve on SASB-terms too. And actually GRI and SASB have announced a partnership to provide guidance on joint implementation.

We know the process of trying to decide on a given set of standards for reporting is confusing for many companies. It is also confusing for investors. We also know most companies default to GRI (although over time this may change given the push of many visible investors such as Blackrock towards SASB). We are happy to help companies deal with these decisions as many factors come into consideration when optimizing the ESG reporting. In the end though, good disclosure is good disclosure no matter who stamps your report.

I hope you found this useful. As usual, if there is anything we can help you with, please reach out.

Best,

Marimar

Partner, Miranda ESG