time the “Big Four” accounting firms (KPMG, EY, Deloitte, PwC), responding in part to a rise in clients’ budgets for developing net zero emissions plans and other sustainability initiatives, have been working to set new international principles for measuring sustainability and to push forward the sustainability consulting business (Financial Times, 2021).

SASB has developed a complete set of 77 globally applicable industry standards, providing sectorspecific guidance on an extensive range of ESG topics. The main building blocks of SASB standards are the following: Environmental (E), Social and Human Capital (S), Business Model & Innovation and Leadership & Governance (G). We have aggregated these five dimensions into the three main dimensions of E, S and G. Next, we adapted the SASB methodology to take into account the structure of the ES questionnaire. In particular, the SASB subcategories were converted and aggregated into broader categories (for example, Energy Management, Water & Wastewater Management and Waste and Hazardous Material Management appear under a unified category called Green Management). This eclectic approach - which reflects the SASB framework, takes into account the approach of ESG rating agencies, and adapts to the structure of the ES questions – made it possible to match the survey’s questions with the ESG frameworks already in use.

# **SASB Dimensions and Categories**

|**Dimension**|**General Issue Category**|
|---|---|
||GHG Emissions|
||Air Quality<br>|
|**Environment**|Energy Management|
||Water & Wastewater Management|
||Waste & Hazardous Materials Management|
||Ecological Impacts|
||Human Rights & CommunityRelations|
||Customer Privacy|
||Data Security|
|**Social Capital**|Access & Affordability|
||ProductQuality& Safety|
||Customer Welfare|
||SellingPractices & Product Labeling|
||Labor Practices|
|**Human Capital**|Employee Health & Safety|
||Employee Engagement,Diversity& Inclusion|
||Product Design & Lifecycle Management|
|**Business Model**|Business Model Resilience|
|<br>**& Innovation**|SupplyChain Management|
||Materials Sourcing& Efficiency|
||Physical Impacts of Climate Change|
||Business Ethics|
|**Ldhi &**|Competitive Behavior|
|**eaersp**<br>**G**|Management of the Legal & RegulatoryEnvironment|
|**overnance**|Critical Incident Risk Management|
|Source: SASB|Systemic Risk Management|

ESG regulation is also evolving fast and is becoming more ambitious. Sustainability disclosure is among the priorities of the world’s largest investors, and the evolution of regulation is accompanying it. In most of the cases, these new regulations or standards are not only regulatory requirements, but “business imperatives” for companies and financial institutions, to serve the growing needs of investors and consumers.

The European Union is in the lead on ESG disclosure and the European Commission is developing extensive regulation both to provide a common language for environmentally sustainable activities, and to accelerate mainstreamed ESG disclosures:

- The Taxonomy Regulation (in force since July 2020) provides a common classification system for determining whether an economic activity qualifies as “environmentally sustainable”. The Taxonomy applies to (i) financial market participants, (ii) entities in scope of the Non-Financial Reporting Directive (NFRD), and (iii) Member States and the Union when setting out requirements for financial products considered environmentally sustainable.

- The European Green Bond standard proposal (July 2021) will create a voluntary “gold standard” for issuers seeking to use green bonds to raise funding on the capital markets.

6