What is the SASB Framework?
The Sustainability Accounting Standards Board (SASB) framework is a set of industry-specific standards that guide companies in disclosing financially material sustainability information to investors. SASB standards help companies communicate how sustainability issues impact their financial performance, making it easier for investors to compare sustainability performance across different companies and industries.
Why is the SASB Framework Important?
Industry-Specific Focus: SASB standards are tailored to the specific sustainability issues that are most relevant to each industry, ensuring companies report on topics that are financially material.
Investor Relevance: By focusing on material ESG factors that affect financial performance, SASB provides investors with the information needed for informed decision-making.
Global Applicability: While SASB is based in the United States, its standards are used globally to enhance transparency and align with investor expectations.
Complementary to Other Frameworks: SASB can be used alongside frameworks like the Global Reporting Initiative (GRI) and the Task Force on Climate-related Financial Disclosures (TCFD) for a comprehensive view of a company’s sustainability performance.
Key Metrics in the SASB Framework
SASB standards cover 77 industries, each with specific disclosure topics and metrics. Although metrics vary by industry, they generally focus on the following areas:
Environmental Impact:
Greenhouse Gas Emissions: Reporting on CO2 and other greenhouse gas emissions, including Scope 1, 2, and 3 where applicable.
Water Management: Metrics on water use, conservation efforts, and impacts on local water resources.
Waste Management: Information on hazardous and non-hazardous waste generation, disposal, and recycling.
Social Capital:
Data Privacy and Security: How companies protect customer and employee data from breaches.
Product Quality and Safety: Metrics on product recalls and safety incidents.
Access and Affordability: Information on the accessibility and affordability of essential products and services.
Human Capital:
Labour Practices: Reporting on employee turnover, labour conditions, and fair wages.
Employee Health and Safety: Workplace injuries, fatalities, and overall health and safety practices.
Diversity and Inclusion: Data on workforce diversity, including gender and minority representation.
Business Model and Innovation:
Sustainable Product Design: Development and sales of environmentally friendly products.
Supply Chain Management: Sustainability practices in the supply chain, including sourcing and supplier audits.
Leadership and Governance:
Business Ethics: Anti-corruption measures and ethical business practices.
Risk Management: How companies identify and manage risks, including sustainability-related risks.
What is Required from Companies Using the SASB Framework?
Materiality Assessment: Companies should conduct a materiality assessment to identify which SASB standards are relevant to their industry. This ensures they focus on disclosing information that is financially material.
Data Collection and Reporting: Set up processes to gather data on relevant SASB metrics and integrate sustainability data with financial disclosures in reports.
Transparency and Consistency: Ensure accurate, consistent, and transparent reporting. Use clear language to make disclosures accessible to investors and stakeholders.
Regular Updates: Regularly review and update SASB disclosures to reflect new information, risks, and changes in business strategy.
Difference Between SASB and CSRD Materiality Assessments
SASB Focuses on Financial Materiality: SASB is primarily concerned with identifying ESG issues that impact financial performance, focusing on investors' needs.
CSRD Requires Double Materiality: CSRD mandates that companies assess both financial materiality (how sustainability issues impact financial performance) and impact materiality (how the company’s operations impact society and the environment).
Potential Duplication of Work
Companies reporting under both SASB and CSRD frameworks may face duplication due to the different materiality approaches. To streamline efforts and reduce duplication:
Integrate Assessments: Combine materiality assessments to cover both SASB’s financial materiality and CSRD’s double materiality requirements.
Leverage Data: Use insights from one assessment to inform the other, ensuring all relevant ESG issues are addressed.
Seek Expert Guidance: Consult sustainability experts or use digital tools to manage the complexity of multiple frameworks effectively.
Conclusion
The SASB framework is a valuable tool for reporting on financially material sustainability issues, making it highly relevant for investors. However, companies also reporting under CSRD should be mindful of the different materiality approaches to avoid duplication of work. By integrating materiality assessments and aligning with both SASB and CSRD requirements, companies can enhance transparency, build investor trust, and support long-term value creation.
Need Help?
If you have questions about SASB reporting or need assistance aligning SASB with CSRD requirements, contact the KEY ESG team via our in-app chat function or email us at support@keyesg.com. We’re here to support your sustainability reporting journey.