External Reporting on Environmental, Social, and Governance Issues and the Sustainability Accounting Standards Board (SASB)

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Alan Glazer

By Alan Glazer

Alan Glazer has taught financial accounting at Franklin & Marshall College, Lancaster, PA, since 1975. He has served as chair of the Department of Business, Organizations, and Society and is presently Henry P. and Mary B. Stager Professor of Business. Glazer did his undergraduate work at Franklin & Marshall and completed his Master’s and Ph.D. at the University of Pennsylvania. He also is a CPA (inactive) in PA. Glazer’s recent research focuses on financial reporting of for-profit companies. He has published four research monographs for Bloomberg BNA and is currently studying how companies disclose information about sustainability issues. He is a reviewer for, and member of the editorial board of, the Journal of Accountancy. Glazer served as associate director of the Independence Standards Board’s conceptual framework project and as a consultant to the AICPA’s Not-for-Profit Committee. He has written articles on auditor independence, not-for-profit reporting, and accounting ethics.

Standalone sustainability reporting—communications prepared by managements of business organizations for investors, creditors, and other external stakeholders that discuss organizations’ environmental, social, and governance (ESG) activities and impacts—by large U.S. public companies has become the norm, with over 80 percent of S&P 500 companies issuing such reports in 2016, up from just 20 percent in 2011. Nevertheless, the lack of specific disclosure requirements and standardized metrics for communicating information about companies’ ESG activities often results in disclosures that are inconsistent from company to company and from year to year and, as a result, may not be useful to investors.

Several organizations have developed guidelines that companies employ to communicate ESG-related information, including the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC), the CDP (formerly the Carbon Disclosure Project), and the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD). This special report focuses on one organization, the Sustainability Accounting Standards Board (SASB), a U.S.-based group whose main goal is to improve ESG-related disclosures in U.S. Securities and Exchange Commission (SEC) filings.The Sustainability Accounting Standards Board (SASB) is funded in part by Bloomberg Philanthropies, and Michael Bloomberg, founder of the global business, financial information and news leader Bloomberg L.P., sits on its board. Bloomberg BNA is an affiliate of Bloomberg L.P. The special report begins with a brief introduction to sustainability reporting. Subsequent sections discuss the SASB’s mission and organizational structure, its approach to materiality, and its standard-setting process. The special report summarizes the status of the SASB’s provisional standards through Sept. 1, 2017, briefly discusses recent developments affecting the SASB, and concludes with some remarks about its future.


Many commentators believe that investors and other stakeholders need information about a company’s performance beyond that provided by traditional financial reporting. In their view, an organization’s long-term success depends on its ability to manage both financial and a wide variety of nonfinancial aspects of its activities, including those related to environmental ( e.g., energy and water usage and carbon emissions), social ( e.g., labor practices, health and safety, and workforce diversity), and governance ( e.g., ethics, board of directors’ structure and independence, and executive compensation) issues. Reporting “nonfinancial” information helps ensure that investors and others are aware of the wide range of complex issues organizations face and how those organizations are managing the related risks and opportunities. That information is particularly useful when it clearly links an organization’s performance on ESG issues with its business strategies and financial performance.The financial implications of managements’ failure to address sustainability-related issues can be significant. For example, the increased demand for, and reduced availability of, certain natural resources mean more global competition and pressure on companies to reduce waste. Increased concern about organizational lapses in environmentally risky situations—such as the Exxon Valdez and Deepwater Horizon oil spills and the Bhopal chemical accident—as well as the risks of corporate governance failures—including those that came to light in the aftermath of the 2008 global financial crises—has led many commentators to suggest that public companies’ sustainability-related risks should be more clearly reflected in their financial reporting. A recent survey (“Is Your Nonfinancial Performance Revealing the True Value of Your Business to Investors?”) of institutional investors, for example, reported that (a) 92 percent believe ESG issues have long-term “quantifiable” impacts; (b) 89 percent believe that “generating sustainable returns over time” requires a sharper focus, not only on governance, but also on environmental and social factors; and (c) 63 percent believe that a company’s annual report is the most useful source of ESG-information to support their investing decisions. Increased investor interest in ESG-related matters also is evident in the large number of recent shareholder resolutions dealing with those issues: more than two-thirds of the shareholder proposals filed in 2016 related to those areas, including many seeking expanded external reporting. For example, as reported by the New York Times, more than 60 percent of ExxonMobil shareholders approved a non-binding proposal in 2017 recommending that the company disclose how requirements to reduce greenhouse gas (GHG) emissions could impact the value of the company’s oil fields, pipelines, and refineries. Another indication of increased stakeholder concerns is proxy advisory firms’ implementation of specific voting policies on shareholder resolutions dealing with sustainability issues. For example, Institutional Shareholder Services (ISS) generally supports shareholder proposals to expand sustainability reporting unless the company has included similar information in other sustainability reports or has committed to implementing standards-based reporting ( e.g., one based on the GRI framework).In response to stakeholders’ concerns, many companies have expanded their ESG-related reporting by (a) including additional information in traditional external financial reports; (b) providing online and hard copy stand-alone reports, typically using one or more of the reporting frameworks mentioned below and often referred to by various names, including sustainability reports; environmental, social, and governance reports; corporate social responsibility reports; and nonfinancial reporting; (c) combining in a single report both traditional financial reporting and reporting on sustainability issues, a technique often called “triple bottom line” or “integrated reporting;” and (d) providing information to organizations such as the U.S. Environmental Protection Agency (EPA) and the CDP. The information may be quantitative or qualitative in nature, may be expressed in monetary or other terms, and may be subject to independent assurance. The American Institute of CPAs (AICPA) issued “Attestation Engagements on Sustainability Information (Including Greenhouse Gas Emissions Information, ” this year. That guide is intended to be used by accountants who provide attestation services on clients’ sustainability reporting. Despite the growing availability of ESG-related information, many investors and other stakeholders apparently are increasingly dissatisfied with the quality of the information currently provided by many companies. For example, over 40 percent of the investors responding to a 2016 survey indicated that ESG-related information is often “inconsistent, unavailable, or not verified” and is “seldom available for comparison with those [measurements] of other companies.” This was double the number reported in a similar survey in 2013.


The GRI, IIRC, and TCFD and other organizations have developed frameworks that many companies are using as guides to disclose sustainability information. Various regulatory and other initiatives, both in the U.S. and elsewhere (for example, the SEC’s interpretive release and the EU’s Directive have included guidance for disclosing ESG-related information). A standard framework—such as U.S. generally accepted accounting principles (GAAP) used in external financial reporting—would allow investors to assess more effectively a company’s (a) ESG-related activities, risks, and opportunities, (b) changes in a company’s sustainability performance over time, and (c) a company’s sustainability performance compared with that of other companies; however, no such framework currently exists.One significant issue facing companies trying to use existing sustainability reporting frameworks in their SEC filings is the difficulty in determining what ESG-related information is material to disclose under current SEC rules. The U.S. Supreme Court’s definition of materiality, which is used by the SEC, notes that information is material when there is “a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.” This definition of materiality differs from the one used in many of the existing sustainability reporting frameworks, and, as a result, those frameworks may not be suitable as guides for preparing ESG-related disclosures in SEC filings. The rest of this article focuses on one organization—the SASB—and its mission to develop industry-specific guidelines for disclosing ESG-related information in SEC filings.


The SASB is an independent private-sector group organized in July 2011. Its mission is

  • to maintain sustainability accounting standards that help public corporations disclose material, decision-useful information to investors in SEC filings. That mission is accomplished through a rigorous process that includes evidence-based research and broad, balanced stakeholder participation. The SASB, through its Foundation, also provides education and resources that advance use of the standards.
The SASB obtains most of its resources from grants by foundations and corporations—including Bloomberg Philanthropies and the Ford, PwC, and Deloitte Foundations—as well as in-kind contributions, donations, and loans from organizations and individuals. Earned revenues, which the SASB is trying to increase, are generated from a variety of sources, including educational programs, the Fundamentals of Sustainability Accounting (FSA) Credential program, publication sales and licensing fees, and partnerships with various service providers. Those sources are being supplemented in 2017 by dues from the new SASB Alliance, a program to provide educational and other resources to member organizations and individuals.

Organizational Structure

The SASB’s current two-tiered organizational structure is patterned after the one used by the Financial Accounting Foundation (FAF) and the Financial Accounting Standards Board (FASB). The SASB Foundation, an independent 501(c)3 organization, has overall fiduciary and oversight responsibility, but it delegates standard-setting authority to an independent body, the SASB Standards Board. The SASB Foundation’s board of directors is composed of a maximum of 21 members headed by a chair, currently Michael Bloomberg, and two vice chairs, currently Mary Schapiro and Robert Steel. It appoints SASB Standards Board members based on the recommendations of its governance and nominating committee. The Foundation Board’s standards oversight committee monitors the SASB Standards Board’s due process and standards-development activities.The SASB Standards Board, composed of between five and nine members with diverse backgrounds and experience who serve a maximum of two, three-year terms, is headed by a full-time chair, currently Jean Rogers, the SASB’s founder, and a vice chair, currently Jeffrey Hales. The Standards Board develops and maintains a technical agenda, ratifies SASB standards based on due process procedures, and updates those standards as needed. The chair of the SASB Standards Board calls and presides over its meetings and has other administrative functions, including supervising the SASB staff. A minimum of three board members (one of whom serves as chair) and an SASB analyst are assigned to each industry sector committee in which the SASB’s research and standard-setting work is typically done. The SASB Standards Board staff does research, consults on standards, proposes technical agenda items, and recommends Standards Updates to the Board. In addition to sector-specific analysts, the SASB staff includes a director of research, technical director, director of capital markets policy and outreach, and director of legal policy and outreach.The SASB’s “ Conceptual Framework,” revised in February 2017, discusses the “basic concepts, principles, definitions, and objectives” on which its standards are based (p. 1). Five sustainability dimensions are considered (pp. 2-4)—environment, social capital, human capital, business model and innovation, and leadership and governance—along with 30 broad sustainability issues (see Appendix A of this article) related to those dimensions. The Framework emphasizes that the SASB’s standard setting process helps to ensure that its standards provide information that is “reasonably likely to be material,” “decision-useful for companies and their investors,” and “cost-effective for corporate issuers” (pp. 9-11, emphasis in original).

Investor Focus

The SASB’s goal is to develop standards for companies to use to report to investors about material ESG-related issues in mandatory SEC filings. Its industry-specific standards include metrics for each sustainability issue that is likely to impact the financial performance of companies in that industry. Those metrics, together with narrative descriptions, help investors better understand (a) companies’ sustainability activities, (b) their portfolios’ exposure to ESG risk, and (c) how to integrate sustainability assessments into their analyses of companies’ operating performance and financial condition. The SASB’s “ Engagement Guide for Asset Owners & Asset Managers” contains specific questions that help investors to assess companies’ approaches to sustainability issues and to benchmark companies’ sustainability performance. The SASB’s Investor Advisory Group (IAG) of investors and asset managers provides input to the Board and encourages companies to disclose sustainability-related information and to get involved in the SASB standard-setting process. The SASB Foundation also has partnered with various organizations—including B Analytics, Clean Capitalist, cr360, eFront, Green Diamond, and WeSustain—to provide tools that help (a) companies gather and communicate information about sustainability-related issues and (b) investors use that information to analyze companies’ performance. Data sets based on SASB’s provisional standards also are available from various sources, including Bloomberg’s Environmental, Social and Governance DataSnapshot template and Insight360 on the Thomson Reuters Eikon App Studio.

Approach to Materiality

The SASB standards are intended to help registrants comply with existing U.S. securities laws and Regulation S-K requirements for disclosures in the Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) and other relevant sections of their annual filings on Forms 10-K and 20-F, as well as disclosures in other SEC filings. Item 303, Management Discussion and Analysis of Financial Condition and Results of Operations, of Regulation S-K, for example, requires companies to disclose in their MD&As the financial condition, results of operations, and management’s views on known trends and future uncertainties that are reasonably expected to have a material impact on companies’ sales, revenues, income, capital, or liquidity. Because of its scope, flexibility, and focus, the MD&A is the logical place for companies to report on their sustainability performance. The SASB expects companies to use the same processes and controls to produce sustainability-related information as they use for other information included in their MD&As. It also encourages companies to have their sustainability disclosures attested to in independent third party assurance engagements.The SASB recommends that companies include material sustainability-related disclosures in a separate section of their MD&As labeled “Sustainability Accounting Standards Disclosures.” Relevant information could also be included in other sections of Form 10-K and 20-F filings—for example, the “Description of Business,” “Legal Proceedings,” and “Risk Factors” sections—and in other filings as appropriate. Determining materiality is particularly complex for sustainability issues because of the large number of potential issues that could be included and the difficulty of measuring the impact on companies of those issues. Also, sustainability issues’ impacts often vary greatly from industry to industry—what might be a very significant issue for companies in one industry might be unimportant for companies in others.The SASB’s solution to the materiality problem has been to use an industry-specific standard-setting approach based on its proprietary Sustainability Industry Classification System (SICS™), in which industries are organized by their sustainability impacts. This seems logical because companies in an industry typically use similar resources to produce and sell similar goods and services and have similar business models, regulatory environments, and approaches to managing resources. As a result, those companies likely face similar sustainability issues—for example, product safety for pharmaceutical companies, fossil fuel-related stranded assets for oil and gas companies, and customer privacy for telecommunications companies. A broad sustainability standard applying to all companies in all industries could result in some companies being forced to disclose immaterial information or to use boilerplate language just to satisfy a standard’s requirements. The SASB’s initial materiality assessment process consisted of the following:

  •  Research on sustainability issues—Industry analysts on the SASB’s technical staff identified emerging sustainability issues of potential interest to investors that are reasonably likely to have material impacts on companies. Their research included developing initial indications of potential issues by searching for key words in a wide variety of public documents, including Form 10-Ks and 20-Fs, shareholder resolutions, and SEC comment letters.
  •  Assessing materiality—The analysts gathered evidence of links between companies’ performance on a sustainability issue and potential financial impacts on companies’ revenues, operating and financing costs, assets, liabilities, and risk profiles. Those links were found by reviewing both industry level information, such as government databases and academic research studies, and company-specific information, such as investor call transcripts, sell-side analyst research, and news articles. Based on their research, SASB analysts identified sustainability issues where there was both investor interest and potential material impacts on companies’ financial condition or operating performance.
  •  Assessing nature of impacts—The analysts modeled the potential financial impacts of the sustainability issues identified in their research to assess the likelihood and size of potential impacts of both outstanding and poor company performance on those issues.
  •  Consultation and vetting—The SASB assessed the materiality of the issues by consulting a wide variety of individuals and organizations, including SEC registrants, investor and analyst organizations, and technical resource and sector advisory groups.
  •  Verification and validation—The SASB technical staff evaluated the quality of the reported metrics and other disclosures made by companies in their SEC filings to communicate information about the sustainability issue under study. This helped to verify that companies recognized the importance of the issues and the related impacts. (An additional verification step will include “back-testing” to evaluate whether a company’s performance on a particular sustainability issue is correlated with its financial performance.)
This process led to the development of an interactive Materiality Map™ showing the materiality level of 30 sustainability issues for companies in each of the 79 industries covered by its provisional standards.The SASB’s “ State of Disclosure Report 2016” notes that many companies already consider those issues material and therefore appropriate for disclosure. Almost 70 percent of the approximately 700 companies whose recent SEC filings the SASB staff examined included at least three quarters of the sustainability issues identified as material in the SASB’s provisional standard for that industry; almost 40 percent of the companies included disclosures about all of the SASB issues related to their industries. Nevertheless, fewer than one quarter of the disclosures contained sustainability-related metrics, and more than half used “boilerplate” non-specific language. The SASB believes that implementing its standards will greatly improve the usefulness of companies’ disclosures.


The SASB’s standard-setting process includes SASB staff recommendations to add items to its Standard Board’s technical agenda. Stakeholders also may submit proposals to add issues to the Board’s agenda, and Sector Advisory Groups and the IAG provide ongoing input on implementation and emerging issues. Proposed standards and updates are exposed for public comment, typically for 90 days. Final adoption of a new standard or update requires approval of at least a majority of the SASB Standards Board members.In March 2016, the SASB completed work on provisional standards covering 79 industries in 10 sectors—consumption, financials, health care, infrastructure, non-renewable resources, renewable resources and alternative energy, resource transformation, services, technology and communications, and transportation. Those provisional standards can be accessed on the SASB website, or by using the SASB Standards Navigator, a subscription-based research platform.Updates to SASB standards are to be made on three-year cycles unless developments occur requiring more frequent updating on a specific issue. The SASB also issues interpretations and technical and staff bulletins to help resolve questions and to provide implementation guidance.

Provisional Standards

The SASB recommends that companies use the provisional standards related to their primary industry, as listed in the SICS™. Companies operating in more than one industry should consider disclosing additional metrics and narrative information about the sustainability topics that the SASB considers material for each of those industries. “ SASB Industry Standards: A Field Guide,” summarizes the sustainability topics and metrics included in its 79 industry-specific provisional standards and discusses each industry’s risk exposures and opportunities. Each SASB provisional standard includes:

  •  “Disclosure guidance” containing, among other items, descriptions of (a) the industry to which the provisional standard is applicable, (b) the reporting format, and (c) the scope of disclosures ( e.g., covering the parent and other organizations that are consolidated for financial reporting purposes).
  •  “Accounting standards on sustainability topics”—This section includes each sustainability topic that the SASB believes is reasonably likely to have material effects on companies in that industry. Each provisional standard also provides (a) standardized quantitative sustainability accounting metrics recommended for use in measuring company performance on each disclosure topic or element of the topic and (b) the unit of measure—often a non-monetary one, such as water usage or safety data—to be used for each metric. To help ensure the information is complete, accurate, and comparable, accounting metrics should be accompanied by narratives (“Discussion & Analysis”) discussing important qualitative matters. Narratives should include, for example, the nature and basis of estimates companies used to develop the metrics and the inherent uncertainty in the disclosures, as well as their strategies and competitive positioning, the extent of companies’ control over the metric, their performance over the last three fiscal years, and any actions they have taken or plan to take to improve their performance. The provisional standards also provide references to appropriate technical protocols for each accounting metric to ensure the data are objective, measurable, complete, and relevant. Activity metrics also are included that can be used to scale or normalize the accounting metrics based on “high-level business data,” such as the number of employees, customers, or transactions. This is intended to provide context for the accounting metrics and to increase their usefulness.
An excerpt from the Provisional Standard for Airlines is included as Appendix B to this article.Although each company’s management has ultimate responsibility for making judgments about what specific sustainability issues are material, each SASB provisional standard (and the related industry research brief) indicates the sustainability topics that the SASB has concluded are reasonably likely to have material impacts on the financial condition and operating performance—that is, on its revenues, costs, assets, liabilities, and cost of capital—of the companies in that industry and, therefore, are likely to impact companies’ current or future financial values. On average, each industry-based standard includes five sustainability issues and 13 metrics (78 percent of which are quantitative).The SASB’s “ Implementation Guide for Companies,” is designed to help companies use the SASB provisional standards to improve their Form 10-K and 20-F disclosures. The Guide includes assistance on making materiality assessments and developing appropriate disclosures, metrics, and related narratives and provides suggestions for performance evaluation and benchmarking. The SASB also has developed illustrative MD&A disclosures based on its provisional standards.Bloomberg L P., a private company, is the first organization to implement the SASB provisional standards, which it began to do in its 2014 sustainability report. Its “2016 Impact Report” and the related supplement, “ 2016 SASB Disclosure,” provide quantitative metrics and narrative information as recommended by the SASB standards for the Internet media and services, media production and distribution, and professional services industries.Although companies often include in their MD&As many of the topics covered by the SASB provisional standards, very few public companies mention those standards in their SEC filings. Some public companies, however, have started to cite the SASB’s provisional standards in their standalone sustainability reports. For example, Hewlett-Packard Inc’s 2016 Sustainability Report notes:
  • Building on a model previously established, we produced a materiality assessment for HP in 2015. Working with the consultancy BSR (formerly Business for Social Responsibility), we reviewed internal documents, interviewed key internal and external stakeholders, and considered developments in our industry and emerging trends in sustainability. We also took into account leading reporting frameworks, including the Global Reporting Initiative (GRI) G4 Sustainability Reporting Guidelines, and the Sustainability Accounting Standards Board (SASB) Standards.
Other recent examples include JetBlue Airways Corp’s “ 2016 Sustainability Accounting Standards Board Report” and NRG Energy Inc’s “ 2016 Sustainability Report.” The SASB expects that many more companies will use its standards to prepare their MD&As after its provisional standards have been codified.


As part of a major initiative, the SEC is currently studying the overall effectiveness of its existing sustainability-related disclosure guidance. Its Concept Release, “ Business and Financial Disclosure Required by Regulation S-K,” issued in April 2016, solicits stakeholder comments about a wide variety of topics, including the need for improving its sustainability-related disclosure requirements as well as the costs and benefits of disclosing that information. Specific sustainability-related questions in the Concept Release (Section IV.F.3, “Disclosure of Information Relating to Public Policy and Sustainability Matters”) include:

  •  What specific sustainability issues are relevant for investors and what guidance could best be provided to ensure appropriate disclosure of that information?
  •  What implementation issues and compliance costs might arise if new sustainability disclosures are required?
  •  Is the SEC’s 2010 guidance for disclosing climate change information adequate? Should it encourage companies to provide expanded disclosures about climate change?
The SASB, as well as many institutional investors and other stakeholders, have responded to the SEC’s request for comments. Many of those responses concern (a) the inadequacies of ESG-related information currently reported in SEC filings and (b) the need to have additional requirements to ensure companies disclose quantitative and qualitative information about material ESG issues that is uniform, reliable, and comparable.The SASB also is involved in a major initiative to update its guidance. Between September 2016 and March 2017, the SASB consulted with many investors and other stakeholders about its existing provisional standards. Based on the comments it received, the SASB developed and issued its 2017 Technical Agenda, which includes almost 250 potential changes in topics, metrics, and technical protocols affecting 11 industry sectors for which it issues standards. Following a period of public comment and review to ensure its revised standards will be relevant for investors and cost effective for companies, the Board plans to issue a codification of its updated standards, including a basis of conclusion for each proposed update to the provisional standards, during the first quarter of 2018. The SASB anticipates that ratifying its provisional standards will encourage more companies to adopt them beginning with their 2018 SEC filing seasons. In order to understand more clearly the potential impacts on companies that will use its standards, the SASB has asked three academic researchers to study potential implementation costs and benefits and related issues such as materiality assessment and standards enforcement and oversight. The researchers expect to complete their work in January 2018.


Some commentators have suggested that the SASB’s mission to expand traditional financial reporting to include ESG-related disclosures about organizations’ sustainability activities should be done cautiously, if at all. Some of their concerns are based on companies’ existing disclosure practices: information about ESG activities and risks of many organizations, especially those of large publicly held companies in the U.S., is available from many print and online sources, including company websites, statutory and regulatory reports, equity research reports, and the financial press. In some commentators’ views, including sustainability information in SEC filings does not offer any comparative benefits over other sources of information. It can, however, result in higher external reporting costs because of additional staff time and the need for developing new information systems; it also may increase assurance-related costs.Despite the increasing availability of ESG-related information, some published surveys and other research suggest that mainstream investors and analysts may not be employing the information because it isn’t useful in assessing organizations’ overall sustainability performance or in linking that performance with organizations’ financial performance. Another frequent criticism of current reporting on ESG-related issues is that some managers engage in “greenwashing”—attempting to enhance an organization’s reputation and to protect its brand by accidentally or deliberately misleading stakeholders about its sustainability successes by showing the organization in a favorable light while ignoring negative aspects of the organization’s environmental and social impacts or without having any genuine interest in improving its sustainability performance. (See C. Marquis, M. Toffel, and Y. Zhou, “Scrutiny, Norms, and Selective Disclosure: A Global Study of Greenwashing,” Organization Science (2016), pp. 483-504.) A related problem is that some companies include too many, and often irrelevant, details about their ESG-related activities. This “information overload” or “carpet bombing” allows relevant information to be hidden among boilerplate information not important to investors’ decisions. (See C. Cho, G. Michelon, D. Patten, and R. Roberts, “CSR Disclosure: The More Things Change…?, Accounting, Auditing, & Accountability Journal (2015), pp. 14-35.)


This special report has described the SASB’s history, staff and organizational structure as well as its materiality assessment and standard setting processes. It also discussed the SASB’s provisional standards and recent developments and concerns that may affect the organization’s future.The SASB’s approach to developing sustainability standards has several specific advantages:

  •  It uses the SEC’s traditional definition of materiality as a guide to determining what issues companies should include in their SEC filings.
  •  It uses a proprietary, industry-based approach to developing standards, with extensive input from a wide variety of stakeholders and with the goal of helping companies provide reliable and comparable information relevant for decision making.
  •  It is built on cost-effective compliance with current U.S. securities laws and SEC requirements, eliminating the need for new legislation or SEC rules.
  •  It allows for the easy integration of the GRI and other sustainability reporting frameworks as well as reporting metrics developed by a wide variety of sources, such as the EPA and CDP.
Several weaknesses of its approach also can be identified:
  •  As an independent organization, it has relied on grants, donations, and loans for most of its financial resources, a risky approach if its future work fails to please its financial supporters.
  •  Its standards are not required or endorsed by the SEC for use in SEC filings. As a result, the credibility of its voluntary standards relies on their acceptance by companies’ boards and managements.
  •  Its provisional standards have not been widely cited in companies’ SEC filings or standalone sustainability reports. This may be due to the absence of such a requirement, the provisional nature of those standards, or because many managements already use other sustainability guidelines in their standalone sustainability reports.
The SASB’s future could be greatly affected by the outcome of the SEC’s current disclosure effectiveness project. The future of the SASB obviously would be assured if the SEC mandates inclusion of ESG-related information in its filings in accordance with SASB standards. At this point, however, there doesn’t appear to be sufficient research evidence that the benefit of such a requirement would more than offset its cost. If more companies voluntarily adopt the newly codified SASB standards, however, and future research supports the usefulness to investors of the resulting disclosures, the SEC may acknowledge or require those standards as appropriate guidelines for companies to use in Form 10-K and 20-F filings. However, it is still too early to tell if and when that will occur. Until that point, increased voluntary adoption of the SASB’s standards and an engaged Investor Advisory Group will be critical in ensuring that the organization has sufficient credibility and access to adequate financial resources to survive as an independent organization.


This exhaustive list of sustainability factors is filtered down through a series of steps, outlined in the Process section of this document, which are designed to identify only those issues reasonably likely to have material impacts on companies in an industry. Environment

  •  Greenhouse gas emissions
  •  Air quality
  •  Energy management
  •  Fuel management
  •  Water and wastewater management
  •  Waste and hazardous materials management
  •  Biodiversity impacts
Social Capital
  •  Human rights and community relations
  •  Access and affordability
  •  Customer welfare
  •  Data security and customer privacy
  •  Fair disclosure and labeling
  •  Fair marketing and advertising
Human Capital
  •  Labor relations
  •  Fair labor practices
  •  Employee health, safety and wellbeing
  •  Diversity and inclusion
  •  Compensation and benefits
  •  Recruitment, development, and retention
Business Model & Innovation
  •  Lifecycle impacts of products and services
  •  Environmental and social impacts on core assets and operations Product packaging
  •  Product quality and safety
Leadership & Governance
  •  Systemic risk management
  •  Accident and safety management
  •  Business ethics and transparency of payments
  •  Competitive behavior
  •  Regulatory capture and political influence
  •  Materials sourcing
  •  Supply chain management


An excerpt from the Provisional Standard shows sustainability disclosure topics, as well as accounting metrics.

Environmental Footprint of Fuel Use
A. Description

As a result of heavy reliance on oil, the Airlines industry generates a significant amount of direct greenhouse gas (GHG) emissions and is subject to potential compliance costs and risks associated with climate change mitigation policies. Over 99 percent of airline emissions are in the form of carbon dioxide. The main sources of GHG emissions for airlines companies are aircraft fuel use and emissions, ground equipment, and facility electricity. Aircraft emissions are the largest contributor to total emissions from the industry, and fuel management is a critical part of reducing emissions. The management of the environmental impacts of fuel usage includes both fuel efficiency and the use of alternative fuels, which are effective ways for airlines to increase profits through reduced fuel costs while also limiting exposure to volatile fuel pricing, future regulatory costs, and other consequences of GHG emissions.

B. Accounting Metrics
a. TR0201-01. Gross global Scope 1 emissions

1. The registrant shall disclose gross global Scope 1 greenhouse gas (GHG) emissions to the atmosphere of the six GHGs covered under the Kyoto Protocol (carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride).

  •  Emissions of all gases shall be disclosed in metric tons of carbon dioxide equivalents (CO2-e) calculated in accordance with published global warming potential (GWP) factors. To date, the preferred source for GWP factors is the IPCC’s Second Assessment Report (1995).
  •  Gross emissions are GHGs emitted to the atmosphere before accounting for any GHG reduction activities, offsets, or other adjustments for activities in the reporting period that have reduced or compensated for emissions.
  •  Disclosure corresponds to section CC8.2 of the Carbon Disclosure Project (CDP) Questionnaire and section 4.25 of the Climate Disclosure Standards Board (CDSB) Climate Change Reporting Framework (CCRF).
2. Scope 1 emissions are defined by the World Resources Institute and the World Business Council on Sustainable Development in (WRI/WBCSD) The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, Revised Edition, March, 2004 (hereafter, the “GHG Protocol”).
  •  These emissions include direct emissions of GHGs from stationary or mobile sources that include, but are not limited to, equipment, production facilities, office buildings, and transportation (i.e., marine, road, or rail).
3. GHG emission data shall be consolidated according to the approach with which the registrant consolidates its financial reporting data, which is generally aligned with: 4. The underlying technical approach to data collection, analysis, and disclosure shall be consistent with the CDP Guidance.
  •  The registrant shall consider the CDP Guidance as a normative reference, thus any updates made year- on-year shall be considered updates to this guidance.
5. The registrant should discuss any change in its emissions from the previous fiscal year, such as explaining if the change was due to emissions reductions, divestment, acquisition, mergers, changes in output, and/or changes in calculation methodology.

6. In the case that current reporting of GHG emissions to the CDP or other entity ( e.g., a national regulatory disclosure program) differs in terms of the scope and consolidation approach used, the registrant may disclose those emissions. However, primary disclosure shall be according to the guidelines described above.

7. The registrant should discuss the calculation methodology for its emission disclosure, such as noting if data are from continuous emissions-monitoring systems (CEMS), engineering calculations, mass balance calculations, etc.

b. TR0201-02. Description of long-term and short-term strategy or plan to manage Scope 1 emissions, emissions reduction targets, and an analysis of performance against those targets

8. The registrant shall discuss the following, where relevant:

  •  The scope of its activities, particularly if strategies, plans, and/or reduction targets pertain differently to different business units, geographies, or emissions sources;
  •  If strategies, plans, and/or reduction targets are related to or associated with an emissions disclosure (reporting) or reduction program ( e.g., E.U. ETS, RGGI, WCI, etc.), including regional, national, international, or sectoral programs; and
  •  The activities and investments required to fulfill the plans and any risks or limiting factors that might affect fulfillment of the plans and/or targets.
9. For emission-reduction targets, the registrants shall disclose:
  •  The percentage of emissions within the scope of the reduction plan;
  •  The percentage reduction from the base year,
  •  The base year is the first or starting year against which emissions are evaluated toward the achievement of the target
  •  Whether the target is absolute or intensity-based, and the metric denominator if it is an intensity-based target;
  •  The timelines for the reduction activity, including the start year, the target year, and the base year. Disclosure shall be limited to activities that were ongoing (active) or reached completion during the fiscal year; and
  •  The mechanism(s) for achieving the target, such as energy efficiency efforts, energy source diversification, carbon capture and storage, etc.
10. Where necessary, the registrant shall discuss any circumstances in which the target base year emissions have been or may be recalculated retrospectively or in which the target base year has been reset.

11. Disclosure corresponds with:

  •  CDSB Section 4, “Management actions”
  •  CDP questionnaire “CC3, Targets and Initiatives”
12. Relevant initiatives to discuss may include, but are not limited to, fuel optimization efforts such as the use of ground power and pre-conditioned air rather than Auxiliary Power Units (APU) when parked at gate, adjusting flight speed to optimize fuel efficiency, and route design (NextGen). Aircraft-related efforts can include the use of winglets, reduction in weight, and upgrading of the fleet to new aircraft.

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