SASB Calls on Companies to Enhance their Investor Disclosures

The Investor Advisory Group (IAG) of the Sustainability Accounting Standards Board (SASB), which represents 55 members and USD 41 trillion in assets under management, has updated its call for companies to enhance their sustainability disclosures to investors.

Investors and companies have been looking for standards which will help them to measure the sustainability of their activities. The SASB standards have been tailored specifically to assist companies with the ways they communicate with investors but have been considerably strengthened from their earlier 2016 iteration.

The standards are industry-specific, metric-driven and focused on financial materiality. They are designed to improve the comparability of ESG-related data and enable the integration of ESG considerations into investment and stewardship decisions across global portfolios and asset classes.

They are designed to improve understanding of company performance on ESG issues which are most relevant to long term value creation or destruction. Disclosure via SASB Standards yields improved quality and comparability of ESG data, not only via quantitative performance-focused metrics, but also qualitative measures that provide insights into the context around performance.

These are important tools for investors, helping to improve price discovery and valuations across asset classes and global capital markets. They are designed to enable integration of ESG considerations into investment and stewardship decisions across global portfolios. In the words of the SASB, “other reporting standards and frameworks may complement SASB Standards but are not replacements for them.”

Ole Buhl, Vice President and Head of ESG at ATP, and a member of the SASB Investor Advisory Group, said: “Within the broader landscape of sustainability disclosure, SASB Standards are specifically designed to meet investor needs. That’s why the IAG is asking companies to use the SASB Standards as a core part of their disclosure.”

SASB’s IAG was set up in 2016 to demonstrate investor demand for improved quality and comparability of ESG data and provide investor feedback and guidance for the organisation. It has more than doubled in the last four years and includes some major institutions, like AXA Investment Managers, BlackRock, CalPERS, CalSTRS, Federated Hermes, Fidelity Investments, Franklin Templeton, Goldman Sachs, Legal & General and Nordea Asset Management, among many others.

SASB is active in a global effort to integrate ESG reporting standards and frameworks into a comprehensive global system for sustainability reporting. Recently it issued a joint statement with a number of other organisations outlining their shared vision (e.g., Carbon Disclosure Project, CDSP and Global Reporting Initiative). It is gaining support as a helpful tool for investor-focused disclosure. For example, the UK’s Financial Reporting Council has encouraged UK public interest entities to voluntarily report using the Task Force on Climate-related Financial Disclosure (TCFD) recommendations and the SASB standards to meet the needs of investors.

To this end the SASB announced last month it would be merging with the International Integrated Reporting Council (IIRC) to form the Value Reporting Foundation. This will continue to provide investors and corporates with a comprehensive corporate reporting framework across the full enterprise value drivers and standards, helping to drive global sustainability performance.

“This merger is a significant advancement towards building a comprehensive system of corporate reporting, as we work to ensure integrated reporting and sustainability disclosure have the same level of rigour as financial accounting and disclosure,” explained Charles Tilley, CEO of the IIRC.