Emerging Sustainability Reporting Standards

Whether they call it ESG (environment, social responsibility and governance), CR (corporate responsibility), sustainability or something else, more and more companies are choosing to voluntarily disclose their efforts and successes in this rapidly developing area of interest. For example, The Conference Board states that the rate of sustainability reporting has doubled just since 2012. Disclosures may appear in proxy statements, annual reports to shareholders, websites or special reports to the company’s various stakeholders. (See this Doug’s Note regarding this growing trend.)

Once a company has decided to provide sustainability disclosure, it next must address what to disclose and how? To date, no generally accepted practices have emerged. Standard-setters are, however, starting to pop up. Among them, the Sustainability Accounting Standards Board is beginning to get a lot of attention.

The SASB is a nonprofit organization created in 2011 whose mission is to “develop and disseminate sustainability accounting standards that help public corporations disclose material, decision-useful information to investors.” Its board of directors is a distinguished mix of executives, investors, professionals and academics chaired by Michael Bloomberg (who, no doubt, bolsters its visibility).

SASB has developed standards for sustainability analysis and disclosure on an industry-by-industry basis, dividing public companies into 88 industries in ten sectors. According to its web site:

“A new, standardized language is needed to articulate the material, non-financial risks and opportunities facing companies today. These non-financial risks and opportunities that affect corporations’ ability to create long term value are characterized as ‘sustainability’ issues. Sustainability issues vary by industry because they are closely aligned with business models, the way companies compete, their use of resources and their impact on society.”

So far, SASB has published standards for half of the ten sectors, including healthcare, technology and communications, financials, non-renewable resources and transportation. Sectors still in the works are services, resource transformation, consumption, renewable resources and alternative energy and infrastructure. The standards emphasize disclosure guidance and accounting metrics.

SASB’s standards, of course, have no legal effect. Rather, they represent an attempt by what appears to be a well-organized and highly qualified group intent on getting out in front of sustainability disclosure. Companies interested in beginning or enhancing their own disclosures should consider the following:

    • Most companies view disclosure through the prism of what other companies are doing or planning to do, particularly when it comes to new disclosure concepts. SASB and other similar organizations are excellent resources for that purpose.
    • SASB’s accounting metrics and disclosure standards will apply to many aspects of a company’s operations and public filings, including risk management, governance, and MD&A.
    • SASB encourages all interested persons, including public companies, to become involved in the standard-development process. For companies committed to best practices in this area, engagement with SASB could be an excellent opportunity to shape disclosure in a particular industry.

This is something to keep an eye on.

All the best,


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