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SASB – Sustainability Disclosures

Ef­fec­tive date:

The SASB was incorporated in July 2011

Most recent Annual Report

December 6, 2016

Overview

The Sustainability Accounting Oversight Board (SASB) is a non-profit organization which is developing industry-specific standards for the recognition and disclosure of material environmental, social and governance (ESG) impacts by U.S. public companies.

In formulating its disclosure standards, SASB views sustainability as having five dimensions – environment; social capital; human capital; business model and innovation; and leadership and governance.

SASB is not a governmental body, and its standards have no legal effect. However, SASB is explicitly attempting to identify ESG information that is material to investors under the existing securities law definition of materiality. As SASB points out, the SEC’s Management’s Discussion and Analysis (MD&A) requirements call for a description of known trends, events, and uncertainties that are reasonably likely to have material impacts on the reporting company’s financial condition or results of operations. SASB describes its standards as “designed for integration into MD&A and other relevant sections of SEC filings.” Because of the link between securities law materiality and SASB’s standards, there is a possibility that its standards will influence the law of materiality and could become de facto disclosure requirements.

One of SASB’s objectives is to formulate quantifiable measures of sustainability performance. Such metrics facilitate comparison between companies and comparison of a company’s performance over time. SASB found that the use of sustainability performance metrics in SEC filings is not common today. Importantly, even in these cases the metrics were non-standardized, and therefore lacked comparability from one industry firm to the next

SASB ranks the disclosure performance of the 79 industries recognized in its standards. The ranking methodology looks at three factors: (i) disclosure levels (the frequency with which the entries analyzed provided some form of disclosure on SASB’s industry-specific topics); (ii) use of metrics; and (iii) use of boilerplate.

Recent developments

Date

Development

Comments

July 2011

SASB incorporated

SASB is a non-profit organization which is developing industry-specific standards for the recognition and disclosure of material environmental, social and governance (ESG) impacts by U.S. public companies.

December 6, 2016

First Annual State of Disclosure Report issued

The Report provides an overview of the quality of existing corporate disclosure across 79 industries in hundreds of SEC filings across every major industry. The report shows 81 percent of all disclosures analyzed across all SASB disclosure topics indicate some level of disclosure in SEC filings. However, more than 53 percent use boilerplate language and less than 24 percent of these disclosures contain metrics – demonstrating that many companies take a minimally compliant approach to sustainability disclosure.

Amendments under consideration

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.