How do companies decide what they will measure, track, and report?
Why do companies choose some disclosures over others?
How should my company decide what is most important for us to disclose in ESG reporting?
In November of 2021, during COP26, the IFRS Foundation announced the creation of the International Sustainability Standards Board (ISSB), to help meet the growing demand for high quality, transparent, comparable Environmental, Social, and Governance (ESG) reporting. The purpose of this move is for the ISSB to deliver a global baseline of sustainability disclosure standards for capital providers to use in understanding companies’ sustainability-related risks and opportunities and to inform capital allocation decisions.
This move not only seeks to consolidate the ‘alphabet soup’ of sustainability reporting, but also add clarity to an often murky and difficult landscape to navigate.
The Sustainability Accounting Standards Board (SASB) represents one of the most referenced and ubiquitous sustainability and ESG reporting frameworks in the world.
Many have noted the apparent merger of different standards taking place under the ISSB. Certainly, SASB and TCFD principles and standards are being brought together. Likewise, Global Reporting Initiative and Carbon Disclosure Project disclosures will be included. What’s useful and relevant to those of us tasked with leading and producing ESG or sustainability reporting is that the ISSB will involve the merger and simplification of ESG reporting. A core piece of this process will be led by SASB and its materiality process.
SASB Standards are financially material and help to identify the subset of ESG issues most relevant to financial performance in each of 77 industries. SASB Standards are developed based on extensive feedback from companies, investors, and other market participants as part of a transparent, publicly documented process. Not all sustainability issues matter equally to each industry, and the same sustainability issue can manifest differently across industries--that's why SASB Standards are industry-specific.