Five things to know about the SASB Standards

It is the unique, industry-specific focus of the SASB Standards that sets them apart from other frameworks and makes them central to the forthcoming global baseline for sustainability reporting.

In this article, we talk about where the SASB Standards have come from and the important role they're expected to play going forward in the rapidly changing landscape of ESG reporting requirements.

1. What are the SASB Standards?

The Sustainability Accounting Standards Board was founded in the U.S. to simplify and standardize the reporting language of sustainability efforts. The standards identify sustainability disclosure topics that are reasonably likely to be relevant within each of 77 different industries and include a small number of focused, mostly quantitative, metrics to capture performance on each topic. Investors need to make decisions about a company's value: The SASB Standards were developed from extensive outreach with companies and investors to understand the information investors needed.

Today, the SASB Standards are maintained and enhanced by the International Sustainability Standards Board; this follows the SASB's merger with the International Integrated Reporting Council into the Value Reporting Foundation and subsequent consolidation into the IFRS Foundation in 2022. The SASB's investor focus is shared by the ISSB, which was formed to develop international standards to satisfy the market need for a global baseline of sustainability information.

In 2022 alone, 2,231 companies from 66 jurisdictions aligned their reporting to the SASB Standards, up 60% on the prior year.

Although the largest number of reporters is in the U.S., use of the SASB Standards outside the U.S. is common and growing. In 2022, nearly 60% of SASB reporters were located outside the U.S., and many countries and regions experienced a minimum of 50% year-on-year growth from 2021 to 2022 in the number of companies aligning reporting to the SASB Standards.

2. How does SASB fit into the ESG landscape?

SASB Standards serve a unique role in the global ESG reporting landscape. SASB's value-add is providing a framework that provides both a clear starting point to determine a company's financially material sustainability topics and investor-relevant, industry-specific metrics.

With the creation of the ISSB, the SASB Standards now serve as a foundational building block for the new global standards that have consolidated a previously fragmented set of investor-oriented disclosure guidance. Notably, the ISSB's first two standards contain industry requirements and directly refer to guidance that is either in the SASB Standards or that was derived from them.

Because the standards are designed to provide consistent and comparable disclosures that meet investor needs, companies that want to speak to a broader range of stakeholders would also need to look to other standards, such as those from the Global Reporting Initiative or the EU's Corporate Sustainability Reporting Directive, both of which are aimed at a wider stakeholder audience.

3. What is the ISSB doing to update SASB Standards?

The ISSB is committed to maintaining and enhancing the SASB Standards. An early focus of the board has been to address concerns that the standards include some U.S.-specific references. The ISSB has also committed to carry forward continuing projects from the SASB Standards Board that were aimed at enhancing the relevance of certain industry standards — for example, by addressing alternative proteins in the meat, poultry and dairy industries and single-use plastics in the chemicals industry.

4. Why are SASB Standards relevant to IFRS Sustainability Disclosure Standards adopters?

SASB Standards are clearly relevant for companies planning to adopt the ISSB's IFRS Sustainability Disclosure Standards due to their role as a foundational input. The influence of SASB is evident in IFRS S1, "General Requirements for Disclosure of Sustainability-related Financial Information," and IFRS S2, "Climate-related Disclosures," meaning that companies already familiar with the SASB Standards should be at an advantage when adopting the IFRS Sustainability Disclosure Standards.

• In IFRS S1, companies will be required to refer to and consider the SASB Standards when identifying relevant sustainability-related risks and opportunities to report, and when selecting disclosures applicable to those risks and opportunities.
• IFRS S2, which focuses specifically on climate-related matters, includes industry-based disclosure requirements and guidance for fulfilling those requirements. This content was derived from and is aligned with the climate-related content in the SASB Standards.

5. What should companies do next?

Given the changes and complexity of the reporting landscape, a reasonable question from corporate management is: "Do I need to keep reporting under SASB?" Our answer to that is, "Yes." 

SASB reporting facilitates identification of material ESG topics for each industry and therefore can promote efficient resource allocation for corporate sustainability efforts. In the European Union, although the focus is understandably on the incoming CSRD requirements, the SASB Standards continue to provide valuable industry-specific perspectives while sector-specific EU standards are developed.

We recommend that companies take the following key actions next:

• See KPMG's ISSB Sustainability Reporting Resource Centre for valuable thought leadership about the ISSB and SASB Standards.
• Speak to their accountant. 
• Review the ISSB's website for additional resources such as FAQs, recent news and more.
• Consider responding to the ISSB's consultation about the process to update the SASB Standards.
• Consider SASB's materiality finder when performing their materiality assessment.
• Engage in industry working groups for updates to the standards.
• Keep using the SASB Standards relevant for their industry or investigate how to start using them.