The SASB Standards are designed to provide investors with decision-useful and comparable information. They serve a unique role in the global ESG reporting landscape by offering a framework that provides both a clear starting point to determine a company's financially material sustainability topics and investor-relevant, industry-specific metrics.
The industry-specific nature of SASB Standards are tailored to specific industries, allowing companies to quickly access guidance relevant to their business activities. The SASB Standards consist of 77 industry-based sustainability-related disclosure standards and include over 1,000 metrics.
Regarding the guidance on sustainability-related topics beyond climate, the SASB Standards cover a wide range of sustainability issues, including human capital and environmental topics. This broader scope makes them valuable for companies applying IFRS S1, which requires consideration of sustainability-related risks and opportunities beyond just climate.
As for the global usage statistics, 310 institutional investors representing $84T AUM and 25 markets support and/or use the SASB Standards to inform their investment decision-making. Many types of market participants, including companies, advisors, and others, use the SASB Standards. The SASB Standards are used by companies in more than 70 jurisdictions around the world, including 72% of the S&P Global 1200 Index.
Scope & Adoption
The SASB Standards serve a unique role in the global ESG reporting landscape by providing a framework that offers both a clear starting point to determine a company's financially material sustainability topics and investor-relevant, industry-specific metrics. They identify sustainability disclosure topics that are reasonably likely to be relevant within each of 77 different industries and include focused, mostly quantitative metrics to capture performance on each topic.
In 2022, the SASB Standards were consolidated into the IFRS Foundation when the Value Reporting Foundation (VRF) merged with it. The International Sustainability Standards Board (ISSB) of the IFRS Foundation then assumed responsibility for the SASB Standards.
The SASB Standards now play an important role in the first two IFRS Sustainability Disclosure Standards: IFRS S1 General Requirements for Sustainability-related Disclosures and IFRS S2 Climate-related Disclosures. Companies are 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 under IFRS S1.
The ISSB has committed to maintaining and enhancing the SASB Standards and encourages their continued use. This demonstrates the ongoing relevance and importance of the SASB Standards in the context of IFRS sustainability reporting.
The industry-specific nature of the SASB Standards is particularly valuable, as they provide guidance for applying IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information. They help companies identify and disclose material information about sustainability-related risks and opportunities in the absence of specific IFRS Sustainability Disclosure Standards.
Components of a SASB Standard
On average, SASB Standards include 13 metrics per industry, and each metric is accompanied by technical protocols for guidance on definitions, scope, implementation, and presentation. SASB Standards identify sustainability-related issues most relevant to investor decision-making in 77 industries, with about 6 disclosure topics per industry. Each SASB Standard includes the activity metrics to quantify the scale of specific activities or operations by a company.
Disclosure topics: Areas under which climate-related risks and opportunities most likely to affect the organization have been identified.
Accounting metrics: The quantitative and qualitative metrics in which a company will evaluate its performance for each of the material disclosure topics.
Technical protocols: The following of a verified and science-based methodology (eg; SASB Standard) that can be verified by third parties. The technical protocols provide guidance on definitions, scope, implementation, compilation and presentation for each accounting metric.
Activity metrics: These metrics are about the scale of the company’s business, which provides important context for assessing the data provided in the accounting metrics.
What are the SASB Sustainability Dimensions?
The SASB has crafted its benchmarks around five pivotal sustainability pillars, further refined into twenty-four subcategories. These pillars encapsulate a diverse array of ESG elements, tailorable to various sectors for addressing their most pressing concerns. The primary pillars are as follows:
Source: SASB
The five-dimension structure serves as an organising framework for the full universe of sustainability issues that SASB has identified through its evidence-based research process. It is important to understand that not all five dimensions, nor all twenty-four subcategories, are relevant to every industry. SASB's research methodology systematically evaluates which topics within these dimensions are reasonably likely to have a material financial effect for companies in a given industry. The result is that each industry standard identifies only the subset of dimensions and topics that are financially material for that specific sector. For example, GHG Emissions (under the Environment dimension) is material for the Oil and Gas industry but may not be identified as a primary disclosure topic for industries with minimal direct emissions. This selective approach is what distinguishes SASB from broader reporting frameworks and is central to its design principle of decision-usefulness for investors.
SASB and materiality
The SASB's primary focus is on financial materiality in reporting. This concept deals with the financial aspects of reporting and accounting, involving the assessment of how excluding certain information from a report might impact a company's overall financial status. The inclusion of financial materiality in ESG reports has become increasingly crucial in today's business landscape. SASB acknowledges that not all sustainability issues are universally relevant across industries. By emphasizing financial materiality, SASB aims to ensure that companies disclose pertinent information that highlights their sustainability efforts and financial risk profile effectively. To facilitate this process, SASB provides the Materiality Finder tool. This resource helps companies identify industry-specific topics by utilizing filters within the SASB database. The tool enables organizations to compare and analyze potential actions across various sustainability dimensions.
Notably, users have reported finding the Materiality Finder more user-friendly compared to the traditional Materiality Map, which displays dimensions and subcategories across industries. This improved accessibility underscores SASB's commitment to providing practical, industry-specific sustainability guidance. By focusing on financial materiality and offering user-friendly tools, SASB continues to play a pivotal role in shaping effective and relevant sustainability reporting practices across diverse industries.
Users of SASB Standards for Reporting
The SASB Standards set out ESG reporting requirements for 77 different industries, grouped under 11 overarching headings:
The Sustainable Industry Classification System (SICS) Codes establish industry categories, and the SASB website provides lookup tools to assist organizations in identifying the most appropriate industry code for their operations. Additionally, the website offers guidance for companies whose activities span multiple SICS Codes, ensuring comprehensive and accurate industry classification.
The SASB standards are voluntary and not mandatory for companies to follow. These standards offer a framework for disclosing material sustainability information in a consistent and comparable way. Companies can choose to adopt SASB standards based on their own discretion, regulatory environment, and stakeholder demands.
Why Use SASB Standards for ESG Reporting?
The biggest benefit of the SASB Standards specifically (also the biggest limitation) is that they are industry specific.
SASB Standards are designed to be "decision-useful for investors and cost-effective for companies."
SASB Standards can be used with other frameworks and standards. The SASB standards integrate well with other ESG frameworks including TCFD (Discontinued), CDP, and GRI etc. While there are various reasons for engaging in ESG reporting. If you intend to use it to share information with investors, lenders, and financial institutions, they expect high-quality and comparable data.
SASB Standards serve a unique role in the global ESG reporting landscape" as they provide 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 key input to the ISSB's work to develop a global baseline of sustainability disclosures for the capital markets."
With the creation of the ISSB, the SASB Standards serve as the industry-based foundation for the global baseline of sustainability disclosures. Companies that adopt SASB Standards now are effectively building the disclosure infrastructure required for ISSB compliance. This forward-looking benefit is particularly significant for companies operating in jurisdictions that are in the process of adopting ISSB Standards, as early SASB adoption substantially reduces the effort needed to meet future mandatory requirements.
The SASB Standards also provide a structured entry point for companies that are new to sustainability reporting. For organisations that lack the resources or experience to conduct a full materiality assessment from scratch, the SASB Standards offer a pre-researched, evidence-based set of material topics and metrics for their industry. This reduces the analytical burden on the reporting company and provides confidence that the disclosures produced are aligned with investor expectations and industry best practice.
Process overview
Conclusion
The SASB Standards have undergone a remarkable evolution from a voluntary, US-originated framework to a globally significant component of the international sustainability reporting infrastructure. Their consolidation into the IFRS Foundation, their formal integration as a required reference within IFRS S1, and the ISSB's ongoing programme to enhance and internationalise them have collectively transformed the role that SASB Standards play in the global disclosure landscape.
For companies, the practical case for engaging with the SASB Standards has never been stronger. Whether as a standalone reporting framework for investor-focused sustainability disclosure, as a stepping stone toward ISSB compliance, or as a source of industry-specific metrics to complement broader reporting under GRI or ESRS, the SASB Standards offer a rigorous, evidence-based, and cost-effective approach to sustainability reporting. Companies that invest in understanding and applying the SASB Standards relevant to their industries will be better prepared for the regulatory developments ahead and better positioned to meet the growing expectations of investors and other capital market participants for high-quality, comparable sustainability information.
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