Persefoni Expert Publications
Carbon Accounting 101 - What is SASB?
A weekly Persefoni blog featuring all things climate, carbon, and ESG.
Published May 13, 2022
Groups such as the Financial Accounting Standards Board (FASB) have been creating standards for financial accounting and reporting for decades. With the recent rise of ESG investing and the realization that issues of sustainability have become more financially material to organizations, standards for recording sustainability information have sprung up.
The Sustainability Accounting Standards Board (SASB), was created to enable organizations to disclose financially material sustainability information to investors and stakeholders in a standardized way. Additionally, SASB identifies which ESG frameworks (including climate-related frameworks) are relevant to a subset of 77 industries.
Founded in 2011 by, among others, Persefoni Sustainability Advisory Board Co-Chair Robert Eccles (Chairman, 2011-2014), the SASB Standards have evolved over the years to reflect the growing number of sustainability disclosure frameworks and issues, making the disclosure ecosystem more complex.
As investors and disclosers were calling for a simplification of sustainability disclosures to reduce the complexity of disclosures. SASB in response announced in 2020 they would join forces with the International Integrated Reporting Council (IIRC) under the Value Reporting Foundation (VRF). In June 2021, the VRF was formed to maintain the IIRC and SASB under one integrated body. VRF is now maintained as a global nonprofit that offers resources to help businesses and investors develop a shared understanding of how enterprise value is created, preserved, and eroded.
SASB Materiality Map
The role of SASB is to identify sustainability information that is financially material - meaning that a sustainability issue being identified is material to how an organization creates value. Therefore, the SASB standards are primarily focused on companies bettering their financial prospects.
SASB created the materiality map to help industries discover what is material and what they should be measuring to ensure their sustainability disclosures are in line with their financial prospects. The materiality map allows organizations to quickly identify what is material to their sector.
An example of the materiality map for 6 of the 77 sectors within the SASB standards can be seen here it shows how companies can easily assess which factors are material to them.
SASB vs GRI and other Frameworks
The main differentiation between SASB the Global Reporting Initiative (GRI) and other such standard-setting bodies is that SASB focuses only on sustainability issues that are financially material. Whereas, GRI focuses on sustainable development more holistic in relation to a company's economic, environmental, and social impacts, in the interest of a broad range of stakeholders, including investors.
SASB, GRI, and other frameworks can be complementary to each other, and SASB has released guidance on how to use their standard with others such as the GRI to ensure they are working in conjunction rather than in opposition. To further bring these standards into cohesion under one umbrella, multiple frameworks are set to combine in 2022 under the International Sustainability Standards Board (ISSB).
As part of SASB’s ongoing mission to simplify sustainability disclosures, the VRF will be consolidated with other standards into the IFRS’s ISSB.
In June 2022, the SASB standard will move into the ownership of the IFRS and will aim to further the integration, simplification, and adoption of SASB standards. The ISSB is not necessarily a new standard but a combination of other standards including the TCFD, World Economic Forum, and CDSB.
The ISSB aims to be a tool to allow organizations to give more robust and comprehensive sustainability disclosures. And, will likely be the primary sustainability standard around the world, either through local regulations or through investor pressure.
SASB and software
To automate the materiality map for your sector and ensure your company is in line with the requirements of the SASB standards the utilization of software can simplify the disclosure process. Software is a cheaper, faster, and more efficient way of disclosing your ESG information, and calculating company carbon footprints.
Software is considered a key part of SASB’s reporting ecosystem. some of the necessary solutions are general ESG, others focus on particular niches within the reporting ecosystem. Through a SaaS model, software providers can cover all bases from an ESG data collection, management, and analysis perspective. While some focus holistically on ESG disclosures –providing resources and a platform that cover a range of ESG-related metrics, including climate measurements and disclosures – others solely deal with the niche and complicated process of measuring GHG emissions.
SASB ESG disclosure ecosystem
SASB ESG disclosure ecosystem
To find out more about the ESG and specifically the climate disclosure ecosystem, you can download Persefoni and Novata’s joint e-book based on the SASB reporting ecosystem “Making Sense of Climate Disclosure,” here.
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