Financial Advisor contributor Paul Ellis recently interviewed Dr. Jean Rogers, CEO and founder of Sustainability Accounting Standards Board (SASB), to discuss SASB’s standard setting process.
Ellis: Jean, tell our financial advisor readers what’s next for SASB related to setting standards for material sustainability information in corporate SEC filings.
Rogers: We’ve just finished a period of deep consultation on the provisional standards. For the last six months, we’ve been looking for consistency of logic and approach in consultation with companies and investors, as well as looking at the full set 79 industries for patterns of materiality exposure. Where there is an issue unique to an industry we want to make sure the topic and metrics are appropriate, as well as be clear on the similarity of disclosures across industries since the standards were developed in silos and sector by sector.
This summer we will open the standards for a public comment period. The SASB technical board will then review the updated standards and vote to adopt them into code. Our goal is to have codified standards available for use in 2017 SEC filings of Form 10-K and 20-F.
Ellis: When did this process begin?
Rogers: The SASB standards were developed sector by sector starting in 2012. In March 2016, we reached a milestone by completing the full set of provisional standards for 79 industries across the economy. We are now able to use these standards to assess materiality and analyze exposure to ESG risks industry by industry. SASB is doing this across a diversified portfolio of these industries and in 10 major economic sectors.
Ellis: And these SEC filings are required for companies on an annual basis, correct?
Rogers: Yes, Regulation S-K requires companies to disclose material information in their annual SEC filings. What’s been missing, until now, are standards that help companies disclose material sustainability information in a way that’s decision-useful to investors.
Ellis: What is SASB’s goal for use of these sustainability accounting standards?
Rogers: SASB’s vision is that any investor can type in a ticker symbol and access a company’s sustainability fundamentals alongside financial fundamentals. In order to achieve that vision, we must get material sustainability information into the company’s SEC filings, where investors find the company’s official financial information. The information is then freely accessible to all investors in the public reporting system.