SMEs that enroll via the Tese platform will automatically adopt the SASB standards to recognize sustainability-related risks and opportunities that are likely to impact their cash flows, access to finance, and cost of capital in the near, medium, or long term. While ISSB has recently introduced new standards, namely S1 and S2, to be implemented from 2024 onward, it continues to advise companies to leverage the well-established industry standards utilized by SASB. Consequently, assuming SASB as the default standard aligns with ISSB's recommendation, ensuring coherence and consistency in sustainability reporting across various entities.
SASB metrics are designed to provide investors with a clear and consistent understanding of the sustainability-related financial impacts of a company's operations.
What are SASB standards?
SASB or the Sustainable Accounting Standards Board, is an independent non-profit organization that develops industry-specific standards for environmental, social, and governance (ESG) reporting.
Each SASB Standard provides companies with standardized quantitative—or, in some cases, qualitative—metrics intended to measure performance on each disclosure topic or an aspect of the topic. On average, SASB Standards include 13 metrics per industry. Their metrics are designed to provide investors with a clear and consistent understanding of the sustainability-related financial impacts of a company's operations.
What is unique about SASB standards?
- Industry-specific: SASB standards are designed to be used by companies in specific industries.This ensures that the metrics are relevant to the specific sustainability risks and opportunities faced by companies in that industry. Industry-based disclosure also reduces costs and minimizes noise by surfacing the most relevant information for investors.
“Industry-based sustainability disclosure standards – because they are focused on the drivers of risk and return most relevant to business models in a given industry – both improve comparability across companies and help reduce the burden to reporting companies.”
- SASB Standards Investor Advisory Group letter to the ISSB, May 2022
- Materiality-focused: SASB standards focus on metrics that are material to a company's financial performance. This means that the metrics are important enough to be considered by investors when making investment decisions.
- Reviewed by experts: SASB standards are reviewed by a panel of experts, including investors, accountants, and sustainability professionals. This ensures that the standards are high quality and meet the needs of investors. See ING: Setting the Bar for Climate Risk Reporting.
- Transparent: SASB standards are transparent. The process for developing the standards is open and the rationale for the standards is publicly available. This helps to build trust with investors and other stakeholders.
- Up-to-date: SASB standards are regularly updated to reflect changes in the sustainability landscape. This ensures that the standards remain relevant and useful to investors.
- Alignment with international standards: SASB's metrics are aligned with the International Integrated Reporting Framework (IIRC), which is a global framework for integrated reporting.
What are the benefits of SMEs using SASB metrics?
- Improved access to capital: Investors are increasingly looking to invest in companies that are committed to sustainability. See Verizon: Sending a Strong ESG Signal to Investors
- Reduced risk: Sustainability risks can significantly impact a company's financial performance. By reporting on SASB metrics, SMEs can identify and manage sustainability risks, which can help reduce their overall risk profile.
- Enhanced reputation: Sustainability is becoming increasingly important to consumers and other stakeholders. Disclosing ESG goals showcases an SMEs commitment to sustainability and enhance their reputation across the board.
- Increased efficiency and innovation: SASB metrics can help SMEs improve their efficiency by identifying and reducing waste and identifying new opportunities for innovation by understanding the sustainability challenges and opportunities facing their industry.
- Improved decision-making: SASB metrics can help SMEs to make better decisions by providing them with a better understanding of the sustainability impacts of their operations. See Key takeaways from the first SASB reporter.
Tese’s Tips on Reporting with SASB
Start Small
If you are new to sustainability reporting, you may want to start by reporting on a few key metrics. You can then gradually add more metrics over time as you become more familiar with the process.
A small tech company might report on metrics related to energy efficiency, the waste they generate and the diversity of their workforce. They might also report on metrics related to the social impact of their business, such as their commitment to ethical sourcing and their support for social justice causes.
Be Transparent
When reporting on SASB metrics, it is important to be transparent about your data sources and methods. This will help to ensure that your reports are credible and reliable.
A clothing manufacturer might report on the amount of water used in the production of its clothes by providing data from its suppliers. It might also report on the amount of waste generated by providing data from its waste disposal company. The store should also explain how it collected this data and how it calculated the metrics.
Keep It Up-to-date
SASB standards are regularly updated to reflect changes in the sustainability landscape. It is important to keep your reports up-to-date, too, to ensure that they reflect the latest information.
Restaurant chains might update their sustainability report annually. This would allow the restaurant to report on its latest sustainability performance and to highlight any new initiatives it has undertaken.
More Information
Learn more about the ISSB and the IFRS Sustainability Disclosure Standards
Download the SASB Standards
Learn about ISSB updates to the SASB Standards
Case Studies from SASB Reporters
