SASB follows a rigorous and objective process to set the standards for each of the 88 SICS industries. The process includes evidence based analysis, along with in-depth industry research and engagement with a broad range of stakeholders. The end result of this process is the creation of a complete sustainability accounting standard which accurately reflects the material issues of that industry.
Standards Setting Process
SASB’s standards setting process involves three major phases. The first phase is preparation and is lead by SASB. The second phase involves participation by a multi-stakeholder Industry Working Group to improve the performance indicators. The third and final phase involves feedback from the public and a review by the SASB Standards Council in order to refine the standard.
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The following diagram and text describe each stage of the SASB standards development process in greater detail.
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- SASB’s research team begins by reviewing the material issues for a specific industry, as defined by SASB’s Materiality Map.
- They then conduct in-depth industry research to fully understand the context within which the sustainability issues are analyzed.
- Part of the industry research involves identifying and documenting existing metrics and practices used to quantify and articulate each material issue. Importantly, this also reveals which material sustainability issues are not currently quantified or articulated.
- The research team harvests existing sustainability performance indicators and management disclosure formats that are of the highest quality. The team creates new ones where none exist or where existing indicators and disclosures are not of the highest quality. The result is a set of strawman performance indicators for that industry.
- SASB convenes Industry Working Groups composed of stakeholders with deep industry expertise that review the sustainability accounting standard, providing comments and feedback to SASB. IWG members represent one of three interest groups:
- Market Participants (Investors, Research Analysts, Exchanges)
- Public Interest & Intermediaries (Government, NGOs, Academics, Accountants, Auditors, Consultants)
- The research team incorporates the IWG members’ feedback into the performance indicators.
- SASB publishes the performance indicators to the general public via the SASB website and asks for comments. Public comment is open for 45 days for each industry standard.
- The research team incorporates comments from the general public.
- The standards are reviewed by the SASB Standards Council. The Standards Council reviews the standards to ensure consistency, completeness, and accuracy. With their final approval the industry sustainability accounting standards are deemed complete.
- In the final step the sustainability accounting standard for that industry is published.
This process will be followed for all 10 sectors, with review of the industries within each sector occurring simultaneously.
Role of the Standards Council
The Initiative for Responsible Investment at Harvard has convened an external Standards Council which brings their industry expertise to bear on development of SASB’s sustainability accounting standards. They are responsible for reviewing the standard setting process to ensure SASB adheres to the standards settting principles as described here.
Council members represent the 10 sectors plus various investor types. Members of the Standards Council have experience in sustainability performance indicators and management disclosures across a broad range of industries. The Standards Council convenes quarterly.
American National Standards Institute
SASB is an ANSI Accredited Standards Developer.
The American National Standards Institute’s (ANSI) is a U.S. non-profit that oversees and facilitates the creation of voluntary consensus standards. Accreditation by ANSI signifies that the procedures used by SASB in connection with the development of the SASB sustainability accounting standards meet the Institute’s essential requirements for openness, balance, consensus and due process. Once SASB has completed development of all 88 industry sustainability accounting standards, SASB will submit the entire set of standards to ANSI for approval as an American National Standard.
As an ANSI-accredited standards-setting organization, SASB follows an open, orderly process that permits timely, thorough, and open study of sustainability accounting issues. SASB encourages broad public participation in the standards setting process by creating channels for the communication of all points of view and at all stages of the process.
The cooperation of and engagement with all parties concerned with sustainability accounting is fundamental to the operation of SASB. Of particular importance is the receipt of thoughtful, reasoned, and timely input during SASB’s research, discussion, and deliberative processes. SASB recognizes that acceptance of its conclusions is enhanced by demonstrating that the comments received in due process are considered carefully.
For more information on ANSI, please visit http://www.ansi.org