Thanks so much for those who attended the second annual SASB Symposium! This year’s event was a spectacular convening that brought together people across the ESG conversation: professionals in sustainability, finance, accounting, and law.
Here are some highlights from the event:
We heard from Michael Bloomberg, Chairman, The SASB Foundation Board, Bill McNabb, Chairman and CEO, Vanguard, and Mary Schapiro, former Chair, SEC, about the dynamism of the marketplace compared to regulation when it comes to sustainability information, and the value of letting the marketplace address the need for higher quality data. The speakers also noted that SASB fosters comparability and creates decision-useful information for companies.
Jean Rogers, Chair of the SASB Standards Board, discussed the need for good sustainability data and the role market participants can play in shaping the final SASB Standards.
“ESG is not a separate wedge in the color-coded pie chart of asset allocation…it’s the whole pie.” – Jean Rogers
Sophia Mendelsohn, head of sustainability at JetBlue, emphasized the need for sustainability issues to be championed throughout corporate organizations, rather than in isolated departments, during a panel addressing the disconnect between companies and investors.
George Serafeim, Jakurski Family Associate Professor of Business Administration at Harvard Business School, quantified the effect on financial returns among those companies with high performance on material issues. For example, he showed slides detailing the effect material sustainability information has on stock price performance.
The final panel of the day featured a discussion about the future of material sustainability disclosure. Panelists highlightedresearchdemonstrating the financial upside awaiting companies who incorporate ESG issues into their operations.
SASB also launched several new publications and editions at the Symposium, including:
The State of Disclosure Report – 2017: This annual publication assesses the state of the market related to corporate disclosure on SASB topics and helps readers perform year-over-year comparisons among related to those corporate disclosure practices
Legal Roundtable: This publication summarizes a discussion that took place at Harvard Law School related to the legal questions surrounding sustainability disclosure and how to move past any remaining obstacles to implementation
The SASB Brochure: This document provides an overview of the development process for SASB Standards, the related methodology, and SASB governance.
The hundreds of people who attended the Symposium were privy to cutting edge research and discussions about the future of ESG. For highlights of the discussion that took place at the Symposium, take a look on Twitter at the #movingthemarket hash tag.
Thanks again to everyone who made this year’s Symposium a great one! We’re excited for and already looking ahead to next year’s event!
We’re excited about the recent update to our Navigator sustainability research platform – so excited in fact that we want to outline some of the new features and show you how subscribers can take advantage of them.
We know how quickly sustainability information is proliferating and how this makes it harder and harder to make sense of the available data. Where should you be looking? Which data points are linked to financial value? SASB is here to help. Our goal with the revised Navigator is to help clients break through the noise and confusion to find which ESG issues impact corporate performance and how well companies are disclosing on those issues.
So let’s walk through an example. Let’s say your client is PG&E (PCG) and you’re helping with sustainability management and reporting, or you are an analyst researching PG&E. Your first step would be to head over to the Navigator site and input either PG&E or its ticker, PCG, into the company/ticker search field. New functionality here allows you to type either company or ticker, since we previously received feedback that people did not always remember a company’s ticker letters:
You’re taken to the SASB Standards page for PG&E, where you can research disclosure topics such as greenhouse gas emissions, air quality and water management:
You can dig deeper on each of the above topics by clicking “Evidence” on the “Greenhouse Gas Emissions and Energy Resource Planning” section. You’re taken to a page that shows you the breadth and depth of all the possible research available through the Navigator:
The financial drivers for any of the disclosure topics are also available via this “Evidence” tab. They appear at the top of the screen and look like this:
Or if you’d prefer to get a quick view of the financial drivers for all topics in PG&E’s industry, go back to the PG&E results page and click “Cross-Sector Search” next to the search bar:
From there, you will be directed to a screen where you can input your search criteria. For the Electric Utilities Industry, you would input the following:
Which will take you to the following page, where you can easily see the financial drivers in the Electrical Utilities industry:
The above example helps with managing sustainability information, but what if you want to deal with reporting? For example, understanding where PG&E sits compared to peers and the quality of its disclosure? Here, you would use the Disclosure Intelligence app, accessible from the homepage:
The Disclosure Intelligence feature homepage prompts you put in a ticker, in this case we would input PCG:
Selecting PG&E will allow you to see the company’s disclosure quality relative to its peers. You can also click on the “See excerpts” button and you will be taken to SEC disclosures that serve as the basis for the data underlying the Disclosure Intelligence feature:
You also have the option here to do a peer comparison by pressing the “Peer Comparison” tab. There, you will see up to four other companies. You can choose which companies to compare PG&E too though, by clicking on “Select companies to compare”:
In addition to the above, you can also use this page to see industry leaders. First, click on the Industry category at the top of the page:
By clicking on the tab you will be taken to a page ranking companies in the Electric Utilities industry category by disclosure quality:
You can use the dropdown menu in the above to change the reporting year, and thus the order of the companies.
Why do you think more and more companies are making the link between sustainability and enterprise risk management?
I think it is very natural for these two disciplines to be linked together. Sustainability and Enterprise Risk Management (ERM) are helpful concepts for company leadership to execute on their chosen strategies. Sustainability helps leaders think about long term value creation strategies. ERM helps leaders think about the uncertainties in realizing long term value.
In today’s environment, sustainability and enterprise risk management must have agreement on these fundamental questions: “What should we do?” “What is the impact?” “Who does this impact?” “Is it meaningful?” “How do we increase the likelihood of success?” From a company governance perspective, these questions should be debated and discussed by company leadership.
What do you see as SASB’s role in filling the disconnect between companies and investors related to ESG data reliability?
First of all, I think investors want to understand how companies are managing their ESG risks and opportunities. One of the best ways a company can do this, is to demonstrate that they have meaningful and reliable ESG data that is useful to manage the business.
SASB has already worked with the investor community to identify the ESG topics that are meaningful for 79 distinct industries. On average, each industry standard has just five disclosure topics. SASB puts a spotlight on these topics. Let’s say that we are investors in the Software & IT Services Industry. SASB has published standards for me to evaluate how these companies are managing issues related to Data Security, Data Privacy, Recruiting a Skilled Workforce and their Data Center Environmental Footprint. Over time, we are going to be able to see the relationship between these issues, financial performance, return volatility and long term resilience.
Who are the key internal players that are leading the conversation around incorporating sustainability into ERM models?
They are the same key internal players who are driving and enacting the company strategy. In most cases the C-Suite with Board oversight. Sustainability helps frame the long term risks and opportunities. ERM is a tool to monitor the long-term risks and take advantage of new opportunities. If sustainability or ERM is not linked to strategy, it doesn’t work in the long term and over time they become irrelevant.
What are some tools that help management teams and boards bring together corporate activities for internal analysis?
Practitioners in sustainability and in ERM have developed their own distinct language around their disciplines. Terms like “Stakeholder Engagement,” “Materiality Analysis,” “Impact” have similar definitions but nuanced differences. Therefore, it is important to anchor all of these definitions to the organizations strategy and to view sustainability and ERM from the board member perspective.