Implementation Primer

Understanding SASB Standards

SASB’s standard-setting process is designed to surface the sustainability factors most likely to materially impact the financial condition or operating performance of companies in a given industry. As such, the standards are well-suited to serve as a valuable input to a company’s existing approach to identifying, assessing, managing, and monitoring risks and opportunities. To begin this process, a company may wish to:

Understand SASB Terminology and Review SASB Standards

A company can begin this process by familiarizing itself with SASB terminology and the structure of SASB standards, which can be downloaded free of charge. In reviewing SASB standards, a company should familiarize itself with the following components:

  • Standards Application Guidance: In reviewing its industry standard(s), a company should begin with this supplementary document, which provides universal implementation guidance applicable to all industry standards.
  • Disclosure topics: Each SASB standard includes a set of disclosure topics, which vary from industry to industry. The standard lists and briefly describes how management or mismanagement of various aspects of the topic may impact a company’s ability to create long-term value. On average, SASB standards include 6 disclosure topics per industry.
  • Accounting metrics: 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 accounting metrics per industry.
  • Technical protocols: Each sustainability accounting metric is accompanied by underlying technical protocols that provide guidance on definitions, scope, accounting, compilation, and presentation, and which may also serve as the basis for suitable criteria for an independent, third-party assurance engagement. The technical protocols help ensure that metrics are compiled consistently and enable comparisons across companies.
  • Activity metrics: The standard also includes activity metrics to measure the scale of the issuer’s business, providing operational context and facilitating normalization of SASB accounting metrics, which is important for the analysis of related disclosures.
A Note on SASB Terminology
  • Sustainability: Corporate activities that maintain or enhance the ability of a company to create long-term shareholder value.
  • Financial materiality: SASB’s approach to materiality is based on a traditional, financially oriented definition that is well-accepted globally: information that is reasonably likely to be important to investors in making investment decisions.
  • Sustainability dimension: SASB standards capture information about corporate performance along five key dimensions of sustainability: the environment, social capital, human capital, business model and innovation, and leadership and governance.
  • Sector and industry: SASB’s Sustainable Industry Classification System® (SICS®) groups companies into 77 industries across 11 thematic sectors based on their shared sustainability challenges.
  • Disclosure topic: Each SASB standard includes a set of disclosure topics, which vary from industry to industry. The standard lists and briefly describes how management or mismanagement of various aspects of the topic may impact a company’s ability to create long-term value. On average, SASB standards include 6 disclosure topics per industry.
  • Accounting metric: 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 accounting metrics per industry.
  • Technical protocol: Each sustainability accounting metric is accompanied by underlying technical protocols that provide guidance on definitions, scope, accounting, compilation, and presentation, and which may also serve as the basis for suitable criteria for an independent, third-party assurance engagement. The technical protocols help ensure that metrics are compiled consistently and enable comparisons across companies.
  • Activity metric: Each SASB industry standard also includes activity metrics to measure the scale of the issuer’s business, providing operational context and facilitating normalization of SASB accounting metrics, which is important for the analysis of related disclosures.
Determine Which Industry Standards Apply

To determine which SASB standard (or standards) apply to a company’s operations, it may be helpful to explore SASB’s Sustainable Industry Classification System® (SICS®).

Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors and industries. Although this approach is valuable for a variety of applications, it does not always group companies that face similar sustainability challenges and opportunities in a rapidly evolving 21st century economy. As a result, SASB developed SICS in 2012, grouping like industries based on their sustainability profiles. Thus, SICS builds on and complements traditional industry classification systems by grouping issuers into sectors and industries in accordance with a fundamental view of their business model, their resource intensity and sustainability impacts, and their sustainability innovation potential. SICS presents a new lens through which to assess companies and establish peer groups, by selectively reclassifying existing industries, surfacing new ones, and establishing new thematic sectors.


SASB Resources: SICS Lookup Tool

Companies can find out where they are classified within SICS by using the SICS Look-Up Tool on SASB’s website. By entering its ticker symbol, a company can instantly find its primary SICS industry and download the appropriate industry standard.


Questions to Consider:


✓   What is your company’s primary industry classification in SASB’s SICS Look-Up Tool?

✓   Which other SICS industry (or industries) may apply to your company’s operations?

✓   What other companies does your company consider to be its peers or key competitors? In which SICS industries are they classified?

✓   If your company’s peers have reported using SASB standards, which industry standards did they use?

✓   What differences—if any—exist between the company’s primary SICS industry and its classification in other widely used industry classification systems? What can those differences tell the company about the sustainability risks and opportunities it faces?

Determine Which Disclosure Topics are Applicable

After determining your company’s appropriate SICS industry or industries, the next step is to review the SASB disclosure topics for each industry and identify which disclosure topics are applicable to your company. Note that because SASB standards are designed to address sustainability factors that are applicable to the typical company within an industry, in some cases they may:

  • Include topics that, for certain companies, may not be financially material; and/or
  • Not necessarily include every sustainability factor that is financially material to the company.

In other words, the industry standard should not be interpreted as either a “floor” or a “ceiling” for the company’s sustainability disclosure to investors, but instead as a useful guide. For example, the SASB disclosure topic related to genetically modified organisms in the Chemicals industry may be irrelevant to a company that operates exclusively in the commodity and specialty segments of the industry (i.e., with no exposure to the agricultural segment). Likewise, in the Electric Utilities & Power Generators industry, SASB metrics related to direct (Scope 1) greenhouse gas emissions may be less relevant to a power company that sources—but doesn’t generate—energy.

Similarly, companies may find that additional sustainability topics not included in the SASB standard are relevant to their business strategy based on their specific facts and circumstances. This is especially true for companies with hybrid or unique business models, or for companies in industries where business models vary significantly around the world.

Ultimately, companies are responsible for determining which disclosure topics represent financially material risks and opportunities for their business and which associated metrics to disclose, taking the company’s business model, business strategy, and relevant legal requirements into account.

Questions to Consider:


✓   Which SASB disclosure topics from which industries appear to be relevant to the company’s long-term financial performance?

✓   What sustainability topics have been identified in previous materiality assessments the company may have undertaken? Do the SASB disclosure topics align with previous sustainability-related materiality assessments?

✓   Do the SASB disclosure topics align with the key risks identified in the company’s Enterprise Risk Management (ERM) processes? Are there risks identified in the ERM processes that are not in the SASB standards?

✓   Do the SASB disclosure topics align with the key risks identified in the company’s existing risk factor disclosures to investors? Are there risks identified in the risk factors that are not in the SASB standards? Which sustainability topics do investors most often ask the company to discuss or disclose?

✓   What sustainability matters that are not included in the SASB standard might the company wish to consider disclosing?

Establishing a Common Understanding of the Term “Materiality”

Both financial reporting professionals and sustainability reporting professionals commonly use a concept they call “materiality” to help determine what information should—or should not—be disclosed in their public reporting. However, these two groups may not always be speaking the same language. Where financial reporting teams have traditionally relied on legal and/or regulatory definitions of materiality to guide their reporting efforts, sustainability practitioners have often taken up specialized definitions established by sustainability reporting initiatives. In establishing a cross-functional team to implement SASB standards, it is important for an organization to ensure all internal parties share a common understanding of key terms like this one.

For example, the widely used Global Reporting Initiative’s (GRI) Materiality Principle states that a sustainability report should include information that “reflect[s] the organization’s significant economic, environmental, and social impacts” or “substantively influence[s] the assessments and decisions of stakeholders.” This emphasis on external impacts and a broad set of stakeholders differs from the definition of materiality typically used to guide financial reporting (as well as the development of SASB standards), which is focused on financial impacts of interest to investors.

As they implement SASB standards, companies are likely to bring together key internal functions that have traditionally used these (or other) conceptions of materiality, resulting in the potential for misunderstanding. Thus, an important early step may be to review and align on foundational concepts and terminology to ensure clear communication.


What to Do If Multiple Industries Apply

Some organizations are “pure play” companies focused on a single line of business that is neatly captured by SASB’s industry classification system. Others’ operations are integrated horizontally across industries or vertically through the value chain straddling multiple industries. For such companies, multiple industry standards may be required to address the full array of sustainability topics reasonably likely to impact a firm’s financial condition and/or operating performance. For example:

  • If a company’s consolidated operations span multiple industries, SASB recommends reviewing multiple industry standards to identify topics beyond those defined in its primary industry standard that may warrant disclosure to investors.
  • If a company has a unique business model that defies traditional industry classifications, it may wish to consider disclosure topics (and associated metrics) from an array of industries that have similar activities, choosing those disclosure topics most likely to communicate material information to investors. Some companies with very unique business models, such as emerging technology-based business models, may need to create a custom “SASB template” based on disclosure topics from multiple industries.
Examples of Reporting Using Multiple Industry Standards

Companies seeking to implement SASB standards and whose activities fall across multiple SICS industries may wish to review the following examples of reports that leverage multiple SASB standards:

SASB in Action: Reporting Across Multiple Industries

SASB has developed a unique sustainability accounting standard for each of 77 SICS industries. Thus, for companies that are vertically or horizontally integrated across more than one industry, reporting with SASB standards may initially appear challenging. Companies that have faced similar challenges can provide helpful guidance on how to best overcome this perceived hurdle. For example, Roger Seabrook, Vice President of Finance, Marketing & Sustainability at Unilever, has shared his insights as a member of SASB’s Standards Advisory Group (SAG). About his company, he notes, “our portfolio includes diverse products such as ice cream, tea, deodorant and soap, so we don’t fit neatly” into one industry or another. That being said, he suggests, you can’t become paralyzed by the range of standards that may apply to your company’s operations. “You’ve got to start somewhere,” Seabrook says. “Focus on one area that is really important to the business” and go from there.

Kristin Peterson, Director of Corporate Compliance at Kinder Morgan, agrees. Her company operates in a range of extractive and transportation industries, so “when we pulled all the metrics together from five to six standards, it looked overwhelming at first.” She recommends a methodical approach: determining which industries are applicable, consolidating the metrics from those industries, then looking for overlap—including where related metrics are consistent or not. By using the company’s subject matter experts to help assess the SASB metrics, identify those already being collected, and formulate plans for the rest, “we were able to wean down the list to something considerably more manageable” and make progress, she says.

Many companies that have implemented SASB standards have used multiple industry standards to provide investors with a complete picture of their performance on financially material sustainability issues. Feedback from several companies suggests that the following approach may be helpful when assessing which industry standards apply, and subsequently in using those standards to disclose information:

  • Map the company’s activities to the applicable SICS industries
  • For applicable SICS industries, evaluate the topics in each industry standard to determine which are applicable
  • Prioritize reporting of these topics based on the informational needs of investors as well as the cost-effectiveness of obtaining and reporting the associated data
  • Prioritize reporting of topics based on relative size of business segments and/or relative risk (e.g., relatively small business segments can have outsize contributions to risk)

Your Company, Your Call

SASB standards are intended for use in communications to investors regarding sustainability issues that are likely to impact corporate ability to create long-term shareholder value. However, reporting with SASB standards is not an “all or nothing” proposition. A company determines for itself which standard or standards are relevant to the company, which disclosure topics are financially material to its business, and which associated metrics to report, taking relevant legal requirements into account. To ensure investors understand the thought process behind your disclosures, SASB recommends that you clearly explain why you omitted or modified SASB topics or metrics in your disclosures.  This is covered in more detail in “Develop Your Disclosures,” as well as in SASB’s Standards Application Guidance.

Summary and Worksheet

Key Actions:

  • Gain an understanding of SASB terminology and the structure of SASB standards
  • Determine which industry standard or standards apply
  • Determine which disclosure topics are applicable