SASB is founded on the idea that better information leads to better decision making. Our standards enable greater transparency and comparability of corporate performance on key, industry-specific sustainability issues that could affect corporate value. This, in turn, equips a company’s management and its investors with decision-useful information upon which to act.
For an example of the power of better information, consider diversity in the technology sector and recent efforts by major industry players to measure and manage the issue for improved outcomes.
Shortly after SASB released its provisional sustainability accounting standards for the Technology & Communications sector in April 2014, companies such as Google (NASDAQ:GOOG), Yahoo! (NASDAQ:YHOO), LinkedIn (NYSE:LNKD), and Facebook (NASDAQ:FB) began to disclose their employee diversity data publicly for the first time, starting in May 2014 with Google. Although the companies did not mention the use of SASB standards, their disclosures aligned closely with the SASB metric on workforce diversity for their industry.
The data revealed that at Google, Facebook, LinkedIn, and Yahoo!, the U.S. workforce at the four companies was between 89 and 91 percent white and Asian. All four companies had only three to four percent Hispanic workers and two percent black workers. Furthermore, in leadership positions, around 80 percent of employees were men, while in technology-specific leadership roles, as many as 85 percent were men.
With this disclosure, all of the major companies recognized the need to significantly improve performance on the issue, and announced initiatives—some already in place, others being planned—to do so. For example, Google has contributed to programs aimed at providing women and minorities with exposure to computer science education, while Facebook is providing coding lessons to underserved youth. Over the past two years, cloud-computing company Salesforce (NYSE:CRM) has implemented policies for managers to consider women when filling open positions for leadership roles and to ensure women and men are paid equally, among other measures. Microsoft (NASDAQ:MSFT) has expanded parental leave for both men and women as well as introduced mentorship programs for women.
Such diversity initiatives are more than humanitarian efforts—they’re in the best long-term interests of the company. As detailed in the SASB Industry Research Brief for the Software & IT Services industry, greater workforce diversity is important for innovation and helps companies understand the needs of their diverse and global customer base, enabling them to design desirable products and services and communicate effectively with customers.
As companies continue to measure progress in this area, it is expected that efforts such as these will help improve employee diversity in the technology sector. It’s just one example of how putting better information in the hands of decision makers—information like that provided by SASB standards—can create a race to the top on performance. More transparent, more efficient markets are good for business, good for investors, and good for society at large.