Materiality is a fundamental principle of mandated disclosure in the United States. The concept of materiality recognizes that some information is important to investors in making investment decisions.
According to the U.S. Supreme Court, information is material if there is “a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.”
The SEC’s Regulation S-K requires that certain sustainability-related information be disclosed. Regulation S-K sets forth the specific disclosure requirements associated with Form 10-K and other SEC-required filings and, among other things, requires that companies describe known trends, events, and uncertainties that are reasonably likely to have material impacts on their financial condition or operating performance in the Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section of Form 10-K or 20-F. In the MD&A section, companies must “provide investors and other users with material information that is necessary to [form] an understanding of the company’s financial condition and operating performance, as well as its prospects for the future.”. Also, under Item 503(c) of Regulation S-K, companies are required to disclose risk factors—factors that may affect a company’s business, operations, industry or financial position, or its future financial performance.
SASB and Materiality
SASB standards address the sustainability topics that are reasonably likely to be material and to have material impacts on the financial condition or operating performance of companies in an industry. In identifying these sustainability topics, the SASB applies the definition of “materiality” under the U.S. securities laws. SASB standards are designed to be integrated into the MD&A and other relevant sections of mandatory SEC filings such as the Form 10-K and 20-F. A company’s management is responsible for determining whether the relevant SASB standard should be used to comply with the disclosure requirements of the federal securities laws. SASB recognizes that each company is responsible for determining what information is material and what information should be included in its SEC filings.
For more information about how SASB considers materiality in its standards-setting process, please see the staff bulletin entitled “Approach to Materiality & Standards Development” via the following link:
For an interactive view of disclosure topics across industries, view the SASB Materiality Map™. For guidance on how to incorporate SASB standards into existing disclosure processes, including guidance on conducting materiality assessments, download the SASB Implementation Guide for Companies.
 TSC Indus. v. Northway, Inc., 426 U.S. 438, 449 (1976)
 Securities and Exchange Commission, FR-72, COMMISSION GUIDANCE REGARDING MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dec. 19, 2003),
 17 C.F.R. 229.503(c).
Staff Bulletin: Approach to Materiality & Standards Development