SASB continues to add projects despite mergers

Accounting

The Value Reporting Foundation’s SASB Standards Board decided to initiate two new standard-setting projects this month, even though it’s being absorbed into a new International Sustainability Standards Board by next June.

The Sustainability Accounting Standards Board and the International Integrated Reporting Council merged to form the VRF earlier this year after they and other environmental, social and governance standard-setters came under pressure from international financial regulators to align their often competing ESG standards and frameworks (see story). Last month, they agreed to be merged into the International Sustainability Standards Board that the International Financial Reporting Standards Foundation is setting up by June 2022 (see story). Despite the mergers, the VRF has continued to hold online meetings of its SASB Standards Board to discuss its work on existing projects, but at a Dec. 15 meeting the board decided to introduce two new standard-setting projects to its agenda: one to address diversity, equity and inclusion across multiple SASB standards and the other to address greenhouse gas emissions and air quality in its marine transportation standard.

The ISSB plans to focus initially on standards related to climate disclosures due to the urgency of global climate change, but it plans to consult on other projects to add to its agenda. The ISSB’s standards will build on existing frameworks and standards, and the VRF is encouraging people to engage in the SASB standards development process now in preparation for working on the ISSB standards in the future.

“We have numerous projects open for consultation and feedback,” said SASB Standards Board chair Jeffrey Hales in a statement. “We welcome your input.”

SASB Standards Board chair Jeffrey Hales (center) at the opening bell of the London Stock Exchange

Courtesy of SASB

The SASB Standards Board discussed at the meeting how to transition their work with the ISSB to eventually establish the IFRS Sustainability Disclosure Standards.

To advance the human capital project, the SASB board approved a proposal from their staff to initiate a standard-setting project to evaluate the addition or revision of disclosure topics and/or metrics within a set of SASB industry standards to better account for the impact of diversity, equity and inclusion on enterprise value. The rationale for the new project comes from investor interest in DEI and evidence connecting DEI to business performance. The staff plans to do further research and market consultation to refine an industry list, examine various channels and industries across international markets, and develop a preliminary view on the scope of the disclosure topic.

The SASB Standards Board also approved another staff proposal to initiate a standard-setting project to evaluate improvements to accounting metrics in the greenhouse gas emissions and air quality disclosure topics in the marine transportation standard. The reason why it’s doing the standard-setting stems from feedback the staff received from an industry working group of companies, investors and subject matter experts, along with an analysis of marine transportation industry company disclosures and their level of alignment with the current standard. The staff plans to do further research and develop materials for consultation with market participants, focusing on the information needs of investors.

During the meeting, the staff also offered an overview of the input they have received during a public comment period for a separate project on raw materials sourcing in the apparel industry. The board talked about the steps they will pursue on improving the guidance related to sourcing regions and identifying credible third-party environmental and social certifications and standards. They also discussed how to work on technical updates and editorial corrections to fix minor inaccuracies such as spelling and outdated links in the SASB standards.

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