According to Bloomberg, in 2014 77% of investors accessed ESG data before making investment decisions. In response companies are reporting more than ever, 72% of companies in the S&P 500 now publish a separate sustainability report. However, investors are highly dissatisfied with the sustainability and environmental information that is currently disclosed—on some items over 80% of those interviewed reported being dissatisfied.
ESG reporting clearly matters, companies are responding to the demand, and yet, it’s not enough. In response to this gap the non-profit Sustainability Accounting Standards Board (SASB) was created in 2011 to help organizations shift the way they communicate this now-essential data to investors.
SASB 101
Fast becoming the biggest name in ESG, SASB seeks to provide confirmation and order to the existing reporting process by differentiating themselves from other reporting standards in a few key ways.
First, SASB provides industry-specific standards, covering 10 sectors and 80+ industries, which account for the variance in sustainability issues each industry faces. This specification allows businesses and investors to make peer-to-peer comparisons.
Second, SASB standards are the only sustainability reporting standards designed to be included in a company’s 10-K or 20-F filings. These disclosure channels represent places investors are already looking to make decisions.
Finally, SASB standards are focused on high-level corporate decision makers. Although individual facility and energy managers continue to have day-to-day influence, those in the C-suite are increasingly realizing the key roles energy, sustainability, and other ESG factors will have on their overall business in the years to come. In a recent survey 71% of industrial organizations reported that employees on the corporate level now own or share responsibility for energy management.
Does SASB Matter for You?
Although the SASB standards focus on publicly traded companies, they’re still useful to a wide variety of organizations. Companies that report sustainability and environmental data using SASB standards gain a competitive advantage over their peers through increased investment, improved corporate reputation, greater employee loyalty, and the reduced operational costs associated with higher efficiency and less waste.
Investors, in turn, gain access to high quality sustainability data that focuses on the factors most important to long-term financial and organizational success. Finally, SASB hopes that this improved dialogue and the more transparent investor-corporation relationships it allows will encourage more stable financial and environmental outcomes for all.
How to Use SASB to Your Advantage
Although SASB’s long-term “stability and sustainability for all” goals may seem lofty, there are two steps any organization can begin taking today.
First, decide which reporting standards make the most sense for your organization. If SASB sounds right, you can download the SASB Standards applicable to your industry today. You can also look into other forms of reporting, such as ENERGY STAR (if it isn’t already mandated for you), GRESB, or creating a company-specific report.
Second, make sure you have the proper tools for an effective and painless reporting process. No matter what type of sustainability and environmental reporting your organization does, a robust data management system is key to an accurate and nimble process. Gathering and disclosing sustainability data can mean dealing with organizational silos and headache-inducing spreadsheets and utility bills, but the proper tools can ease these pains and improve the final results.
