© SASB

Sustainability Accounting Standards Board

Matthew Welch

President & COO

Neil Stewart

Director of Corporate Outreach

Presentation for G100

5 June, 2020

77 industry-specific

disclosure standards

Used by companies

and investors globally

SASB connects businesses

and investors on the financial

impacts of sustainability

The Sustainability Accounting Standards BoardNon-profit standards-setting organization for financially material ESG information

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Governance and Oversight

Governance structure safeguards the independence and integrity of standard-setting

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Standards Oversight

Committee (SOC)

Oversight of due process of

standard-setting activities

Governance & Nominating

Committee

Nominates members for appointment to

the Sustainability Accounting Standards

Board by SASB Foundation Directors

THE SUSTAINABILITY ACCOUNTING STANDARDS BOARD

SASB FOUNDATION BOARD OF DIRECTORS

Advisory Groups or ad hoc

Advisory Committees (external

advisors) who provide input on

practical and technical issues

4

The SASB DifferenceSASB standards created for the market, by the market

Decision-Useful

Cost-Effective

Financially Material

Industry-Specific

Evidence-Based

Market-Informed

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The Non-Financial Information and Analytics LandscapeA complex and thriving landscape with many non-profit and for-profit providers playing different roles

SASB / TCFD / CDSB / GRI / Bloomberg /

MSCI / CDP / TruValue Labs / RepRisk /

Sustainalytics / Refinitiv / DJSI / FTSE4Good

DISTINCT GROUPS:

ORGANIZATIONS

2 Request data from

companies via

questionnaires

MULTIPLE

4FIT IN

1 Publish guidance

for voluntary

disclosure, often with

company feedback

loops

3 Aggregate

publicly-available

data from companies

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4 Create assessments of

companies based on public

and/or private information to

sell to investors

6

Standards Make Frameworks Actionable and Help Achieve

Key Success Factors for Non-Financial Reporting

FRAMEWORKSA set of principles-based guidance for “HOW” information is

structured and prepared, and for what broad topics are covered

TCFD IIRCCDSB

STANDARDSSpecific, replicable and detailed requirements for “WHAT”

should be reported for each topic

Framework: Example of climate

disclosure guidance

Discuss strategic planning process related to

GHG emissions, including the use of

scenario analysis.

Standard: Example of climate

disclosure guidance

For an oil & gas company, disclose

carbon dioxide emissions embedded in

proved hydrocarbon reserves.

RAPIDLY ADAPTABLE

as issues evolve

A COMMON LANGUAGE

for companies, investors

and stakeholders

Allow for COMPARABLE and

CONSISTENT INFORMATION

across companies

Can be assured,

PROVIDING RELIABLE

INFORMATION

Can be TAILORED

BY REGULATORY

JURISDICTIONS, providing

flexibility and consistency

Developed using

TRANSPARENT,

INCLUSIVE DUE

PROCESSES

SASB GRI

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Disclosure standards are a

powerful tool to ensure high

quality non-financial disclosure

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SASB Enables Robust TCFD ImplementationIndustry-specific metrics and targets provide actionable information on climate risk

Governance

Strategy

Risk

Management

SASB metrics are

among the most

frequently referenced

tools cited by TCFD

for implementing its

recommendations

Metrics and targets

are critical to more

effective governance,

strategy, and risk

management – the

“outer layers” of the

TCFD “onion”

Metrics

& Targets

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InvestorsBroadest Range of

Stakeholders

Sustainability

Report

Investor

Communications

Relevant Information

All environmental, social,

and governance topics of

interest to a wide range of

stakeholders

Financially Material &

Industry-Specific Data

Non-financial factors reasonably

likely to affect the financial

condition or operating

performance of a company

Complementary StandardsGRI and SASB are key building blocks to implement the EU’s concept of dual materiality

9

“…This year, we are asking the

companies that we invest in on

behalf of our clients to: (1) publish a

disclosure in line with industry-specific

SASB guidelines by year-end…”

“…leveraging the Sustainability Accounting Standards

Board (SASB) materiality framework, R-Factor … allows

us to evaluate a company’s performance against both

regional and global industry peers …

… Beginning this proxy season, we will take appropriate

voting action against board members at companies in

the S&P 500, FTSE 350, ASX 100, TOPIX 100, DAX 30,

and CAC 40 indices that are laggards based on their R-

Factor scores… ”

Source: Morrow Sodali 2020 Institutional Investor Survey

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Investor Demand

Recent, Targeted Calls from Large Asset Managers for SASB Disclosure

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➢ ~$40 Trillion in assets

➢ 20 investors from 7 countries joined the IAG in 2019, nearly

doubling the size of the group

➢ 8 of the world’s 10 largest asset managers* are IAG members

Investor Advisory Group (IAG)

➢ 50+ members

➢ Representing 12 countries

Support for SASB Among Investors is Strong and Rapidly Growing

Updated March 2020

• Norway

• Swedem

• Switzerland

• The Netherlands

• UK

• US

• Australia

• Canada

• Denmark

• France

• Germany

• Japan

* Largest asset managers as of March 2019 per https://www.advratings.com/top-asset-management-firms.

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Investors Are Integrating ESG Using SASB Standards

• 100+ entities license the SASB standards to

incorporate the standards into tools and processes

that support investment decisions.

• SASB’s ESG Integration Insights series now

includes 18 investor-written case studies,

demonstrating how investors use the SASB

standards across public equity, private equity, and

fixed income.

• SASB’s Engagement Guide is used by asset

owners and asset managers to guide discussions

with company directors and management on

sustainability issues.

• Proxy advisor Glass Lewis uses the SASB

standards to inform and explain its voting

recommendations for clients.

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Myths About SASBAs an emerging practice, sustainability accounting confronts many misconceptions

Myth: SASB standards are only relevant to US companies

Reality: Companies and investors around the world use SASB standards to identify,

manage, and communicate about the financially material sustainability risks and

opportunities they face.

Myth: SASB standards compete with GRI standards

Reality: SASB and GRI are complementary, as evidenced by the many companies that

use both in their reporting. They fulfill different purposes and are targeted at different

audiences. SASB is focused solely on investors, while GRI is designed for use by a

range of different stakeholders, including investors.

Myth: SASB-based reporting must go in regulatory filings

Reality: Companies communicate with investors in many ways—including in annual

reports to shareholders, integrated reports, sustainability reports, stand-alone SASB

reports, regulatory reports, and on investor relations websites—all of which may be

appropriate channels for using SASB standards.

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Myths About SASB (continued)As an emerging practice, sustainability accounting confronts many misconceptions

Myth: Companies must disclose every topic and metric in their industry standard(s)

Reality: A company determines for itself which SASB standard or standards are

relevant to the company, which disclosure topics are financially material to its business,

and which associated metrics to disclose. SASB’s Standards Application Guidance

recommends that when a company omits or modifies a SASB metric, it discloses its

rationale for doing so.

Myth: SASB rates companies

Reality: As an independent standard-setter, SASB does not rank, rate, or evaluate

companies on their sustainability performance.

Myth: SASB is only useful for publicly listed companies

Reality: Because the issues covered in SASB standards are closely linked to financial

fundamentals, the standards can be (and are) used by both public and private

companies and are also used by investors across a full range of public and private asset

classes, including equities and fixed income.

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Different Standards for 77 Industries

Across 11 Sectors (SICS®)

▪ Consumer Goods

▪ Extractives & Minerals Processing

▪ Financials

▪ Food & Beverage

▪ Health Care

▪ Infrastructure

▪ Renewable Resources & Alternative Energy

▪ Resource Transformation

▪ Services

▪ Technology & Communications

▪ Transportation

A Total of 26 ESG Sustainability-related

Business Issues Across Five Dimensions

Each SASB Industry Standard has an average of just

6 topics and 13 metrics

Business Model & Innovation

Social Capital

Human Capital

Leadership &

Governance

Environment

UNIVERSE OF

SUSTAINABILITY

ISSUES

SASB metrics are aligned with over 200 existing

frameworks, regulations, and certifications

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Inclusion in SASB Standards Requires Evidence of BOTH

The SASB Approach to Financial MaterialityStandards targeted to the needs of investors for financially relevant ESG information

Investor Interest in an issueFinancial impact of that issue

on companies in an industry

Identifies ESG factors reasonably likely to affect

the financial condition or operating performance of

companies within an industry

AND

SASB’s Process

SASB Standards

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materiality.sasb.org

VISIT

SASB’s Materiality Map®

No Two Industries Are AlikeSASB standardizes disclosure on the business-critical ESG issues for each industry

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Sustainability Dimension

Environment

SICS Industry

Non-Alcoholic

Beverages

SICS Industry

Software & IT

Services

General Issue Category

Disclosure Topic

Accounting Metric

Water & Wastewater

Management

(1) Total water withdrawn, (2) total

water consumed, percentage of each

in regions with High or Extremely High

Baseline Water Stress

Energy Management

Water ManagementEnvironmental Footprint

of Hardware Infrastructure

(1) Total energy consumed, (2)

percentage grid electricity, (3)

percentage renewable

Example: Environment dimension in Beverages vs. Software

No Two Industries Are AlikeSASB standardizes disclosure on the business-critical ESG issues for each industry

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Sustainability Dimension

Human Capital

SICS Industry

Oil & Gas – Exploration

& Production

SICS Industry

Asset Management &

Custody Activities

General Issue Category

Disclosure Topic

Accounting Metric

Employee Health & Safety

(1) Total recordable incident rate (TRIR), (2)

fatality rate, (3) near-miss frequency rate

(NMFR), and (4) average hours of health, safety

and emergency response training for (a) full-

time employees, (b) contract employees, and (c)

short-service employees

Employee Engagement,

Diversity & Inclusion

Workforce Health & SafetyEmployee Diversity &

Inclusion

Percentage of gender and racial/ethnic group

representation for (1) executive management,

(2) non-executive management, (3)

professionals, and (4) all other employees

Example: Human Capital dimension in Oil & Gas vs. Asset Management

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Accounting metrics

Technical protocol

for compiling data

Activity metrics

for normalization

Industry-specific disclosure topic

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Robust Standards Designed to Provide Decision-Useful InformationSASB standards contain industry-specific disclosure topics, metrics, and guidance

Reporting Channels

Location is less important than information quality

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SASB Report

Regulatory Filing

Integrated Report

Sustainability Report

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Examples of SASB Metrics and References Tables

Facilitates access to data for investors

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0 50 100 150 200 250

United States

Canada

Europe

Asia Pacific

Latin America & the Caribbean

Middle East & AfricaYTD 2020 2019

2018 2017

2016 2015

Increasing Corporate Use

Hundreds of leading firms use SASB standards to guide investor communications

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Growth in SASB References by region 2019

Updated March 2020

• 600+ references in 2019

• 62% domiciled outside the U.S.

References are often a leading indicator of future reporters.

SASB References

2019

Non-U.S.

62%

U.S.

38%

Number of unique reporters since 2018: 219 (as of April 30, 2020)

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UNIVERSE OF

ESG ISSUESSUSTAINABILITY

ISSUES

Industry Research

Market Input

Evidence VettingStandards Board Review

Public Comment

Revisions & Board

Approval

Standards

maintenance

Ongoing

Rigorous Process Drives Quality of SASB StandardsStandards for each industry are rooted in evidence and shaped by market input

Industry Working Groups and Issuer,

Investor Consultation

Evidence of Financial Impacts

Exposure Drafts

SASB

Standards

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77 industry-specific disclosure

standards

Average of 6 disclosure topics

and 13 metrics per industry

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Plastics Risks and Opportunities

(Pulp & Paper, & Chemicals

Industries)

Standards Enhancement Projects Underway

Conceptual Framework

Rules of Procedure

Human Capital

Content Moderation on

Internet Platforms

Systemic Risk in Asset Management

Tailing Management in Extractives

Measuring Performance on Raw

Materials Souring (Apparel,

Accessories & Footwear Industry)

Supply Chain Management in the

Tobacco Industry

Alternative Meat & Dairy in Food &

Beverage

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Getting Started

Download your standard(s) https://www.sasb.org/standards-overview/download-

current-standards/

Step-by-step guidance and exampleshttps://www.sasb.org/implementation-primer/

Materiality Map®

materiality.sasb.org

Questions?

neil.stewart@sasb.org

June 3, 16 and 26 with speakers including MOL Group,

Franklin Templeton, JetBlue and EYhttps://info.sasb.org/implementation_primer_webinars

6/3/2020 © SASB

© SASB