9 How Companies Disclose Using SASB Standards

Question 1

What are the four characteristics of how corporate reports feature SASB disclosure and emphasize how they vary?

Answer 1

1) Why companies disclose varies according to the company’s needs and the information needs of the audiences the company is trying to reach, which can include investors and/or other stakeholders
2) Where companies disclose varies considerably across reporting channels and formats
3) What information companies disclose differs across industries, operating environments, and internal data collection processes
4) How companies disclose differs according to the reporting platform, data presentation, and reliability of the information reported

Question 2

Why do companies report using SASB Standards? (2)

Answer 2

1) To meet unique disclosure objectives alongside additional frameworks (e.g. from reading was State Street’s use of SASB and TCFD for investors, and GRI for employees and the broader community)
2) To communicate the link between sustainability management and financial performance (e.g. from reading was utility and fertilizer companies referring to high energy assets and inputs)

Question 3

When companies disclose using more than one standard or framework, what are two reasons companies choose to disclose?

Answer 3

1) can add supplementary data
2) can help operationalize other frameworks that do not offer guidance on specific metrics

Question 4

How can the SASB Standards’ focus on financial material and each disclosure topic’s connection to financial impacts support companies in communication?

Answer 4

Supports companies in communicating how key sustainability issues impact a company’s ability to generate value into the future.

Question 5

Where do companies disclose SASB Metrics? (4)

Answer 5

1) In Annual Reports, including regulatory filings or integrated reports
2) In Annual Reports, including reports using multiple frameworks or standards
3) as a standalone SASB report
4) as a web-based report

Question 6

What are examples of companies disclosing standards in annual reports such as regulatory filings?

Answer 6

–Etsy incorporates SASB Standards as embedded into their 10K - this has the benefit of being the “go to” source for investors, but has stringent requirements for completeness, accuracy and timing
–Vornado (US based Real Estate company) discloses their ESG report into Form 8-K used to communicate unscheduled material events or changes, which signals to investors the seriousness and credibility of sustainability disclosure

Question 7

What are examples of companies disclosing standards in annual reports using multiple frameworks and standards?

Answer 7

–Tokyo Electric Power Company has an integrated report prepared to IIRC guidelines and inclues GRI and TCFD standards - this has the benefit of a single report location for financial and sustainability information, and can more easily allow a link of sustainability information explicitly to long-term value creation
–Roxgold (Canadian metals & mining) integrates the U.N. Sustainable Development Goals alongside SASB data in annual sustainability reports, where SASB data is sometimes a separate data table or index at the back of the report
–Jabil (US based electronic manufacturing, OEM) weaves data throughout the document, presenting key metrics as they appear in the report, and applies multiple standards to the same dataset as applicable, e.g. having the GRI and SASB reference for workplace injury rate

Question 8

What are examples of companies disclosing SASB Standards as a stand-alone or web based report?

Answer 8

–A bank in Luxembourg has a separate report document where the only information is related to the Standards
–General Motors provides a unique URL link, offering a URL path that can be used for SASB only, and does the same for CDP, or GRI-aligned information

Question 9

In the absence of reporting requirements a company can choose the channel that best suits its needs. Where do companies choose to disclose?

Answer 9

It is a reflection of a company’s expectation for where investors or other stakeholders will look for that information.

Question 10

What sustainability information are companies reporting? (4)

Answer 10

–Choosing the right industries, disclosure topics, and metrics
–Assessing industry topics and metrics
–Modifying or omitting existing metrics
–Providing context

Question 11

What is an example of a company choosing the right industries, disclosure topics and metrics?

Answer 11

–Grupo Arcor (an Argentina-based company operating in processed foods, agricultural products and containers & packaging) - reports using SASB Standards across three industries.

Companies have the discretion to determine which disclosure topics and accounting metrics are most applicable to their business and operations, which may span multiple industries.

Question 12

What is an example of a company assessing industry topics and metrics?

Answer 12

–AGL Energy (an Australia-based operating company in electric utilities, power generators, and gas utilities & distributors) assessed the electric utilities SASB standards and provides a clear explanation for excluding nuclear safety & emergency management metrics since it does not own nuclear power facilities.

Question 13

What are examples of companies modifying or omitting existing metrics and associated best practices?

Answer 13

–Arcelor Mittal (Luxembourg-based operator of iron & steel producers) decided to develop a simple visual to indicate the extent to which the metrics align with reporting practices and goals rather than omitting metrics, specifically whether they are aligned, partially aligned, or unaligned. Where there is no alignment, the company omits the metric and provides a rationale.
–Alcon (Swiss medical supplies company) discloses data omissions as a separate element of the SASB table in their report index
–Sanderson Farms (US based meat, poultry & dairy company) disclosed inability to accurately quantify a metric and provides an alternative, estiamted data point accompanied by a rationale

A company may choose to omit a metric if it does not apply, but it can be helpful and is considered best practice for a company to disclose both the omissions and the rationale for doing so

Question 14

What are examples of companies providing context and the associated benefits?

Answer 14

–Hawaiian Electric provides narrative description of the diversity of their workforce as well as the diversity of the state of Hawaii; it also provides governance information about the sustainability expertise of the board members rather than just listing qualifications
–Frontline (Norway based marine transport company) provides context for understanding data reported for marine casualties, where data was based on estimates, and one main incident.

Qualitative information can be helpful in clarifying uncertainties, estiamtes where companies are not able to provide the most accurate measures, context for performance of the metric, and governance around the ESG topic.

Question 15

What can a company do if they do not fall neatly into one SICS industry?

Answer 15

Choose to use disclosure topics and metrics from multiple industries

Question 16

What are reasons for a company to omit, modify, or add to a metric and/or topic?

Answer 16

–a topic in one industry standard is not financially material to the firm
–does not include every sustainability factor that is financially material to the company
–cannot be reported according to the Standard

Question 17

Where is it written that companies are expected to disclose a rationale for the change in a metric?

Answer 17

Per the SASB Standards Application Guidance

Question 18

How is sustainability information being disclosed? (5)

Answer 18

–deciding to publish assurance statements
–organizing and formatting data
–time series data
–downloadable excel data
–embracing continuous improvement

Question 19

What are examples of companies deciding to publish assurance statements ?

Answer 19

–Interface Inc (US building products & furnishing company) provides a verified column in the appendix where SASB data is reported and identifies the assurance provider
–Cenovus Energy (Canadian oil & gas exploration and production company) names the measures that have undergone reasonable and limited assurance as well as those that have no assurance
–Deutsche Post DHL Group (German air freight & logistics company) verified the reported sustainability information through an assurance report provided by an independent practitioner

Question 20

What are the benefits of public assurance statements?

Answer 20

–Assurance signals to report users that the information is reliable
–Assurance process can also have internal benefits.
–Publishing assurance often reflects the maturity of a company’s internal data collection process, internal controls, and board / management oversight over ESG data

Question 21

What are examples of organizing and formatting data and what are their respective benefits?

Answer 21

–BlackRock (US asset management) illustrates not just the percentage of diversity of their employees, but also the increase / decrease YOY to communicate how performance has changed
–Tractor Supply & Co (US multiline and specialty retailer) presents SASB data broken down by region and business unit which can help report users utilize the information and make more informed decisions where aggregate numbers do not tell the whole story
–Hawaiian Electric used visual graphic for racial composition of the company’s workforce and Hawaii which supports effective communication of sustainability performance

Question 22

What is an example of time series data and what are the benefits?

Answer 22

–Cenovus Energy (Canadian oil & gas exploration and production company) reported years 2015-2019, assisting in users assessing the company’s performance year-over year.

This offers trend-based insights, informs future projections, and supports data consistency

Question 23

What is an example of a downloadable excel data and what are the benefits?

Answer 23

Azul (Brazilian airlines company) provides time series ESG data alongside fundamental financial statements through a downloadable Excel document. This is beneficial to analysts who wish to conduct their own data analysis.

Question 24

What is an example of embracing continuous improvement and what are the benefits?

Answer 24

–JetBlue improved from previous reports that were text-heavy towards presentation in an investor-oriented way where qualitative context offers insight into the company’s management of risks and opportunities and time-series data communicates performance trends.

Question 25

What are the activities that help companies evolve their sustainability disclosure? (6)

Answer 25

As companies evolve their disclosure process, many
–monitor to improve their activities, including internal and external drivers of risk and opportunity,
–monitoring and benchmarking against peer disclosures,
–seeking feedback from investors and other stakeholders,
–monitoring mandatory disclosure requirements in other jurisdictions,
–monitoring standards development, and
–seeking assurance.

Question 26

[CHECK FOR UNDERSTANDING] What are two reasons why companies report using SASB Standards?

Answer 26

Companies report using the SASB Standards for many reasons, but primarily do so to meet unique ESG disclosure objectives alongside other reporting frameworks (such as GRI, IIRC, or existing annual reports), and to communicate the link between sustainability management and financial performance to investors.

Question 27

[CHECK FOR UNDERSTANDING] Where do companies disclose SASB Standards?

Answer 27

The focus of the Standards on financial materiality means that companies disclose SASB data through a variety of channels, including in annual reports and integrated reports, regulatory filings, annual sustainability reports, as a stand-alone SASB report, or in more periodic web-based reports. There is no single location where SASB information must be reported, and companies may choose the disclosure channel best suited to their audiences.

Question 28

[CHECK FOR UNDERSTANDING] How do companies disclose SASB-aligned data when a Standard does not perfectly align with their business?

Answer 28

The Sustainable Industry Classification System (SICS) was developed to identify the topics that are likely to be financially material to companies in a given industry. To develop the classification, SASB relied on characteristics of “pure play” companies, meaning companies that focus solely on a particular product or service. For example, companies in the Apparel, Accessories, and Footwear industry are presumed to only be involved in the design, manufacturing, wholesaling, and retailing of apparel, accessories, and footwear. As such, not all companies fit perfectly within one SICS industry. In these cases, companies may choose disclosure topics from secondary industries. In situations where a disclosure topic or metric does not apply to a particular business, companies may omit or modify the topic and metrics, and are asked to disclose their rationale for doing so.

Question 29

[CHECK FOR UNDERSTANDING] What presentation formats have companies embraced when reporting sustainability information aligned with SASB Standards?

Answer 29

The way companies choose to present information disclosed using the SASB Standards varies. Companies increasingly publish assurance statements to signal the reliability of SASB-disclosed data, organize and format data in various ways and at multiple levels of granularity, provide data visualizations and time-series data, or present information in a downloadable spreadsheet to enable analysis. By looking at SASB disclosures at a company year-over-year, users can also get a sense of the extent to which a company has demonstrated continuous improvement and the extent to which disclosure quality may continue to improve in the future.