IFRS Foundation

Developing Your Disclosures

Note: As of August 2022, the International Sustainability Standards Board (ISSB) of the IFRS Foundation assumed responsibility for the SASB Standards. The ISSB has committed to maintain, enhance and evolve the SASB Standards and encourages preparers and investors to continue to use the SASB Standards. The ISSB has confirmed that industry-specific disclosures are required and, in the absence of specific IFRS Sustainability Disclosure Standards, companies must consider the SASB Standards to identify sustainability-related risks, opportunities and related information to disclose. The guidance in this Implementation Primer is intended to serve as a useful reference for entities applying the SASB Standards independently from the ISSB Standards. Entities using the SASB Standards as part of their implementation of ISSB Standards should consider the relevant ISSB application guidance.

For this reason, a company should consider how to best present SASB disclosure topics and metrics in its core communications to investors, along with deciding what contextual information to provide. To help companies meet this objective, SASB provides certain guidance in the introduction to each industry standard and in SASB’s Standards Application Guidance, much of which is addressed and supplemented here.¹

Although SASB’s sustainability accounting metrics have been standardised, companies enjoy a certain amount of leeway in determining how to present their disclosures. For example, they may wish to consider how metrics might best be formatted to optimise their utility to investors, what supplementary information may be required for a clear understanding, which metrics may need to be omitted or modified to most effectively reflect the company’s operations, and how the disclosures might be woven into a broader narrative about the firm’s approach to long-term value creation.

Corporate reporting, like any communications exercise, should be guided by the needs of its intended audience. Thus, when preparing their SASB-aligned disclosures, companies should consider how the standards can help them produce disclosures that support meaningful analysis and decision making by investors and other providers of capital.

Consider the Presentation Format

Although certain SASB metrics call for specific, standardised formatting, a company should always consider how its financially material sustainability data might be most usefully presented to investors. The following questions may be helpful in determining the optimal approach:

  • Would the use of supplementary charts, tables, graphics, and headings help make the information more digestible and understandable?
  • How might the disclosure present a short-, medium-, and/or long-term analysis of the issue and its actual or potential impacts on financial performance and/or operations?
  • Does the disclosure include a historical time series demonstrating performance trends?
  • Should the company establish and report performance targets or benchmarks related to the metric?
  • Is the metric, as presented, readily comparable to peer disclosures?
  • Would additional disclosure by business segment and/or region be helpful to users of the data?

SASB Resources: TCFD Good Practice Handbook

Not sure how to present your data? Consider what other companies are doing. Developed by SASB and CDSB, the TCFD Good Practice Handbook provides real-world examples of good-practice, TCFD-aligned disclosure and key takeaways to help reporting companies communicate more effectively with investors on climate risk. Along with the mock disclosures included in the accompanying TCFD Implementation Guide, these publications provide useful examples for companies to consider as they review and shape their own efforts to communicate with investors.

Provide Important Context

Although 78 percent of SASB metrics are quantitative, the most important aspects of a sustainability issue can’t always be completely captured in numbers. For example, certain SASB topics, such as those related to human rights and ethics, are inherently difficult to quantify. In these instances, SASB Standards include qualitative metrics, formally known as discussion and analysis metrics, to supplement numerical data, providing important context for understanding and evaluating the data.

SASB recommends that for all metrics, a company consider—and disclose—the qualitative information that would be necessary for investors to fully understand the firm’s performance. This may involve incorporating relevant contextual information, including that related to:

  • Governance, strategy, and risk management related to SASB disclosure topics
  • Activity metrics to facilitate normalisation of reported metrics
  • Discussion of uncertainty and estimates

These and other key reporting considerations are covered in SASB’s Standards Application Guidance

Disclose Modifications and Exclusions

SASB recognises that standardised disclosure of financially material sustainability information to investors is a relatively new area of practice, and certain accounting metrics may be infeasible to disclose in the near term for some companies. SASB encourages companies to use the standards to guide disclosures to investors even in the event that certain disclosure topics and/or associated metrics must be omitted and/or modified.

  • Omissions: A company that omits one or more SASB disclosure topics and/or accounting metrics should disclose the omission(s), as well as its rationale for the omission(s). For example, if a disclosure topic does not apply to a company’s business model, the company should disclose that the topic and its associated metrics were omitted based on the lack of applicability.
  • Modifications: If a company believes it necessary to modify a SASB metric, the entity shall disclose the fact that the metric was changed, a description of the change, and its rationale for making the change.

Omissions and modifications are covered, along with other important disclosure considerations, in SASB’s Standards Application Guidance

Review Your Overall Narrative

After collecting data on the relevant SASB disclosure topics, a company should also take a step back and consider the bigger picture. Investors’ growing appetite for sustainability information is not driven by a desire for “data for its own sake.” Rather, investors are looking at how this data can shed light on a company’s financial performance, business strategy, and long-term value creation prospects.

Questions to Consider:

✓   Do the company’s disclosures inform investors about the company’s approach to long-term value creation?

✓   Do the company’s disclosures provide clear links between ESG performance, business strategy, and financial outcomes?

✓   Do the company’s disclosures provide insight into how well-positioned the company is to manage sustainability risks and opportunities over time?

✓   How is the company’s sustainability performance portrayed by third-party ESG ratings and rankings firms? Are there any misperceptions the company wants to address with its own disclosures?

As investors increasingly integrate ESG information into their decision-making, the need for high-quality, accurate, and verifiable data has grown significantly. To fill this gap, they have begun to rely on a growing number of third parties to supply environmental, social, and governance (ESG) information about their portfolio companies. In this ecosystem, SASB Standards can be particularly helpful for companies who wish to communicate their sustainability story and performance directly to their investors in a format that meets investor needs.

“There are so many different surveys and other requests for information,” says Alex Hausman, Director of Purpose Communications and Reporting at Nike. “Each one has a different take, so they’re all asking for unique information, which can make it challenging.”

Laurel Peacock, Sustainability Director at NRG Energy, says many of these third parties have their own ideas about how to classify her company’s operations and which ESG issues it should be managing. For example, many ESG ratings and ranking services lump the company in with regulated utilities, even though it isn’t one. “I was going to my executives and subject matter experts to ask about the information and they would say, ‘Why are they asking us this? This is not material to what we do,’” Peacock says. Using SASB Standards to report directly to investors “was win-win,” she says. Not only are shareholders getting more relevant and reliable data, Peacock says, “we aren’t putting out information that’s just noise because someone has a box to check.”

Summary and Worksheet

Key Actions:

  • Review SASB’s Standards Application Guidance¹
  • Consider options for presenting and formatting your disclosures
  • Provide important context
    • Governance, strategy, and risk management context
    • Activity metrics related to operating context
    • Assumptions and estimates
  • Communicate necessary modifications or omissions
  • Ensure your overall narrative is clear, complete, and consistent

¹Please note: Entities using the SASB Standards as part of their implementation of ISSB Standards should consider the relevant ISSB application guidance.