IFRS Foundation

Enabling Continuous Improvement

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.

Implementation Primer

As changes occur in an industry’s competitive context, in the interests of investors, or in SASB Standards, a company’s sustainability disclosures will likely need to evolve to support market needs.

A company can take several steps to enable continuous improvement:

  1. Monitor internal and external drivers of ESG risk and opportunity;
  2. Monitor practices in peer disclosure;
  3. Seek periodic feedback from shareholders and other stakeholders;
  4. Monitor evolving mandatory disclosure requirements in relevant jurisdictions;
  5. Monitor the evolution of SASB Standards, and participate in SASB’s standards maintenance processes; and
  6. Benchmark performance on SASB disclosure topics against peers.

Monitoring Drivers of ESG Risk and Opportunity

Sustainability factors are dynamic by nature and thus often tend to be emerging or evolving issues. A specific SASB topic may become more or less likely to have material financial impacts as changes occur in an industry’s competitive context or its business model. Also, issues that are of interest to a broad range of stakeholders often evolve into issues that become financially material over time. As the likelihood for material financial impacts evolves, the company may wish to modify its disclosures accordingly.

Key considerations include:

  • Internal factors: The likelihood that a SASB topic will have financially material impacts may change along with aspects of the company’s strategy, its business model, and its operations. Such changes may include:
    • Changes in the company’s product mix or service offerings; or
    • Adjustments to the scale or scope of the company’s operations (including geographic footprint).
  • External factors: Financially material impacts related to a SASB topic also may become more or less likely due to factors outside the company. These may include:
    • Macroeconomic factors (e.g., population growth, commodity prices, climate change);
    • Business climate (e.g., competition, technological innovation);
    • Regulatory developments and political climate (often regional in nature); or
    • Societal trends (e.g., shifting consumer preferences).

Monitoring sustainability disclosure practices

A company may also wish to monitor market practices that develop around each SASB disclosure topic—including those related to corporate reporting, shareholder engagement, and disclosure requirements.

  • Peer disclosure: Regular monitoring of peer disclosure can help a company better understand evolving expectations—among investors and other stakeholders—of:
    • Which topics should be disclosed; and
    • How they can be reported to ensure companies across an industry provide comparable information.

It is helpful to review peer disclosure across a range of disclosure channels, including annual reports to shareholders, sustainability reports and investor presentations.

  • Shareholder engagement: A company can solicit feedback from shareholders and track issues raised during engagements with shareholders to monitor evolving issues of interest to investors.
  • Disclosure requirements and recommendations: A company should also monitor the evolving disclosure landscape, including:
    • Mandatory disclosure requirements related to sustainability disclosure; and
    • Sustainability disclosures that may be required or suggested by the exchange on which the company’s securities are listed.

Monitoring SASB Standards development

In addition to monitoring changes in jurisdictional reporting requirements, a company should also keep abreast of periodic updates to SASB Standards. SASB approaches updates to the standards using a project-based model, enabling focused standard-setting to effectively address key issues and ensure the standards remain relevant and responsive to evolving market needs. SASB’s ongoing due process involves internal research, external outreach, inclusive public comment, and transparent oversight. Based on these inputs, SASB may periodically issue updates to the topics, metrics, and/or underlying technical protocols included in an industry’s SASB Standard.

Monitoring Performance

Perhaps most importantly, a company should monitor its performance on the SASB metrics. While a firm has little if any control over how issues evolve or how the views and practices of peers, stakeholders, and regulators change, it can wholly determine its own responses to sustainability risks and opportunities. Using SASB Standards to monitor whether and how performance changes—for better or worse—can usefully inform the perspective of the company and its investors on whether or not its management approach is effective.

Summary and Worksheet

Key Actions:

  • Track the internal and external drivers of ESG risks and opportunities;
  • Monitor peer and best-practice disclosure for benchmarking;
  • Seek regular feedback from investors and other key stakeholders;
  • Keep up with emerging and evolving disclosure requirements and recommendations;
  • Periodically review SASB Standards for relevant updates;
  • Monitor company performance on SASB disclosure topics.