Sustainability reporting: the SASB standards

The SASB Indicators are standardised indicators that you can use to effectively communicate your company's sustainability performance. The Standards are designed to be used by all types of companies and organisations globally. The SASBs published in 2022 vary and are specific to 77 industries. Each Indicator was developed through a public consultation process that involved stakeholders to more easily achieve the goal of a Sustainability Report that can comprehensively communicate the information required by investors and all business stakeholders.

In order to understand how the SASB Standards are relevant for companies and organisations, it is good to learn more about the importance of the Sustainability Report. The report is indispensable for companies to communicate environmental, social and governance performance to customers, suppliers, investors and employees. This type of document allows them to show their commitment to activities promoting sustainability and responsible practices towards the environment and the entire community involved in the company's operations. Through the Sustainability Report it is possible to communicate respect for human rights, reduction of environmental impact, promotion of safe and fair working conditions. Ultimately, the report makes it possible to communicate to stakeholders the correct, transparent and responsible management of the company.

In order to comply with the New CSRD Directive, companies choose to supplement their traditional reporting with a Sustainability Report. In order to be able to offer a report that is as accurate and transparent as possible, specific standards such as GRI, SASB and ESRS must be relied upon. These Indicators represent guidelines to be followed to establish methods for assessing the impacts of corporate actions, to define objectives, to organise work and to create satisfactory sustainability content. Organisations can adopt either one of these standards or several standards for a more transparent and fair Sustainability Report. The Sustainability Accounting Standards Board - a non-profit organisation founded in 2011 - specifically devised the SASB Indicators to enable companies to identify, manage and communicate financially relevant sustainability information.

SASB has created Standards that companies can use to disclose financially relevant sustainability information to their stakeholders. The criteria identify the most important environmental, social and governance issues in 77 sectors and are thus a key component of an organisation's ESG communication. The creation of these Indicators has become necessary since sustainability issues are considered global business issues affecting the financial condition and value of the company. Every organisation has the duty not only to report financial results but also to draw up a Sustainability Report to demonstrate the impact of its actions on the territory, the environment, society. This is the only way to improve operational performance and corporate reputation.

Thousands of companies around the world have adopted the SASB Standards to communicate their sustainability performance to investors. The Indicators identify financially relevant issues by calculating the likelihood of a impact on the organisation's operational and financial performance and risk profile. The SASB Standards identify five dimensions - Environment, Social Capital, Human Capital, Business model & Innovation, Leadership & Governance - and 77 sub-dimensions based on 26 variables. Compared to the GRI Standards which assess a company's economic, social and environmental impact and positive and negative contributions to sustainable development, the SASB Indicators allow organisations to approach a larger number of micro-sectors of activity.

In order to identify the material elements of sustainability and apply the appropriate metrics according to the sector in question, it is possible to refer to the specific principles that SASB's Materiality Map identifies for each sector. There are eleven macrocategories analysed, namely consumer goods, finance, metalworking, food, health, infrastructure, services, resource transformation, renewable energy, technology and communication, and the transport sector. These macrocategories are further subdivided according to the specific activities that can be carried out up to a total of 77 micro sectors.All topics are important but the impact will vary depending on the context analysed. Consequently, each sector will have a unique sustainability profile. SASB has identified different material KPIs for the sectors according to sector, environmental, social and governance.

Once you have determined the appropriate sector(s) for your company, it is time to look at the SASB disclosure topics and identify those that apply to your organisation's operations. The SASB Standards are designed to address the sustainability factors to be applied to a typical company. Consequently, it is possible that in some cases they may include arguments that are not financially relevant to your business. Conversely, they may not include all sustainability factors that one wants to communicate in the Sustainability Report. The company must, therefore, customise its reporting and industry standards based on its business strategy.

Disclosure topics should be identified on the basis of relevance to long-term financial performance, consistency with previous materiality assessments related to sustainability, and relevance to key risks identified in Enterprise Risk Management processes. The company should then ask itself whether the SASB disclosure topics to be included in the Sustainability Report are in line with the key risks identified in the risk factor disclosures made to investors. One must also ask oneself which sustainability topics are relevant to the stakeholders in order to respond to each need andimprove corporate performance.

Your company can use the Standard SASB to communicate sustainability issues to investors that could positively affect the company's ability to create long-term shareholder value. In this way, the Sustainability Report will be more complete and the reasons for any omission/change of SASB topics or parameters can be clearly and transparently explained. The Standards should be seen as an added value to be customised to outline and communicate your company's strengths as well as to show the actions taken in favour of sustainability and compliance with ESG criteria. The IFRS Foundation's International Sustainability Standards Board (ISSB) encourages all companies to continue using the SASB Standards or to start using them to produce a detailed and valid Sustainability Report, including in conjunction with the GRI Standards.

The sustainability report of companies must adapt to the continuously changing standards required by meeting the needs of suppliers, customers, investors, employees. This is where 3Bee comes in, operating in the three areas of competence of the ESG realising, alongside corporate partners, biodiversity protection and monitoring projects based on the use of proprietary technologies that return clear and quantifiable KPIs. These KPIs are translated into a report that 3Bee provides annually to partners: a useful tool to communicate the actions taken within the corporate sustainability report. 3Bee is therefore the partner of biodiversity that guarantees a transparent communication of ESG through reports compliant with the CSRD Directive and with the reporting standards, in particular SASB, GRI and ESRS, issued by EFRAG.

Article edited by Valentina Trogu