Sustainability Accounting Standards Board

Based in San Francisco, the SASB was founded in July 2011 by its CEO Jean Rogers, John Katovich,99 and Steve Lydenberg100 as a not-for-profit organization to create industry-based sustainability standards for the recognition and disclosure of material environmental, social, and governance impacts by companies traded on U.S. stock exchanges.101 At the time of this writing, SASB has issued standards for the healthcare, financial institutions, and technology and communications sectors and expects to have completed all 10 sectors by the beginning of 2016. These sectors are composed of more than 80 industries.102 Because both SASB and the IIRC focus on investors, companies can use SASB's standards for the nonfinancial information they include in their integrated report.

Through evidence-based research; Industry Working Groups103 comprised of corporations, investors, and other stakeholders; a 90-day public comment period; and review by an independent Standards Council,104 SASB has established an exacting process105 for standard setting. The rigor of its methodology earned SASB accreditation by the American National Standards Institute to establish sustainability accounting standards. Because SASB's process is based on a U.S. context, however, how its standards can be adapted to other countries remains undecided in spite of clear non-U.S. interest. As of May 1, 2014, of the 1,672 downloads of the healthcare sector standards, 991 (59%) were from the United States and 681 (41%) were from 55 other countries.106 For the more recently released set of standards for financial institutions,107 the 365 downloads were evenly split between the United States and 33 other countries on that same date. Because interest in SASB's standards outside the United States is high, whether and how SASB expands its industry-based expertise to the international market will have strategic repercussions for both the organization and the movement.

Using the Security and Exchange Commission's (SEC) definition of materiality,108 SASB's goal is to set standards companies can use to provide information in their SEC filings, such as the Form 10-K (for U.S.-based companies) or Form 20-F (for foreign registrants). In light of this, Bob Herz, former Chairman of FASB, defined this benchmark for SASB's success as SEC incorporation: "The challenge for SASB is whether the SEC will enforce SASB standards based on the rigor of SASB's process and their use of the SEC's definition of materiality. Will the SEC refer to SASB standards when they review, for example, Forms 10-K and 10-Q? A related question is whether companies participating in the SASB process voluntarily begin making sustain ability disclosures in their SEC filings."109 While inclusion of sustainability performance information in the 10-K or 20-F would not turn these SEC-required documents into an "integrated report" as defined by the <IR> Framework, it would certainly accelerate the meaningful adoption of integrated reporting.

On May 1, 2014, SASB elected a new Chair, Michael Bloomberg (philanthropist, founder of Bloomberg LP, and the 108th mayor of New York City), and a new Vice Chair, Mary Schapiro (former SEC chairman).110 According to GreenBiz, these appointments provide SASB with "two powerful allies who are well-poised to extend its influence within the business and investment communities."111 We concur that these appointments will provide momentum to SASB's mission and, in our personal view, to the integrated reporting movement in general.

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