SASB (Sustainability Accounting Standards Board)
- Countries: Global (legacy usage, especially in US; now part of ISSB)
- Function: Developed sector-specific standards for financially material ESG information
The Sustainability Accounting Standards Board (SASB) was established in 2011 with the objective of developing industry-specific disclosure standards that identify financially material environmental, social, and governance (ESG) issues for companies and investors. SASB’s core contribution was the articulation of a sector-specific approach to ESG materiality, providing a framework that distinguished between sustainability factors that materially affect enterprise value and those that do not, based on sectoral dynamics.
Unlike broader reporting frameworks such as the Global Reporting Initiative (GRI), SASB focused explicitly on financial materiality from the perspective of investors. Its standards were designed to be decision-useful for capital markets, integrating ESG risks and opportunities into the investment analysis and valuation processes.
The SASB Standards are organized across 77 distinct industry classifications within 11 sectors, including financials, healthcare, technology, consumer goods, transportation, and extractives. For each industry, SASB identifies a small subset of ESG issues deemed likely to materially impact financial performance, along with standardized disclosure topics and associated metrics. Topics cover areas such as greenhouse gas emissions, data privacy and security, supply chain management, labor practices, product quality and safety, and business ethics.
SASB’s approach offered several key innovations:
- Sector specificity: Material ESG issues differ dramatically between industries. SASB’s framework recognized, for example, that water management is financially critical for mining companies but relatively immaterial for software firms.
- Investor relevance: SASB standards focused on information material to investor decision-making, thereby aligning with US securities law principles and the Supreme Court definition of materiality.
- Standardized metrics: By prescribing specific metrics for each disclosure topic, SASB facilitated comparability across firms within the same industry, enhancing the utility of ESG data for benchmarking and analysis.
In 2021, SASB merged with the International Integrated Reporting Council (IIRC) to form the Value Reporting Foundation (VRF). In turn, the Value Reporting Foundation was consolidated into the International Financial Reporting Standards (IFRS) Foundation in 2022 to support the formation of the International Sustainability Standards Board (ISSB).
The ISSB has adopted and adapted the SASB Standards as foundational inputs for its development of global baseline sustainability disclosure standards (IFRS S1 and S2). SASB Standards continue to be actively referenced and applied by companies and investors globally, particularly for sector-specific materiality mapping and metrics selection. Companies using the ISSB standards are encouraged to refer to the relevant SASB Standards to satisfy industry-based disclosure requirements until formal ISSB sector-specific standards are finalized.
Key legacies of SASB include:
- Institutionalizing the concept of industry-specific financial materiality in sustainability reporting.
- Bridging ESG disclosure with mainstream financial reporting and analysis practices.
- Creating a modular, scalable framework that could be adapted into evolving global reporting structures.
While the SASB brand has been absorbed into the broader ISSB ecosystem, its standards remain critical transitional tools for organizations preparing for next-generation, investor-focused sustainability reporting.