Sustainability Accounting Standards Board

Sustainability Accounting Standards Board is an independent nonprofit standard-setter that developed industry-specific standards for reporting on sustainability topics such as climate change, water risk, human capital, supply chain, and corporate governance. Founded in 2011 in San Francisco, California, the organization sought to create comparable, decision-useful information for investors and companies across sectors including financial services, energy industry, technology companies, and manufacturing. The board engaged with stakeholders from BlackRock, State Street, Vanguard Group, Bank of America, and Goldman Sachs as well as regulators like the Securities and Exchange Commission and multilateral institutions such as the World Bank and the United Nations.

History

The board was launched by founder Jean Rogers with initial support from organizations including the Rockefeller Foundation, Fidelity Investments, Kaiser Permanente, CalPERS, and CalSTRS. Early work built on initiatives from Global Reporting Initiative, Carbon Disclosure Project, Task Force on Climate-related Financial Disclosures, and standards discussions at the International Organization for Standardization and International Integrated Reporting Council. By publishing exposure drafts, engaging in public comment with stakeholders such as Microsoft, Apple Inc., and ExxonMobil, and convening practitioners from Ernst & Young, Deloitte, PwC, and KPMG, the board created sector-specific guidance that influenced reporting practices in the United States and internationally. In 2020–2021, governance changes and funding shifts culminated in a consolidation with Value Reporting Foundation and later alignment initiatives with International Financial Reporting Standards Foundation stakeholders.

Mission and Governance

The stated mission emphasized making sustainability information comparable and material for investors including BlackRock, Vanguard Group, Fidelity Investments, and State Street Global Advisors. Governance structures included a board of industry and investor representatives, advisory councils drawing members from Goldman Sachs, Morgan Stanley, Citigroup, and civil society organizations such as Natural Resources Defense Council and World Wildlife Fund. Funding was provided by foundations like the Ford Foundation and corporate supporters including Microsoft and PepsiCo. The organization maintained procedures similar to standard-setters such as Financial Accounting Standards Board and collaborated with regulatory bodies including the Securities and Exchange Commission and standard-setters like the International Accounting Standards Board.

Standards and Methodology

Standards were published for multiple industries including oil industry, utilities, automotive industry, pharmaceutical industry, and retail industry, drawing on methodologies from materiality assessment practice and investor-focused research used by BlackRock analysts and MSCI. Each standard specified performance metrics, disclosure topics, and technical protocols resembling frameworks from Global Reporting Initiative and scenario analysis approaches popularized by the Task Force on Climate-related Financial Disclosures. Development relied on evidence from corporate disclosures by ExxonMobil, Shell plc, BP, Tesla, Inc., and data providers such as Bloomberg and Sustainalytics. The methodology included public consultation, industry working groups, and pilot testing with firms like General Electric, Walmart, and Procter & Gamble.

Adoption and Impact

Corporate adopters included Microsoft, Intel, Unilever, PepsiCo, and Nike, while asset managers and asset owners such as BlackRock, CalPERS, Norwegian Sovereign Wealth Fund, and Temasek Holdings referenced the standards in investment analysis. Regulators and stock exchanges including the Securities and Exchange Commission, New York Stock Exchange, and London Stock Exchange Group considered the standards when assessing disclosure expectations. Academic research from institutions like Harvard University, Stanford University, and Columbia University evaluated the impact on disclosure quality, revealing improved comparability for investors including analysts at Goldman Sachs and J.P. Morgan. The standards influenced corporate reporting, proxy voting, and index construction at firms such as MSCI and S&P Global.

Criticisms and Responses

Critiques came from some corporations and scholars who argued the standards overlapped with frameworks from Global Reporting Initiative and raised concerns about industry capture by large asset managers like BlackRock and State Street Global Advisors. Other commentators questioned reliance on voluntary adoption versus mandatory rules from the Securities and Exchange Commission or legislative action in jurisdictions like the European Union (notably the Corporate Sustainability Reporting Directive). The board responded by emphasizing investor materiality, transparency of standard-setting procedures, and engagement with stakeholders including civil society groups such as Oxfam and Amnesty International. In response to critiques about consistency, collaborations were pursued with international initiatives including the International Financial Reporting Standards Foundation and the Task Force on Climate-related Financial Disclosures to harmonize reporting expectations.

Category:Nonprofit organizations based in California Category:Financial reporting Category:Sustainability standards