Various disclosure frameworks and standards have adopted a range of definitions of “materiality” focused on different users and objectives. SASB Standards, like ISSB Standards—as well as the initiatives that have converged under the ISSB (CDSB, TCFD and Integrated Reporting)—are focused on investor needs. SASB Standards are designed to facilitate the disclosure of sustainability-related financial information that is likely influence investor decision-making.
The original definition of ‘materiality’ underpinning the SASB Standards was the definition established under the U.S. securities laws:
Information is material if there is “a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.”
Revisions were proposed to this definition in 2020 and were made available for public comment. The revised definition per the exposure draft was as follows:
“For the purpose of SASB’s standard-setting process, information is financially material if omitting, misstating, or obscuring it could reasonably be expected to influence investment or lending decisions that users make on the basis of their assessments of short-, medium-, and long-term financial performance and enterprise value.”
Materiality Finder enables companies to easily identify topics that are likely to be relevant for their industry or industries, providing a cost-effective way to disclose material sustainability-related financial information that meets investor needs.
There are other initiatives with a broader scope, focused on multi-stakeholder needs and policy objectives, including GRI.