Standard setting

How does the definition of "materiality" in the SASB Standards compare to that of the ISSB Standards and that of other disclosure frameworks?

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.

How can I provide feedback on, contribute to, or ask questions about ISSB exposure drafts?

First, thank you for your interest in engaging with and supporting the ISSB as it works toward delivering a global baseline of sustainability disclosure standards. Your engagement, including 1,400+ responses on the General Requirements (IFRS S1) and Climate (IFRS S2) Exposure Drafts, has contributed to the quality and speed of the ISSB’s work to date and will continue to be important to their work going forward.

The ISSB issued its first two Standards (IFRS S1 and IFRS S2) in June 2023. For notices of upcoming consultation periods, please subscribe to receive sustainability alerts via the IFRS Foundation’s notifications dashboard. See the ISSB Update for preliminary decisions of the ISSB. See the ISSB FAQs for more information about the ISSB and its work. Other questions and feedback for the ISSB can be submitted via the contact form on the ISSB’s webpage.

How can I stay informed about changes and updates to SASB Standards?

Oversight of the SASB Standards has transitioned from the SASB Standards Board to the International Sustainability Standards Board (ISSB) of the IFRS Foundation. The IFRS Foundation transparently provides stakeholders with a view into the ISSB’s agenda, activities, deliberations, decisions, active projects and other standards-related updates.

In 2023, the ISSB will enhance the international applicability of the SASB Standards and continue SASB Standards projects handed over by the VRF. In other words, the ISSB is not just preserving the SASB Standards, it is updating and improving them to provide a solid footing when companies use them when applying the new IFRS Sustainability Disclosure Standards.

As part of that process, a group of ISSB members—chaired by Jeff Hales, former Chair of the SASB Standards Board—has been established and tasked with developing recommendations for the ISSB related to the maintenance, evolution and enhancement of the SASB Standards. The group will develop drafts of the required exposure drafts of amendments to the SASB Standards and, after considering the stakeholder feedback, drafts of the final amendments. The ISSB as a full board will consider the recommendations of this group in ISSB meetings (which are public) and ratify the exposure drafts and, subsequently the final amendments prepared by the group. The comment period for the exposure drafts will be the same as for those related to IFRS Sustainability Disclosure Standards.

Visit the IFRS Foundation notifications dashboard to stay informed about the work of the ISSB.

What is the approach to Governance—the "G" in ESG—in the SASB Standards?

The approach to governance in the SASB Standards differs from a more traditional assessment of board structures, processes and shareholder rights. Because many of these traditional governance topics are addressed by existing regulation—including stock exchange listing requirements and industry-based or jurisdictional principles and codes—SASB Standards instead include industry-based performance metrics likely to serve as indicators of governance quality, such as fines and settlements, violations, accidents, etc. In this regard, SASB Standards recognize that while corporate governance drives value across every sector, each industry also has its own unique governance profile. For example, the governance issues most likely to be considered in investors’ assessments of enterprise value might involve systemic risks (as in the Financials sector), or operations in highly regulated markets (as in the Infrastructure sector) SASB Standards metrics for these and other issues are intended to complement—not replace—existing, well-established frameworks for reporting on traditional governance issues, such as those developed by the International Corporate Governance Network (ICGN), the Council of Institutional Investors (CII) and the Investor Stewardship Group.