Standards content

In which industries does emissions disclosure vary under the SASB Standards? How do the SASB Standards account for indirect (Scope 2 and Scope 3) emissions?

There is broad support in global capital markets for all companies—regardless of their industry—to disclose their Scope 1, Scope 2 and (where feasible) Scope 3 greenhouse gas (GHG) emissions. For this reason, IFRS S2 Climate-related Disclosures includes cross-industry disclosure requirements for Scope 1, Scope 2 and Scope 3 GHG emissions (subject to an entity’s determination that information regarding those emissions is material). The approach to climate-related disclosure in the SASB Standards is different but not in conflict with such cross-industry reporting.

A subset of 22 SASB Standards include disclosure topics and metrics regarding direct (Scope 1) emissions, because the SASB standard-setting process identified those industries as the most likely to face financial effects specifically related to their emissions. These effects may manifest as regulatory risks and shifts in consumer demand, which in turn affect costs and revenues.

For indirect emissions, SASB Standards capture the operational and/or strategic factors that give rise to such emissions. For the 35 industries that indirectly contribute to greenhouse gas emissions through significant use of purchased electricity (i.e., Scope 2), SASB Standards contain metrics related to understanding the amount, type (conventional or renewable) and source (self-generated or purchased) of energy.

For industries that indirectly contribute to greenhouse gas emissions upstream (e.g., from purchased materials processing and transportation), downstream (e.g., from distribution and use of products) or in other ways (e.g., from employee commuting and business travel)—in other words, Scope 3 emissions—SASB Standards recommend metrics directly related to performance in those areas.

For more information on the approach to GHG emissions and related topics in the SASB Standards, see the SASB Climate Risk Technical Bulletin.

What is the conceptual approach to human capital management in the SASB Standards?

Human capital issues are well-represented throughout the 77 SASB industry standards, as detailed in the SASB Human Capital Bulletin. However, many issues are rapidly evolving and both companies and investors are increasingly attuned to their financial implications. As a result, investor expectations for human capital disclosure are rising. With this in mind, SASB Standards research staff undertook the Human Capital research project with the objective of evolving the content of the Standards in light of emerging trends.

In December of 2021, the SASB Standards Board approved a new standard-setting project evaluating whether and how to address the themes of diversity, equity and inclusion in 45 industries. More information on that project can be found on the DEI project page.

These projects were transitioned to the ISSB upon consolidation of the Value Reporting Foundation into the IFRS Foundation in August 2022. The consultation on the ISSB's future agenda priorities will inform the delivery plan for these projects.

What is the conceptual approach to water-related risk in the SASB Standards?

Water and wastewater management is one of the more prevalent issues addressed in SASB Standards, appearing in 25 of 77 industries. However, in many cases, the issue can have diversified impacts on operating risk and financial performance from one industry to the next, and these differences are reflected in the SASB Standards content.

Water risk impacts are physical in nature, such as those driven by limited natural water availability, competition for water resources and watershed pollution. SASB Standards consider two high-level categories of physical water risk: access to water and water quality. Additionally, SASB Standards consider how the regulatory environment can affect physical water risks and a company’s ability to manage those risks.

Do SASB Standards contain any industry-agnostic metrics?

Metrics can be categorised in the following ways:

• "Industry-based" metrics are those that are tailored to a particular industry context.
• “Industry-agnostic” metrics are those that can be used to measure performance on a topic in a range of different industry contexts.
• “Cross-industry” metrics are applied consistently across all industries.

Because SASB Standards are designed to identify and standardise disclosure for the sustainability-related risk and opportunities most relevant to investor decision-making in each of 77 industry verticals, SASB Standards are industry-based and primarily contain industry-based metrics. However, many risks and opportunities cut across industries and sectors and those issues in many cases can be measured consistently across different business models (i.e., using "industry-agnostic" metrics). For example, SASB disclosure topics related to energy management (35 industries), employee health and safety (26 industries) and water management (25 industries) use identical or near-identical metrics in most relevant industry contexts.

SASB Standards do not currently contain "cross-industry" quantitative metrics, although demand has increased for certain metrics—such as those related to human capital management and climate change—to be more consistently applied across all industries. For qualitative disclosure, SASB Standards Application Guidance recommends that all companies disclose information about their governance, strategy and risk management for all SASB disclosure topics.

In the SASB metrics that ask for "Total amount of monetary losses …," should I disclose the amount that may not have been recognised in the financial statements yet (e.g., when a legal decision is pending and the outcome is uncertain)?

No. The scope of monetary losses included in the disclosure shall include only the losses that were accrued (i.e., on the statement of profit or loss) during the reporting period, which might differ from the amount paid in that period. The entity shall report the net amount of any loss or gain, including amounts reported in a prior period that are reversed during the current reporting period.

Although reporting companies may face different thresholds for recognition (i.e., “probable”) depending on whether they are reporting under local GAAP or IFRS Accounting Standards, SASB Standards Application Guidance recommends that, when providing disclosure in accordance with SASB Standards, companies do so in a way that is consistent with their financial reporting.

All losses accrued during the current reporting period shall be included in the scope of disclosure.