Trust Geek Glossary: Understanding SASB standards

Why sustainability is an essential part of financial materiality

Julie Yamamoto, ESG Content Marketing Manager, OneTrust
April 18, 2022

A graphic of an orange gradient background.

Welcome to the next edition of the Trust Geek Glossary, where we aim to clear up the alphabet soup that comes with the trust profession. If you caught the last installment, you may already be using terms like CDP, DSAR, or GHG with ease. But stay tuned as today’s post will dive into another sustainability reporting framework – the Sustainability Accounting Standards Board (SASB). We’ll explore key questions about SASB standards, the SASB materiality map, and more. 

Download the infographic for a side-by-side comparison of three major ESG reporting frameworks.

What is SASB?

SASB was a nonprofit founded in 2011 by Dr. Jean Rogers, an environmental engineer and former Loeb Fellow at Harvard University. SASB was developed during research conducted by Rogers and her colleagues at Harvard’s Initiative for Responsible Investment. The goal was to address the value gap between information provided in traditional financial statements and the sustainability factors that can impact a company’s long-term ability to create value. In Roger’s own words, she founded SASB because:

“Material information is the right of every investor….to get a full picture of corporate performance, investors need to be able to type in a ticker and access sustainability fundamentals right alongside financial fundamentals.”

Initially focused on helping companies operating in the U.S. disclose financially material sustainability information to their investors, SASB has since gained global acceptance. Today 258 institutional investors across 23 countries support and/or use SASB standards to inform their decision-making. In 2021, SASB and the International Integrated Reporting Council (IIRC) merged into a single organization called the Value Reporting Foundation (VRF) in response to investor demand for simplification of sustainability disclosures.

What is SASB infographic

The infographic that follows provides a quick introduction to SASB:

  • Founded: 2011
  • Number of companies reporting: 1,300
  • Typical audience: Financial stakeholders and investors
  • Purpose: Accounting/reporting standards to guide the disclosure of financially material sustainability information by companies to their investors.
  • Focus: Internal impact of environmental, social, and governance (ESG) risks on financial performance.
  • What is reported: All three ESG pillars. These standards help businesses report on financially material issues across environmental, social capital, human capital, business model & innovation, and leadership & governance.
  • Who reports: Any organization can use the SASB standards.
  • Industry-specific versions: 77 industry-specific standards.
  • Output used for: Company’s public ESG report and other (sustainability indices, awards, etc.)


Infographic titled 'what is SASB - Sustainability Accounting Standards Board' with information related to specific areas like audience and uses to the right


Why is financial materiality important?

Materiality, or more specifically financial materiality, is core to the SASB standards. It is an accounting principle that refers to any information that would impact the judgement of an investor (decision-useful). If it’s likely that an event or fact would affect an investor’s decision, it is said to be material. If it would not affect an investor’s decision, it is said to be immaterial. Material information should be publicly disclosed in a company’s financial statements, and businesses typically use materiality assessments to identify those issues. Because ESG issues are profoundly re-shaping the world and how businesses operate, they are material and should be included in materiality assessments. Taking climate change as a case in point, Larry Fink, CEO of Blackrock, highlighted the investment risk that it poses in his 2020 letter to CEOs:

“Climate change has become a defining factor in companies’ long-term prospects. What will happen to the 30-year mortgage – a key building block of finance – if lenders can’t estimate the impact of climate risk over such a long timeline…? How can we model economic growth if emerging markets see their productivity decline due to extreme heat and other climate impacts? Investors are increasingly reckoning with these questions and recognizing that climate risk is investment risk.”

What are SASB standards?

SASB standards take this concept of materiality to the next level. They consist of 77 industry-specific disclosure guidelines that identify financially material sustainability topics and their associated metrics for a typical company in that industry. While some ESG issues may be industry-agnostic, others may apply only to certain industries or in different ways between industries. For example, ESG issues that can impact the financial performance of a food and beverage company may be different from those that impact a software company.


Graphic listing SASB industry specific standards

Source: SASB video


How are SASB standards organized?

To cover both aspects of disclosure (industry-agnostic and industry-specific), SASB standards are structured as follows:

  • Sustainability dimensions: Five broad themes including Environment, Social Capital, Human Capital, Business Model & Innovation, and Leadership & Governance. 
  • General Issue Categories (GIC): Industry agnostic topics – these are represented as rows in the SASB Materiality Map.
  • Disclosure topics: Industry-specific versions of the GICs (on average six per industry).
  • Accounting metrics: Quantitative and qualitative indicators for measuring performance on each disclosure topic (13 per industry on average).

Structure of the SASB standards

Diagram showing the structure of the SASB standards

Source: SASB


What is SASB materiality? How does the SASB materiality map work?

That’s a lot of information to take in, so the SASB Materiality Map® was created to help organizations navigate the SASB standards, determine what is material for reporting, and enable standardized benchmarking. Investors can use the map to understand how sustainability issues are related across different industries, as well as how they may affect the financial performance of companies within those industries. It helps them assess their portfolio’s exposure to the risks and opportunities represented by each ESG topic to make more informed investment decisions. Businesses can use the map to pinpoint, manage, and report on the disclosure topics most relevant to their industry, along with the associated accounting metrics.

The SASB Materiality Map

The map is organized by 26 general sustainability issues (GICs), grouped under the five sustainability dimensions (the rows). These are then plotted across the 77 industries (the columns) to indicate how likely a particular ESG issue will be financially material for companies in that industry.


Graphic portraying SASB materiality map spreadsheet

Source: SASB


SASB Materiality Map vs SASB Materiality Finder

While the Materiality Map is still available for commercial license, SASB launched the Materiality Finder in 2021 to make it easier for businesses to find the information they need. Free for everyone, it offers some enhanced capabilities over the Materiality Map such as the ability to search by company, compare up to four industries side-by-side, easier navigation to the relevant SASB standards, and more.

How does SASB disclosure work? Are SASB standards mandatory?

Using SASB standards is voluntary but has strong support from some of the largest investment companies in the world. By leveraging SASB standards, businesses can more easily address investor demand for consistent, comparable data on financially material sustainability issues. SASB outlines a seven-step process companies can use to implement the standards:


Inforgraphic showing icons that represent the 7 steps to implement SASB standards


  1. Establish a foundation: Determine how financially material sustainability factors will be integrated into your company’s strategy, business model, and culture.
  2. Choose the right tools for the job: SASB standards can be used in conjunction with other ESG reporting frameworks. To decide which ones may be relevant, identify key audiences and understand their sustainability information needs.
  3. Decide where to disclose: Establish where and how you will communicate SASB data such as corporate reports, stand-alone ESG reports, websites, investor presentations, earnings calls, etc.
  4. Understand SASB standards: Learn more about the SASB standards and how they are structured to surface, manage, and report on the sustainability factors most likely to materially impact your company’s financial performance.
  5. Assess your readiness: Review the performance metrics associated with each SASB disclosure topic relevant to your organization and evaluate what data collection and internal controls are needed. Compare against existing reporting processes to determine what can be reused and where gaps may be.
  6. Develop your disclosures: Consider how to present your SASB disclosure topics and metrics, including any contextual information, in a way that tells the best story of your company’s long-term value creation to investors.
  7. Enable continuous improvement: Establish feedback loops to iterate and continuously improve your decision-useful sustainability disclosure to investors. Monitor internal and external drivers of ESG risk and opportunity, evolving regulatory requirements and SASB standards, best practices in peer disclosures, etc.


Who uses SASB standards?

Given the financial focus of SASB standards, it’s no surprise that leading investors around the world use them in their decision-making process. In 2021, 258 investors, representing $76 trillion in assets, used the standards to inform their investment decision-making. ESG data, analytics, and research agencies that provide third-party assessments of ESG performance to investors also use the SASB standards. And, between 2015 and 2021, the number of companies incorporating SASB standards into their reporting grew by 40,067% (from three to 1,325).


Line graph showing number of unique reporting and referencing companies by year with visible increase over time for both


How does SASB differ from other ESG reporting frameworks?

As SASB continues to gain attention from investors and enterprises across the globe, it’s important to understand how it differs from other major frameworks and standards. A few ways SASB standards are unique include:

  • They have strong support from leading global investors.
  • They are inwardly focused on ESG issues that could materially impact financial performance.
  • They provide industry-specific guidance and associated accounting metrics.

By contrast, other ESG reporting frameworks, such as CDP and GRI, incorporate an outward focus on the significant ESG impacts a company has on the economy, environment, and people. Many of these frameworks and standards are complementary, but it can be a confusing landscape of disclosure guidance for businesses and their stakeholders. However, there are strong indicators that consolidation is coming. Recent announcements from major international financial and ESG reporting and standard-setting organizations outline a vision for a globally consistent, comparable, and integrated set of disclosure guidelines.

How can ESG reporting software help companies leverage SASB standards?

ESG software can save you time by streamlining your data collection, stakeholder collaboration, and alignment to multiple reporting frameworks. Intelligent workflows and collaboration features, such as those found in the OneTrust ESG & Sustainability Cloud, significantly reduce the effort needed to collect data from multiple sources and stakeholders. A centralized data repository and real-time dashboards also make it easy to prioritize the ESG initiatives relevant to your business (materiality), auto-populate reports across different frameworks, and track progress against baselines.

Download the infographic for a side-by-side comparison of three major ESG reporting frameworks.

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