What it means
SASB stands for the Sustainability Accounting Standards Board, the organisation that originally developed the standards. Rather than asking every company to report the same long list of sustainability topics, the standards are split by industry, on the argument that water use matters enormously to a beverage producer and hardly at all to a software firm.
There are 77 industry standards, each naming a short set of disclosure topics and the specific metrics that go with them. The organising idea is financial materiality.
A topic makes it into an industry standard only if there is reasonable evidence that it could affect the cash flows, cost of capital or long-term value of a typical company in that industry. That focus is what makes the standards useful to analysts who need comparable numbers rather than narrative.
In practice a company opens the standard for its industry, works through the listed metrics, and reports them alongside its financial results or in a dedicated sustainability report. Metrics are precisely defined, so a data centre operator reporting total energy consumed and the percentage from renewable sources is producing a figure that can be compared directly with a competitor's.
Governance of the standards has changed and that matters for anyone citing them. SASB merged into the Value Reporting Foundation in 2021, which was then consolidated into the IFRS Foundation, so the standards now sit under the International Sustainability Standards Board and feed directly into the IFRS Sustainability Disclosure Standards.
Companies applying IFRS S1 are required to consider the SASB topics and metrics when identifying what to disclose. The most common point of confusion is how SASB differs from other frameworks.
SASB asks what sustainability issues affect the company's value; the GRI Standards ask what impact the company has on the world, which is a wider and different question. Many companies report against both, and treat the SASB metrics as the investor-facing subset.
In practice
Real-world examples.
Example
A regional airline uses the SASB standard for its industry and reports greenhouse gas emissions, fuel consumed, the percentage from alternative fuels, and its record on labour relations. An analyst compares those four metrics across three carriers without having to read three narrative reports.
Example
A commercial bank applies the standards for consumer finance and discloses data security incidents, customer complaints and the way it assesses environmental risk in lending. The disclosures give its institutional shareholders comparable evidence during proxy season.
Example
A clothing manufacturer discovers that its industry standard requires reporting on supplier facility audits and water management in the supply chain. The exercise reveals that it has audit data for only 60% of its tier-one suppliers, and closing that gap becomes a board-level objective.
Think of it
“SASB Standards focus on investor-relevant sustainability-industry-specific ESG disclosure guidelines.
Case study
Seen in the real world.
The following case is illustrative and the company is fictional. Cobalt Ridge Beverages, an invented drinks producer, had published a glossy sustainability report for six years and could not understand why its largest institutional shareholder kept asking for more information.
When the investor relations lead sat down with the SASB standard for non-alcoholic beverages, the answer was immediate. The report described community projects and staff volunteering at length, but gave no figure for total water withdrawn in regions with high baseline water stress, which is one of the industry's named disclosure topics. Cobalt Ridge simply had not measured it.
The following year the company added the required metrics, reported water withdrawal by region and the percentage of its packaging that was recyclable, and cut fifteen pages of narrative. The illustrative lesson is that investor-grade sustainability reporting is usually about a small number of well-defined and comparable numbers, not about volume of prose.
Watch out
Common mistakes.
- Treating SASB as a general-purpose sustainability framework. It is deliberately narrow, covering only topics judged financially material to a specific industry, and it will not capture every impact a business has.
- Reporting against the wrong industry standard. Companies with several business lines often need to apply more than one standard, and picking a single convenient one undermines comparability.
- Assuming the standards are obsolete because the organisation merged. The standards remain in use and are now embedded in the IFRS sustainability requirements, so they carry more weight rather than less.
Questions
People also ask.
Are the SASB Standards mandatory?
Not in themselves, but they are referenced by IFRS S1, and several jurisdictions have adopted or built on the ISSB standards, which makes them mandatory in practice for many listed companies.
How do SASB and GRI fit together?
SASB looks at how sustainability issues affect the company financially, while GRI looks at how the company affects society and the environment, and many companies publish both.
Who actually uses the disclosures?
Mainly institutional investors, analysts and ratings providers, who use the standardised metrics to compare companies within an industry.
From the founder's library
Take it further with the book.
Build your financial confidence beyond this definition. Shihan's full-length guide, Accounting Fundamentals, takes the same plain-English approach and turns it into a complete, practical playbook for non-finance managers, business owners and students - with chapter-end quiz answers and presentation slides included.
25% off with code MMHQ25, applied at checkout. Priced in USD - checkout may show the equivalent in your local currency.
View the book and save 25%