Tag Archives: SASB

“Too Many Sustainability Standards” No Longer a Solo Chorus

We are not very popular with sustainability consultants, media and self-appointed standards setters.  Rather than supporting  the myriad of initiatives, we have decried them as marginalizing sustainability and splintering the market – thereby substantially diluting any real successes that may be achieved by those implementing initiatives.  But being a contrarian has left us singing acapella solo in the concert hall.

A bit of harmony was added from this article published earlier this week.  The author does a good job of explaining key problems with competing inconsistent standards.  We know of one major corporation who currently fills out more than 100 sustainability questionnaires each year from various stakeholders.  This is not a new development as I recall in the mid-1990s the forest products company I worked for responded to more than 40 such information requests/surveys annually.

Several of the newer sustainability standards/ratings emphasize that they don’t impose on the company for information – they use publicly available information in their algorithms.  In theory, that sounds nice, but it adds inconsistency beyond just the various algorithms – rating models based on surveys use different information than those relying on what is publicly available.

Then there is the matter of how each initiative/standard fundamentally defines “sustainability” and/or weights various associated factors.  Last year, I sat in on a panel discussion that was ostensibly a cheerleading session for the Sustainability Accounting Standards Board (SASB) with some of the major backers on the panel.  When I brought up the idea that sustainability is not clearly or consistently defined in the corporate world, the panelists were incredulous.  Yet others in the audience chimed in with additional comments supporting the variability in understanding of the term.

Its nice to finally have some company in the choir, but even so we expect that proliferation of standards/quasi-standards will continue as long as consultants feel there is money to be made.  We continue to take a very basic client-specific business based approach to defining sustainability based on the individual client, emphasizing achievable expectations and measurable business fundamentals.  This approach may not be as sexy as others, but it is realistic and, um, sustainable.

SEC Commissioner Speaks to Accountability for Sustainability Accounting

SEC Commissioner Daniel Gallagher made remarks last week at the 26th Annual Corporate Law Institute held at Tulane University Law School.  His comments centered on his views of the current condition of corporate governance and the role of the SEC and the Commissioners.  In that light, he stated  “We must also take exception to efforts by third parties that attempt to prescribe what should be in corporate filings.  It is the Commission’s responsibility to set the parameters of required disclosure.”

Gallagher called attention to “[t]he somewhat confusingly-named Sustainability Accounting Standards Board” or (SASB).  SASB is a non-profit entity that, according to their website “provides standards for use by publicly-listed corporations in the U.S. in disclosing material sustainability issues for the benefit of investors and the public.”

However, Gallagher was less than supportive of the group and clarified that “the SASB does not actually promulgate accounting standards, nor does it limit itself to sustainability topics, although I suppose it is in fact a Board.” 

He continued to voice concern about overreaching or non-mandated SEC disclosures:

The Commission does not and should not delegate to outside, non-governmental bodies the responsibility for setting disclosure requirements.  So while companies are free to make whatever disclosures they choose on their own time, so to speak, it is important to remember that groups like SASB have no role in the establishment of mandated disclosure requirements.

Doubtful this is reception SASB had hoped for at such a relevant and influential level.