Tom Riesenberg is Director of Legal Policy & Outreach at the Sustainability Accounting Standards Board; Elisse Walter is Former SEC Chair and a member of SASB’s Foundation Board. This post is based on a SASB publication by Mr. Riesenberg and Ms. Walter. Related research from the Program on Corporate Governance includes Social Responsibility Resolutions by Scott Hirst (discussed on the Forum here).
As the Sustainability Accounting Standards Board (SASB) marches forward with its standard-setting efforts, public companies are not always receptive, with responses that are reminiscent of the rabbi’s prayer in Fiddler on the Roof: “May God bless the Czar, and keep him far away from us.” In our experience the three reasons most often given by public companies for wanting to maintain their distance from SASB are: it is not clear that investors really want or need this information or that the information is material; it would be too expensive to provide accurate information; and there are too many legal uncertainties.
The response to the first of these concerns is that there is a mountain of evidence that investors want better, more standardized, more useful information about a company’s sustainability. Much of this evidence is available in various forms on SASB’s website. [1] And the crux of SASB’s standard-setting approach is to identify, through extensive research and analysis, information that is reasonably likely to be material to companies within a particular industry. In this regard, although sustainability disclosures are often referred to as non-financial information, they are best characterized as descriptions of a company’s long-term risks and thus perhaps more accurately described as pre-financial statement information.
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