Using the SASB Standards to meet the requirements in IFRS S1
Sustainability Accounting Standards Board (SASB)-
The SASB is a non-profit organization that aims to establish and promote sustainability accounting standards. These standards are designed to assist public corporations in disclosing information that are both material and useful for decision-making to investors.
The process of developing these standards is rigorous and involves evidence-based research. It also ensures broad and balanced participation from stakeholders, which is crucial for the standards to be comprehensive and applicable across different industries and sectors.
Benefits of SASB Standards:
Investor Relevance: They are designed to provide decision-useful information to investors, creditors, and other lenders, making the data comparable across peers.
Industry Specific: The standards are tailored to specific industries, enabling companies to access relevant guidance quickly for their business activities.
Broad Scope: They offer guidance on sustainability-related topics beyond climate, including aspects like human capital and nature.
How does a company use the SASB Standards to meet the requirements in IFRS S1?
What is IFRS S1?
IFRS S1, also known as the General Requirements for Disclosure of Sustainability-related Financial Information, is a standard issued by the International Financial Reporting Standards (IFRS) Foundation.
The main objective of IFRS S1 is to require an entity to disclose information about its sustainabilityrelated risks and opportunities that is useful to users of general-purpose financial reports in making decisions relating to providing resources to the entity. Under IFRS S1 an entity is required to provide the disclosures about:
the governance processes, controls and procedures the entity uses to monitor, manage and oversee sustainability-related risks and opportunities, the entity’s strategy for managing sustainability-related risks and opportunities,
the processes the entity uses to identify, assess, prioritize and monitor sustainability-related risks and opportunities, and
the entity’s performance in relation to sustainability-related risks and opportunities, including progress towards any targets the entity has set or is required to meet by law or regulation.
IFRS S1 references the SASB Standards as a source of guidance that companies are required to consider when identifying sustainability-related risks and opportunities. IFRS S1 requires companies to refer to and consider the applicability of metrics in the SASB Standards when determining what information to disclose regarding sustainability-related risks and opportunities.
Requirements in IFRS S1
SASB Standards
Identify the relevant industry Standard(s) – Companies can initiate the identification of pertinent risks and opportunities by exploring relevant SASB Standards. Determine the industry (or industries) aligned with the company’s business model and operations.
Identify relevant disclosure topics – Within the SASB Standards, disclosure topics outline sustainability-related risks and opportunities that are likely to impact a company’s outlook within a specific industry.
Identify relevant metrics – For each disclosure topic deemed to have a reasonable likelihood of affecting the company’s prospects, refer to and assess the relevance of metrics associated with that disclosure topic. The metrics within the SASB Standards are crafted to offer informative and comparable insights into a company’s performance related to a specific disclosure topic.
Develop disclosures using technical protocols – Each metric is accompanied by technical protocols that furnish comprehensive guidance on definitions, scope, implementation, and presentation of the associated metrics.
