Sustainability Accounting Standards Board
Industry-Based Standards to Guide Disclosure and
Action on Material Sustainability Information
Presentation to the Task Force on Climate-Related Financial Disclosure
London, UK
February 9, 2016
Jean Rogers, PhD
CEO and Founder
© 2016 SASB™
The SASB Mission
Improved non-financial disclosure results in enhanced market efficiency
The mission of SASB is to develop and
disseminate sustainability accounting
standards that help public corporations
disclose material, decision-useful
information to investors.
That mission is accomplished through a
rigorous process that includes evidencebased research and broad, balanced
stakeholder participation.
Facts about SASB
 Independent 501(c)3 non-profit
 American National Standards Institute
(ANSI) accredited standards developer
 Developing industry-specific standards for 10 sectors
and 80+ industries
 Guided by the U.S. Supreme Court’s definition of materiality, SASB prioritizes
material sustainability factors for disclosure to investors
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The Materiality Method
SASB’s approach grew out of research done at Harvard University
From Transparency
to Performance
Industry-Based Sustainability
Reporting on Key Issues
July, 2010

Steve Lydenberg
Domini Social Investment and IRI Fellow, Harvard University

Jean Rogers, PhD
SASB, formerly Arup and Loeb fellow, Harvard University

David Wood, PhD
Initiative for Responsible Investment, Harvard University
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The SASB Difference
SASB standards are created for the market, by the market
Material
Decision-Useful
Cost-Effective
Industry-Specific
Evidence-Based
Market-Informed
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© 2016 SASB™
Comparing Fundamentals, Competing on Performance
SASB standards enable peer-to-peer comparisons and foster competition
SASB
Metrics
Peer comparison
Consistent units
Complete data set
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Benchmarking
© 2016 SASB™
Sustainable Industry Classification System
SICS™ industries are grouped by resource intensity and sustainability impacts
Health Care
Non-Renewable Resources
Resource Transformation
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 Oil & Gas – Exploration &
Production
 Oil & Gas – Midstream
 Oil & Gas – Refining & Marketing
 Oil & Gas – Services
 Coal Operations
 Iron & Steel Producers
 Metals & Mining
 Construction Materials
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Biotechnology
Pharmaceuticals
Medical Equipment & Supplies
Health Care Delivery
Health Care Distributors
Managed Care
Technology & Communications
 Electronic Manufacturing Services &
Original Design Manufacturing
 Software & IT Services
 Hardware
 Semiconductors
 Telecommunications
 Internet Media & Services
Renewable Resources &
Alternative Energy
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Biofuels
Solar Energy
Wind Energy
Fuel Cells & Industrial Batteries
Forestry & Paper
Transportation
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Automobiles
Auto Parts
Car Rental & Leasing
Airlines
Air Freight & Logistics
Marine Transportation
Rail Transportation
Road Transportation
Infrastructure
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Electric Utilities
Gas Utilities
Water Utilities
Waste Management
Engineering & Construction Services
Home Builders
Real Estate Owners, Developers &
Investment Trusts
 Real Estate Services
Services
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Education
Professional Services
Hotels & Lodging
Casinos & Gaming
Restaurants
Leisure Facilities
Cruise Lines
Advertising & Marketing
Media Production & Distribution
Cable & Satellite
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Chemicals
Aerospace & Defense
Electrical & Electronic Equipment
Industrial Machinery & Goods
Containers & Packaging
Financials
 Commercial Banks
 Investment Banking & Brokerage
 Asset Management & Custody
Activities
 Consumer Finance
 Mortgage Finance
 Security & Commodity Exchanges
 Insurance
Consumption
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Agricultural Products
Meat, Poultry & Dairy
Processed Foods
Non-Alcoholic Beverages
Alcoholic Beverages
Tobacco
Household & Personal Products
Multiline and Specialty Retailers &
Distributors
Food Retailers & Distributors
Drug Retailers & Convenience Stores
E-Commerce
Apparel, Accessories & Footwear
Building Products & Furnishings
Appliance Manufacturing
Toys & Sporting Goods
© 2016 SASB™
Designed for Integration Into Mandatory Filings
A de facto mandatory reporting environment without regulation
US GAAP
SASB Accounting Metrics
True and fair representation
of performance on material
factors
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A Market-Driven Response
SASB addresses needs of all market participants—both investors and issuers
Issuers
Investors
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A minimum set of disclosure topics that are
likely to have material impacts on companies
in an industry, and a model for disclosing
information on those factors in a decisionuseful way to investors
A method to understand and improve
performance on ESG-related value drivers
A way to better satisfy the requirements of
Regulation S-K in the U.S. and Directive
2014/95/EU in Europe
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Comparable data for benchmarking
and evaluating performance
Standardized, decision-useful
information in a trusted channel
(i.e., 10-K and 20-F)
Tools and resources to analyze and
understand sustainability risk at the
portfolio level
Guidance for more focused
corporate engagement efforts
SASB INDUSTRY WORKING GROUPS
REFLECT BROAD-BASED INTEREST
>2,800 $23.4T
$11.0T
PARTICIPANTS
MARKET CAP
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ASSETS UNDER
MANAGEMENT
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© 2016 SASB™
Balanced Participation
SASB’s standards-setting process is inclusive and informed by industry expertise
Sample of participants
• 3M
• Alaska Airlines
• Alcoa
• Allianz Global Investors
• Anheuser-Busch InBev
• Apache
• Applied Materials
• ArcelorMittal
• AT&T
• Atlas Copco
• Autodesk
• BAE Systems
• Bain & Company
• Baker Hughes
• Bank of America
• Barrick Gold
• BASF
• Bloomberg LP
• Blue Cross Blue Shield
• BNY Mellon
• Boeing
• Booz Allen Hamilton
• Caesars Entertainment
• CalPERS
• CalSTRS
• CBRE
• Chrysler
• CISCO
• Citigroup
• ConocoPhillips
• Credit-Suisse
• Crowell & Moring
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• Deloitte
• Dell
• Delta Airlines
• Denaher
• Deutsche Bank
• Diebold
• Dow Chemical
• DuPont
• Eastman Chemical
• eBay
• EMC
• Encana
• EY
• Fannie Mae
• FedEx
• FMC
• Ford Motor Company
• General Electric
• General Motors
• Gerdau Ameristeel
• Goldman Sachs
• Google
• Greif
• Groupon
• Harley-Davidson
• Hertz
• Hess
• Hewlett Packard
• Hill & Knowlton (WPP)
• HSBC
• Illinois Tool Works
• ING
• Ingersoll Rand
• Intel
• JetBlue Airlines
• JLL
• JP Morgan
• Johnson and Johnson
• Kaiser Permanente
• KLA-Tencor
• KPMG
• Lear
• Lockheed Martin
• MeadWestvaco
• MetLife
• Microsoft
• Monsanto
• Morgan Stanley
• Morningstar
• MSCI
• NASDAQ
• Newfield Exploration
• Nielsen
• Noble Energy
• Novo Nordisk
• NYSE Euronext
• NVIDIA
• Owens Corning
• Patriot Coal
• Pax World Investments
• Petronas
• Pfizer
• Pirelli
• PwC
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IWG Participation
31%
31%
Corporate
Professionals
Investors
37%
Public Interest &
Intermediaries
• Prudential
• Range Resources
• Raytheon
• RBC
• Rio Tinto
• Sasol
• Schlumberger
• Siemens
• Solvay
• Spectra Energy
• Statoil
• Sunoco
• Symantec
• Talisman Energy
• Teck Resources
• Thomson Reuters
• Tyco
• UBS
• Visa
• Wyndham Worldwide
• Weyerhaeuser
• Yahoo
© 2016 SASB™
Shaped By Consensus
SASB topics must achieve a high level of consensus among all stakeholder types
Stakeholder-specific feedback on likely materiality of all proposed disclosure topics
(% of respondents, by interest group, who think suggested topics are likely to constitute material information)
100
90
80
Percentage
70
60
50
40
30
20
10
0
Health Care
Financials
Technology &
Non-Renewable
Communications
Resources
Transportation
All %
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Services
Corporations %
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Resource
Transformation
Consumption 1
Consumption 2
Renewable
Resources &
Alternative
Energy
Infrastructure
Investors/Analysts %
© 2015 SASB™
Rigorous, Transparent Process
SASB standards are rooted in evidence and shaped by consensus
UNIVERSE OF
ESG ISSUES
Industry
Research
Evidence-based
discovery
Public
Comment
Feedback and
refinement
Standards
Development
Vetting
Industry working
group engagement
and evaluation
Disclosure topics
and metrics
consensus and
definition
Provisional
Standards
Release
Codification
Road testing by
companies
2016: Deep consultation with issuers, internal review, cost-benefit analysis
2017: Code and basis for conclusion
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© 2016 SASB™
Known Value Drivers
SASB standards address business issues known to impact value creation
Financial
Drivers
Types of
Financial
Impact
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COST
REVENUE
Demand for
Core Products
and Services
Intangible
Assets and
Long-Term
Growth
Operational
Efficiency/Cost
Structure
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ASSETS &
LIABILITIES
Valuation of
Core Assets
and Liabilities
COST OF
CAPITAL
Governance,
License to
Operate and
Risk
© 2016 SASB™
Robust Standards
SASB standards contain more than just metrics
Accounting metrics
SASB
Standard
Disclosure
topics
Technical
protocol
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© 2016 SASB™
Cost-Effective Disclosures
SASB provides a cost-effective way to report on material sustainability factors
74 percent of SASB topics
are already being
addressed in SEC filings.
SASB standards average
5 topics and 14 metrics
(78 percent quantitative) per industry.
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© 2016 SASB™
Major Themes from Standards Setting
Interesting patterns have begun to emerge after 10 sectors and 79 industries
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CLIMATE CHANGE
Event readiness in health care delivery, carbon intensity of reserves in oil and gas,
emissions from refining, vulnerability of real estate and insurance, impact on crop yields

$29.1T
80%
$26.9T
75%
$8.3T
23%
$3.9T
11%
FINANCING & RESPONSIBLE LENDING
Responsible lending and transparency of terms in mortgages, consumer finance, and
education, financial literacy initiatives
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93%
ACCESS & AFFORDABILITY OF SERVICES
Consumption II
Orphan Energy
drugs and pricing, access to medicine and coverage, transparency in
Renewable
procedures and billing, financial inclusion and capacity building
Infrastructure
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$33.8T
RESOURCE INTENSITY & SCARCITY
24/7 health care facilities and data centers, fuel management in transport rare earth
minerals in manufacturing, water consumption in beverages, oil and gas, agriculture
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Percentage
of U.S. equity
market
PRODUCT ALIGNMENT & SAFETY
Counterfeit drugs, food quality and nutrition, car and airline safety, responsible
gambling and drinking, product design and take-back
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Market cap of
companies
affected
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© 2016 SASB™
Climate Change: Ubiquitous but Differentiated
Climate change affects majority of capital markets, but industry impacts are unique
CLIMATE CHANGE
Impacts 72 of 79 industries
 Event readiness in Health Care
Delivery
 Carbon intensity of reserves in Oil &
Gas – Exploration & Production
 Emissions from refining in Oil & Gas –
Refining & Marketing
 Vulnerability of real estate in Insurance
 Impact on crop yields in Agricultural
Products
 Financed emissions in Commercial
Banks
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93%
$33.8T
Percentage of
U.S. equity
market
impacted
Market cap of
companies
affected
© 2016 SASB™
SASB’s Climate Risk Framework
SASB frames the impacts of the climate change in a way that is relevant to investors
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Channels of Impact Across Industries
SASB has mapped climate risk for all industries of the economy
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Carbon Footprint is Not Enough
GHG emissions are important, but other more prevalent risks are poorly disclosed
Type of risk
Affected
market
cap
% of U.S.
equity
market
OVERALL CLIMATE RISK
$27.5T
93%
Physical Effects
$18.1T
61%
Transition to a LowCarbon Economy
$26.3T
89%
Climate Regulation
$6.3T
21%
State of Disclosure on Climate Risk in 10-K and 20-F
0%
20%
40%
60%
80%
Capital markets data from Jan. 4, 2016; figures for U.S.-listed, non-OTC securities; figures include impacts from both primary and
secondary risk types; disclosure data from FY 2012-2014 10-K and 20-F filings of the top 10 U.S.-listed companies by revenue for each
industry, resulting in a total of 690 companies.
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© 2016 SASB™
100%
Cost-Effective Alignment
Sample of how SASB climate metrics align with a variety of approaches already in use
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© 2016 SASB™
SASB and Climate Risk
A look at investor exposure to climate risk and an analysis of corporate disclosure
Climate risk is systemic in nature
Climate risk manifests differently in each industry
Understanding climate risk requires specialized disclosures
Climate risk has tangible, identifiable financial implications
Climate risk is not adequately disclosed
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© 2016 SASB™