How SASB Can Help Companies Manage the Sustainability Factors that Impact Value How SASB Can Help Companies Manage the Sustainability Factors that Impact Value

1. How SASB Can Help Companies Manage the Sustainability
Factors that Impact Value
Eli Reisman, SASB @SASB

2. © 2015 SASB™
Linking Sustainability Impact to Financial
Value Through Metrics
Eli Reisman
Product Manager, SASB

3. The SASB Mission
Improved non-financial disclosure results in enhanced market efficiency
3
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 evidence-
based 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
topics of disclosure and standardizes the form of disclosure
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4. Where SASB Fits
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Supporting
Structure
GAAP/FASB SASB GRI CDSB IIRC
Outcomes
Efficient capital
markets
Efficient capital
markets
Various
Efficient capital
markets
Various
Outputs SEC Filings SEC Filings
Sustainability
Report
Required Filings
Integrated
Report
Process
Governing
framework
Financial
reporting
Financial
reporting
GRI CDSB IIRC
Threshold
definition
Supreme Court Supreme Court GRI
CDSB or
Regulatory
Authority
IIRC
Impact
boundary
Reporting entity:
Financial
condition
Reporting entity:
Financial
condition
Reporting entity
and society
Reporting entity:
Financial
condition or
strategy
Reporting entity,
other entities,
stakeholders
Inputs
Criteria Financial Non-Financial
Financial and
Non-Financial
Non-Financial
Financial and
Non-Financial
Metrics Specified Specified Specified Unspecified Unspecified
Protocols Specified Specified Unspecified Unspecified Unspecified
Frameworks are designed
to structure processes
Standards are designed to
structure inputs

5. The Pain Point for Investors
They’re challenged to understand how non-financial performance impacts returns
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Focusing specifically on US-listed companies, how satisfied are you with the information
currently being provided by these companies on the following topics?
Satisfied Dissatisfied
How risks and
opportunities are
identified and
quantified in
financial terms
Comparability of
sustainability
reporting
between
companies in
the same
industry
Relevance and
implications of
sustainability
risks/
issues
How the
company
identifies social
and
environmental
impacts in its
supply chain
Key
performance
indicators
related to each
identified
material issue
Sustainability
strategy that is
linked to
business
strategy
Internal
governance of
sustainability
issues
Process used to
identify material
sustainability
issues
Source: PwC
Sustainability Goes Mainstream, May 2014
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6. A Market-Driven Solution
SASB addresses needs of all market participants—both investors and issuers
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$11.0T
SASB INDUSTRY WORKING GROUPS
REFLECT BROAD-BASED INTEREST
PARTICIPANTS
>2,800
ASSETS UNDER
MANAGEMENT
$23.4T
MARKET CAP
Issuers
 A minimum set of disclosure topics that are
likely to constitute material information for
companies in an industry, and a cost-
effective model for disclosing that information
in a decision-useful way for investors
 A method to understand and improve
performance on ESG-related value drivers
 A way to meet the requirements of
Regulation S-K
Investors
 Comparable data for benchmarking
and evaluating performance
 Standardized, decision-useful
information in a trusted channel
(i.e., 10-K)
 Tools and resources to analyze and
understand sustainability risks and
opportunities at the company,
industry, and portfolio level

7. 7
SASB Standards Taxonomy
How SASB Structures Each Standard
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 Sector
 Industry
o Disclosure Topic
• Accounting Metric
 Technical Protocol

8. 8
Focused Data Set
SASB provides a cost-effective way to report on material sustainability factors
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Avg. SASB Standard
 5 Sustainability Disclosure Topics
 13 Metrics
 79% Quantitative metrics
 21% Discussion and analysis

9. A Shared Definition of Materiality
SASB is guided by the Supreme Court definition in identifying disclosure topics
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“Material information” is defined by the Supreme Court as presenting
a substantial likelihood that the disclosure of the omitted fact would
have been viewed by the reasonable investor as having significantly
altered the “total mix” of information made available.
TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (1976)
Issue frequency in five data-driven
tests:
 Financial disclosure
 Legal drivers
 Industry norms
 Stakeholder concerns
 Innovation opportunity
EVIDENCE OF INTEREST
Issue impact on three business
value drivers:
 Revenue and costs
 Assets and liabilities
 Risk profile (cost of capital)
EVIDENCE OF FINANCIAL IMPACT
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10. Known Value Drivers
SASB standards address business issues known to impact value creation
10
Financial
Drivers
Types of
Financial
Impact
COST OF
CAPITAL
REVENUE COST
ASSETS &
LIABILITIES
Demand for
Core Products
and Services
Intangible
Assets and
Long-Term
Growth
Operational
Efficiency/Cost
Structure
Valuation of
Core Assets
and Liabilities
Governance,
License to
Operate and
Risk
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11. Sustainable Industry Classification System
SICS™ industries are grouped by resource intensity and sustainability impacts
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Health Care
 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
 Biofuels
 Solar Energy
 Wind Energy
 Fuel Cells & Industrial Batteries
 Forestry & Paper
Transportation
 Automobiles
 Auto Parts
 Car Rental & Leasing
 Airlines
 Air Freight & Logistics
 Marine Transportation
 Rail Transportation
 Road Transportation
Non-Renewable Resources
 Oil & Gas – Exploration &
Production
 Oil & Gas – Midstream
 Oil & Gas – Refining & Marketing
 Oil & Gas – Services
 Coal Operations
 Iron & Steel Producers
 Metals & Mining
 Construction Materials
Infrastructure
 Electric Utilities
 Gas Utilities
 Water Utilities
 Waste Management
 Engineering & Construction Services
 Home Builders
 Real Estate Owners, Developers &
Investment Trusts
 Real Estate Services
Services
 Education
 Professional Services
 Hotels & Lodging
 Casinos & Gaming
 Restaurants
 Leisure Facilities
 Cruise Lines
 Advertising & Marketing
 Media Production & Distribution
 Cable & Satellite
Resource Transformation
 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
 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

12. Analysis of a Standard
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FAST FACTS:
 1 of 8 Industries in Transportation Sector
 Number of Disclosure Topics: 5
 Number of Accounting Metrics: 13
Automobiles Standard

13. Evidence of Financial Impact for Sustainability Issues
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Automobiles Standard
Financial Drivers SASB Topic
COST OF
CAPITAL
REVENUE
COST
ASSETS &
LIABILITIES
Materials Efficiency & Recycling
Product Safety
Product security
Product security
Product security
Labor Relations
Fuel Economy & Use-Phase
Emissions
Materials Sourcing

14. 14
Materiality Matters
Harvard research shows The SASB Model drives superior performance
“Corporate Sustainability:
First Evidence on Materiality,”
Working Paper by Mozaffar Khan, George Serafeim, and Aaron Yoon
Harvard Business School, 2015
Findings:
 Using SASB’s framework, Harvard researchers
found that firms with good performance on
‘material sustainability issues’ and
concurrently poor performance on ‘immaterial
sustainability issues’ enjoy the strongest
financial returns. These results speak to the
efficiency of firms’ sustainability investments, and
also have implications for asset managers who
have committed to the integration of sustainability
factors in their capital allocation decisions.
 They also found that 80 percent of disclosures
are immaterial, having no correlation to positive
performance.
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15. Partnerships Making SASB Accessible to Companies
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17. Available Tools
SASB provides tools to facilitate issuer and investor use of its standards
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Materiality Map™
Standards Navigator
Research briefs
Mock 10-K
10/10/2015 © 2015 SASB™

18. Learn More
Increase your understanding of the link between sustainability and corporate value
10/10/2015 © 2015
SASB™
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Fundamentals of Sustainability Accounting Credential
The world’s first credential in sustainability accounting
 How to analyze SASB standards for
any industry
 How to interpret sustainability
information for strategic decision-
making or investment analysis
 The context for materiality and
sustainability
 How to identify the sustainability
factors impacting financial
performance
FSA.sasb.org/prep for curriculum, free resources, and registration
Level I: Principles Level II: Practices (2016)

19. Eli Reisman | eli.reisman@sasb.org | Product Manager