ESG (Environmental, Social, & Governance) is one of the fastest growing issues on the minds of institutional investors; however studies show that the concern for ESG isn’t always shared by today’s corporate directors. Not only can sustainability be hard to measure, but boards have historically struggled to understand how it ties to the bottom line.
In this episode, David Post, Director of Research for the Sustainability Accounting Standards Board (SASB), explains what SASB is and how it’s connecting the dots between sustainability metrics and financial performance. Founded in 2011 with the support of Michael Bloomberg, SASB’s purpose is to create industry-specific sustainability standards that are (a) financially material, (b) decision-useful to today’s companies and investors, and (c) cost-effective to implement.
“For a typical industry, we have five sustainability topics,” said Post. “In the steel industry, one of those five is energy efficiency. In the drugs and biotech industry, one of those topics is affordability and fair pricing. Those are sustainability issues, but they’re also financially material issues.”
In this episode, Post discusses the nature of these metrics and what today’s boards can expect as research increasingly supports the business case for sustainability.
A key differentiator or component for SASB is that we’re not measuring anyone. We’re not coming out with any ratings or rankings. We do our own research. We consult with companies and investors to get their agreement and buy-in…then we come up with a group of standards in each industry that companies can voluntarily choose to report on their own and measure themselves.
Most importantly, Post explains how sustainability metrics can be an asset to both companies and investors when it comes to strategic decision-making.