Business giants to support new SASB reporting standards

Food and drinks giant Kellogg, sportswear brand Nike and beverage manufacturer Diageo are among a group of 11 businesses who have pledged to adopt a new sustainability reporting standard, in a bid to give clarity to investors.

Along with the likes of carmakers General Motors and Groupe PSA, the businesses this week announced that they will adopt the Sustainability Accounting Standards Board’s (SASB) new industry-specific accounting standards.

Published on Wednesday (7 November), the SASB standards include a commitment to report on all sustainability issues which have a “financially material effect” on signatory organisations – and to measure the positive or negative ramifications of these issues in a monetary way. These issues could range from carbon emissions and deforestation in supply chains to employee well-being and the health and safety measures implemented by suppliers.

Signatory organisations are additionally required to disclose any fines they receive for breaching environmental legislation to investors, with some companies also opting to publish information on how its advertisements are received by regulators.

SASB chairman Jeffrey Hales dubbed the adoption of the standards, which have received backing from investors with $26trn in assets under management (AUM), an “important milestone for global capital markets”.

“Companies and investors around the world now have codified, market-based standards for measuring, managing, and reporting on sustainability factors that drive value and affect financial performance,” Hales said.

“What makes SASB standards unique in the marketplace is their focus on industry specificity and financial materiality, universal concepts that are important for investors and businesses around the world.”

The 11 companies to have adopted the standards are General Motors, Merck, Nike, Kellogg, JetBlue, CBRE, Diageo, Groupe PSA, Schneider Electric, Host Hotels, and NRG Energy.

Investor involvement

With some investors fearing that the next financial crash will be climate related, the launch of the SASB standards comes at a time when the finance and banking sector is increasingly looking to divest from companies linked to coal power projects and deforestation

Approximately £15bn has been divested by insurers in the past two years, according to an Unfriend Coal Network report, which found that 15 companies had fully or partially cut financial ties by selling holdings in coal companies and refusing to insure their operations.

Among these companies is Legal and General Investment Management (LGIM), which this year divested from several companies it believes are showing “persistent inaction” on addressing climate risks, removing the firms from its Future World Fund.

Elsewhere, Abundance Investment recently announced a target of increasing the number of small shareholders in its portfolio tenfold, in a drive to accelerate the demand for projects which benefit environmental and social sustainability.

Indeed, the trend towards green investment is growing at such a pace that some key figures within the green economy believe that investors are becoming a key driver for businesses bolstering their sustainability ambitions. Among them is the UN Global Compact’s (UNGC) chief of programmes, Lila Karbassi, who recently told edie that companies which fail to adopt the Sustainable Development Goals (SDG) are at risk of losing investor support.

Sarah George

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