Over the last ten years, lenders, investors, and capital providers have become aware of environmental, social, and governance impacts on business’s financial performance. These parties, call them stakeholders, are demanding utmost transparency on all ESG impacts before committing their resources. To disclose their ESG impacts and risks, companies are now using frameworks such as the Global Reporting Initiative (GRI) and Sustainability Accounting Board (SASB).
SASB has particularly stood out from other frameworks for helping companies correctly disclose financial information on sustainability matters. SASB has a set of ESG metrics for application in 77 industries. To understand the SASB standards, you need to look at the materiality map that brings out disclosure topics in different sectors.
Keep reading as we take a closer look at the SASB materiality map to demonstrate what you should know as an entrepreneur or manager.
A Brief about SASB Sustainability Framework
SASB is one of the common frameworks used to help companies across the globe to easily identify, manage, and communicate material sustainability details in areas of finance to investors. The SASB framework and standards are maintained by Value Reporting Foundation. Particularly, standards were developed to:
- Helping companies identify financially-important information that is likely to impact the organization’s financial performance.
- Generate information that can help investors make the big decision on working with companies under consideration.
- Capture evidence-based details about the company’s operations so that it meets all principles of ESG sustainability reporting.
Why is Materiality Crucial in Business ESG Reporting?
Material ESG issues come with major positive and negative implications on a business’s operation model and its core value drivers, including things such as risk, capital, profit, and revenue generation. Therefore, materiality ensures the company’s financial information is provided to investors so they can make decisions about working with their companies.
Every company has to decide what is considered financially material and the information to disclose. This must factor in the legal requirements and ESG sustainability metrics. We must say that it can at times be pretty challenging to determine what details are financially important to include in the ESG reports.
With the SASB materiality map, your business can easily identify what components are material because they can affect the company’s financial position. If you want to shift the company’s maintenance method from a reactive model to a predictive one, it will be a financial material item because of the additional costs. These additional costs will ultimately impact the company’s profits.
The Bank of America predicts that about USD 20 trillion is expected to be injected into different ESG funds in the next two years. Even with the rapid adoption of ESG reporting, we must say that a large number of companies, especially the medium and small enterprises, are still lagging. They only see the costs associated with ESG reporting. However, you should consider long term targets because they come with awesome benefits.
SASB Materiality Map and ESG Sustainability Software
As stakeholders and governments emphasize ESG sustainability, concerns have emerged about greenwashing. Investors have raised concerns about some reports, indicating that some details are not verifiable. When you select the SASB framework for your company, it is also important to identify good sustainability reporting software.
With the best sustainability reporting software, it becomes easy to collect the right information, protect the data, and generate accurate reports for stakeholders. It also helps with data analysis so that the information can be employed in decision making.
SASB is emerging as an important framework and tool for companies that want to produce high-profile reports to disclose financially-material details to stakeholders. As we have demonstrated, the main focus of SASB is ensuring you internalize sustainability, collect the right data, analyze it, and present the final report to stakeholders. So, make sure to also have the right sustainability management software. Visit Diginex.com to see their reporting apps and get all the assistance you need on ESG reporting.