But, she says, SASB has a compelling value proposition for companies and their investors and stakeholders.
“Everybody comes at them from a different direction, with different issues, wanting disclosure on different things and in different ways,” she told me recently. “All of that takes a tremendous amount of time and focus away from the core business.”
Rogers says SASB’s value proposition to companies is, “We're going to streamline that. We're going to focus on the key material issues that are of interest to both you, in order to manage risk and opportunities, as well as of interest to investors. That will eliminate much of the questionnaire fatigue that companies feel and the inquiries from investors that are often overlapping but slightly different from one another.” (You can read my conversation with Rogers here.)
That’s not all SASB has to offer companies, says Rogers. “We also are giving companies a heads up on the key issues to focus on that are most likely to create short-term and long-term value and, therefore, it’s probably a good idea to think about managing these key issues in addition to reporting on them.”
Rogers also talks about leveling the playing field. “I'm sure that you've heard companies who are leaders talk about the concern that they're out there in front. The reasons they will cite often are that they're afraid of liability. What they actually mean is liability for putting information out there that their competitors are not necessarily disclosing.”
Turning Liability on Its Head
Rogers says the issue of liability is being turned on its head. "With greater clarity on material issues, the companies that are actually at risk are the companies who are failing to disclose material information. That is the greater risk as we have more clarity and more understanding of what is actually material.”
Consider climate change, she says, for which the SEC has issued interpretive guidance to companies on what and how to report issues considered material. “We now understand more about how they view materiality of climate change and that the penalties, the consequences, of nondisclosure of material information are quite significant. So, noncompliance is a much greater risk now on material issues than is the perception that putting information out there creates some liability.”
One of the questions that frequently comes up when pondering SASB is whether and how it competes with the Global Reporting Initiative, which pioneered a sustainability reporting framework used by companies and other entities around the world.
Rogers says she gets that question a lot, and she was ready when I asked. “We're not competing in any way with GRI,” she responded. “We are designing for a very specific mechanism, which is the Form 10-K. We consider ourselves the floor and GRI more of the ceiling. In other words, we're the minimum set of things that are highly material and would be recognized as such by the SEC.”
Moreover, she points out, “We're covering key performance indicators at the industry level. We're planning on doing that for 89 industries over the next two and a half years; each industry will have its own set of key performance indicators. That is not something that GRI has attempted or is doing at that level. So that is something that complements GRI reporting.”
Finally, she notes, approximately 200 U.S. companies have reported using the GRI framework, out of 35,000 or so publicly listed U.S. companies. “We're going after the 34,800 other potential issuers that are not GRI reporters to get everyone reporting on a minimum set of things. That's our target market. For companies that are GRI reporters, SASB will be a piece of cake.”
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