Matthew Welch discusses SASB’s mission to develop and report standardized metrics on environmental, social, and governance factors.
The Sustainability Accounting Standards Board (SASB) creates industry-specific standards to help companies provide high quality, comparable and decision-useful information on environmental, social and governance (ESG) performance data in SEC filings. In this video, Chief Operating Officer Matthew Welch explains the risks of only focusing on financial performance when making business or investment assessments, which can ignore the important societal and environmental impacts that are not captured in standard accounting practices. The metrics SASB develops, in concert with multi-stakeholder industry working groups, are based on evidence that shows them to be financially material in the long run and to offer unique insight into the potential future success of a company.
That's where the benefit to investors comes in. We help to create comparability, for investors to compare the performance of different companies along the same metrics. ...
US Securities law says that companies must disclose material information. We believe that there is material information in the realm of ESG factors that is perhaps not disclosed now, or not disclosed in a decision-useful way. So SASB is there as market infrastructure to help companies do that.
SASB is also a recipient of a Heron Enterprise Capital Grant, and Welch shares about the market opportunity that this and other grant funding helps SASB reach.
In a separate interview with the Wall Street Journal, CEO Jean Rogers talks about the difficulty some firms face in deciding what to disclose and how to report it to investors, as well as why standardized metrics can benefit companies and investors alike:
Understanding greenhouse-gas emissions in every industry and company is useful from a policy perspective and understanding which industries to regulate. But from an investor’s perspective, it doesn’t tell you the risk that’s embedded in your portfolio...
[W]e read a lot of 10-Ks and actually 70% of the topics that we cover in our standards are addressed in some way in the 10-K, already in the mandatory filings, but with boilerplate information. ...The things we’re talking about are things companies are grappling with. The reason there’s a risk factor, or a boilerplate statement, is because some securities lawyer in the company or in their external adviser has said, “We better say something about that.” So the standard really just helps it to be useful to investors and hopefully also helps the companies begin to manage performance on the issue, which is where you derive value.