The article in the url below contains some interesting information that I did not know about the Sustainability Accounting Standards Board (SASB). First, is the organization's financial backers:
"[Michael] Bloomberg bankrolled the outfit, which was founded in 2011, to impose his enlightened political and cultural values on American corporations. SASB drew more attention in January when BlackRock CEO Larry Fink threatened to use his firm's massive ownership stakes to oppose corporate managers who fail to follow the board's standards."
Second, is the widespread potential for abuse of SASB standards, particularly in terms of the selective use of those standards:
"Materiality is essentially a progressive term of art. SASB's standards vary across 77 industries based on what its 'stakeholders'—academics, attorneys, auditors, asset managers and businesses—consider important. Greenhouse-gas emissions are 'material' to food and beverage companies but not to those that make consumer goods. Safeguarding customer welfare is important for health insurers though oddly not for airlines or banks."
The standards are very specific, even while they are grappling with metrics that are very challenging to quantify:
"SASB also directs companies to collect and report detailed data on everything from their share of recyclable and compostable packaging to the gender and racial composition of their workforce. Online retailers have to disclose their greenhouse-gas footprint and 'behavioral advertising,' among dozens of other things. Internet companies must report the results of employee engagement surveys. Beverage makers have to account for their revenue from zero- and low-calorie, no-added-sugar and artificially sweetened drinks. Should companies count drinks sweetened with Stevia as 'artificial,' zero-calorie or no-added-sugar? And who should make this decision?"
Unfortunately, while plenty of firms are willing to claim the legitimacy associated with the SASB standards, much fewer are willing to surrender to the standards in their entirety and their specificity:
"More than 130 companies claim to report information according to SASB guidelines, but their disclosures aren't standardized like corporate financial disclosures. Companies sometimes omit information they say is proprietary or immaterial while highlighting other data as a mark of their sustainability. Mr. Bloomberg's company, Bloomberg LP, chooses not to report the number of data breaches as SASB standards require, though this seems to be more material information than its renewable-energy consumption, which it does report."
Perhaps even more worrying:
"SASB standards can obfuscate poor financial performance. A company can claim it is 'sustainable' even if it is bleeding money, and keep drawing investment dollars from the ESG crowd. Executives may also hope that disclosing favorable information about their workforce diversity or carbon emissions will forestall criticism of other business practices, such as opposition to unions."
In other words, if a firm gets to choose which sustainability standards it adheres to, then the chances are that it is not being sustainable.
Take care
David
David Chandler
© Sage Publications, 2020
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Bloomberg Sells 'Sustainability,' but Buyer Beware
By Allysia Finley
March 3, 2020
The Wall Street Journal
Late Edition – Final
A17
