The SASB Framework: An Overview of ESG Analysis
In recent years, environmental, social, and governance (ESG) factors have become increasingly important in investment decision-making. Investors are looking beyond financial performance and taking into account a company's impact on society and the environment. The Sustainability Accounting Standards Board (SASB) has developed a framework to help investors analyze companies from an ESG perspective. In this blog post, we will provide an overview of the SASB framework and its importance in ESG analysis.
The SASB Framework
The SASB framework is a set of industry-specific standards that identify the sustainability topics most likely to impact financial performance. The framework includes 26 topics, organized into five categories: environment, social capital, human capital, business model and innovation, and leadership and governance.
The topics are designed to be financially material, meaning they are relevant to a company's financial performance and long-term value creation. For example, the environmental topic of greenhouse gas emissions is material to companies in the energy and transportation sectors, while the social capital topic of data privacy and security is material to companies in the technology sector.
The SASB framework is particularly useful for investors because it provides a standardized set of ESG topics that can be used to compare companies within an industry. This allows investors to identify companies that are leaders or laggards in a particular area of ESG performance, and to make more informed investment decisions.
Importance of the SASB Framework
The SASB framework is important because it provides a high-level overview of the ESG topics that are most relevant to a company's financial performance. By focusing on financially material topics, investors can be confident that they are considering the factors that are most likely to impact a company's long-term value creation.
Additionally, the SASB framework is designed to be industry-specific, which makes it easier for investors to compare companies within the same industry. This allows for more meaningful benchmarking and analysis of ESG performance.
Finally, the SASB framework is gaining traction among companies themselves, as well as investors. More and more companies are using the SASB framework to report on their ESG performance, which makes it easier for investors to access and analyze this information.
The 26 SASB Topics
The 26 SASB topics are as follows:
- Apparel, Footwear & Accessories
- Asset Management & Custody Activities
- Commercial Banks
- Construction & Engineering
- Containers & Packaging
- Data Processing & Management
- Electric Power & Utilities
- Electronic Manufacturing Services
- Food & Beverage
- Healthcare Delivery
- Healthcare Distributors
- Healthcare Providers & Services
- Household Durables
- Metals & Mining
- Oil & Gas - Exploration & Production
- Oil & Gas - Midstream
- Oil & Gas - Refining & Marketing
- Renewable Resources & Alternative Energy
If you're interested in learning more about the SASB framework and its application in ESG analysis, there are a number of resources available. The SASB website is a great place to start, as it provides detailed information about the framework, including the 26 topics and industry-specific implementation guidance.
Other resources include ESG research providers, such as MSCI and Sustainalytics, which use the SASB framework as a basis for their ESG analysis. Additionally, many asset managers and investment firms, such as BlackRock and Goldman Sachs, have published research reports on the SASB framework and its importance in ESG analysis.
In conclusion, the SASB framework is a valuable tool for investors who are interested in analyzing companies from an ESG perspective. By focusing on financially material topics and providing industry-specific guidance, the SASB framework allows investors to make more informed investment decisions and to better understand a company's long-term value creation potential.