One Small Step for Society, One Giant Leap for Accounting
The New Sustainability Driven World
In an evolving society, The Sustainability Accounting Standards Board, commonly known as SASB, is a positive reflection of the otherwise negatively reflected world of business. Society is currently taking large steps in becoming a sustainably driven world, in which recycle programs, energy efficient homes, electric cars, etc. are becoming norms. It is ever so important that the business world adapt to the evolving society around it, and the SASB is leading that movement.
Today's investors are focused on much more than a corporation's financial statements when looking to invest. There is now a focus on a company's sustainability programs and their effectiveness.
For this reason the FASB (Federal Accounting Standards Board), established in 1973, is not up-to-date with the needs of today's investors. There are no standards set in place requiring companies to disclose sustainability metrics. FASB's codification is solely focused on the disclosure of financial information on to enhance investor's decision-making capabilities. This overlook in sustainability importance to investors allows for companies to decide what information to disclose on financial statements regarding sustainability, possibly causing a misrepresentation of the company to investors.
Giant Leap in the Right Direction
The SASB, which was founded in 2011, officially published its Exposure Draft Standards for 79 industries. As does the FASB, the SASB has opened these drafted standards to public comments for the next 90 days, ending on December 31, 2017. By opening up their drafted standards for public comment, the SASB ensures transparency with the market, as well as, allowing the market to decide if the proposed standards are cost-effective for implementation and useful for investors.
This is a Giant Leap towards a sustainability driven market, in which we could see SASB's 6-year plan of codification and the replacement of FASB come to fruition in the first quarter of 2018. Inevitably issues with some standards will be brought to attention during this 90-day period, but the fact that Exposure Draft Standards were published demonstrates the SASB is close to market use.
This is a new beginning for the business world, as we could see the almost 45-year old FASB hand over the control of accounting standard setting to the SASB. Financial disclosure will now have a focus on not only financial information, but sustainability, changing the way inv
