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Congratulations to SASB's CEO Dr. Jean Rogers and her comment letter to the US SEC’s Concept Release on Business and Financial Disclosure Required by Regulation S-K for US Public Companies. The US SEC Concept Release discusses the concept of sustainability reporting by public companies as part of the disclosure process by companies to the global capital markets. In her comment letter Dr. Jean Rogers specifically advocates the need of the global, freely-available XBRL data business reporting standard for more effective transparency and accountability of sustainability data by using a machine-readable format for instant data analytics for comparison and benchmarking across industry sectors (See below).

The same XBRL data standard has been mandated by the US SEC for financial statement data disclosed by public companies including detailed information tagged in the footnotes. 

The Sustainability Accounting Standards Board (SASB), is an independent 501(c)(3) nonprofit organization that issues sustainability accounting standards for the disclosure of material sustainability information in SEC filings. SASB’s provisional standards—developed following a robust due process with significant market input—are designed to be cost-effective and work within the framework of the U.S. securities laws. They help registrants effectively disclose material sustainability-related information and comply with regulatory obligations. By issuing standards that help companies provide investors with decision-useful sustainability disclosure, SASB supports the SEC’s mission to protect investors; maintain fair, orderly, and efficient markets; and, facilitate capital formation.

In February 2016 the IMA and SASB announced a Memorandum of Understanding that focuses on accelerating the uptake of accounting standards to improve non-financial disclosure of public companies in the US and abroad.

By creating an ongoing cooperation between the IMA and SASB both can collaborate and align to strengthen value creation, corporate reporting and disclosure, as well as take proactive measures to share the work of the other organization.

Performance on non-financial issues, including sustainability, impacts the financial performance of companies, and as such, is becoming a larger part of the role of accountants and financial professionals. IMA – as a global accounting association focused on the mutual dependency of accounting, finance, operations, technology, strategy, standards, ethics and leadership in the value chain – is uniquely positioned to help its members understand and prepare for this evolution. This includes collaboration of the corporate reporting process as well as better management and verification of a company’s supply chain and its relevance to sustainability reporting. Included in sustainability reporting is a company's environment footprint related to global warming/climate change risk mitigation. 

SASB’s Comment Letter to the US SEC included the following reference related to XBRL and the need to support a "machine-readable format" for better data analytics and accountability to assist regulators and other shareholders in effectively consuming non-financial information using the same data format for financial reported data resulting in de facto – "integrated reporting" supported by the IMA. 

Structured Disclosures 330. How can the quality of structured disclosures be enhanced?

SASB Comment: SASB standards are designed to be SEC-compliant and are ideal for disclosure in the MD&A section of the 10-K because of the broad range and long-term nature of sustainability issues, as well as the varying levels of risk and uncertainty inherent in them. XBRL is currently the only broad-based format for tagging disclosures internationally. SASB thus favors leveraging this existing infrastructure and allowing for voluntary XBRL tagging of sustainability-related disclosure information in the MD&A section of SEC filings.

SASB fully supports the SEC’s pilot to allow iXBRL filings and hopes that there will widespread adoption and a mandate for iXBRL in the future. iXBRL has the potential to reduce errors in data submission, simplify disclosure, and reduce the costs of disclosures for preparers while improving data quality. As the XBRL reporting tool infrastructure is well established, and XBRL tagging is used on an international basis. We believe that the cost of switching to iXBRL would be relatively low, and outweighed by the benefits of enhanced data quality.111

SASB has prepared a complete XML taxonomy and a pilot XBRL taxonomy, and will develop the infrastructure to support an XBRL taxonomy when XBRL tagging is allowed in the MD&A.

SASB would be interested in participating in any task force that addresses the disclosure of sustainability information and the technological means to enhance consumption of this information.

331. Are there changes to the EDGAR system that the Commission should make to render the structured disclosure filed by registrants more useful?

SASB Comment: As noted in the response to question 330, SASB believes that switching to iXBRL and consolidating the reporting process into a single submission would reduce errors, save time, and improve data quality. In addition, SASB recommends that EDGAR accept XBRL tags in the MD&A section, as investors increasingly want to query and analyze non-financial data elements that may be disclosed (and ideally tagged) in the MD&A.

110 SASB MOCK 10-K LIBRARY, http://using.sasb.org/mock-10-k-library/. 111 AICPA, “RESEARCH SHOWS XBRL FILING COSTS LOWER THAN EXPECTED,” (2015) https://www.aicpa.org/InterestAreas/FRC/AccountingFinancialReporting/XBRL/DownloadableDocu ments/XBRL%20Costs%20for%20Small%20Companies.pdf.

332. Are company-specific custom extensions, such as element or axis extensions, useful to investors or other users of structured disclosures? If so, how might these custom extensions be made more useful for enhancing automated analysis? If not, are there better ways to express disclosures that are unique to a company (e.g., business segment, product line)? 􏰀

SASB Comment: Greater standardization and stronger rules on company-specific extensions will improve data comparability.

SASB standards have been developed to meet the market need for comparable sustainability information. SASB sees the need for stronger rules on company-specific extensions for XBRL tagging in order to achieve such comparability. Clear, strong protocols for company-specific extensions are the basis for other similar XBRL taxonomies such as EDINET, the Japanese equivalent of the EDGAR system. While the decision to use SASB standards is a determination that must be made by an individual company, we see the importance of reducing confusion in the marketplace and promoting greater comparability through the reduction in company-specific extensions. The use of a broadly-accepted market standard will provide data aggregators, their investment clients and standards setters with improved comparability, consistency, and traceability of data, reducing the time and cost of analyzing disclosures. It would also reduce preparer costs through the reuse of tags, and improve peer-to-peer performance benchmarking.

333. Should we require registrants to provide additional disclosures in a structured format? If so, which disclosures? For example, are there categories of information in Parts I and II of Form 10-K or in Form 10-Q that investors would want to receive as structured data?

SASB Comment: See the response to question 330. SASB standards are designed for issuers to achieve consistent measurement and structured presentation of material sustainability factors, which in turns allows peer-to-peer comparisons. XBRL tagging of SASB standards in an issuer’s digital filing aids the process both of using the standard and ensuring a structured and comparable output for investors. 

Stay tuned as we await action from the US SEC regarding the Concept Release on Business and Financial Disclosure Required by Regulation S-K for US Public Companies.