The 77 industry-specific sustainability standards developed by SASB (formerly the Sustainability Accounting Standards Board) now have digital definitions.
On September 28, 2021, the Value Reporting Foundation (VRF) announced the formal release of the SASB taxonomy, using which companies can now make sustainability disclosures in the digital XBRL format.
The taxonomy was developed in collaboration with PwC. A draft version of the taxonomy was released in March 2021 for a 60-day public comment period. The final version was released after technical adjustments and corrections based on the feedback received.
The SASB taxonomy is compatible with base financial reporting standards such as IFRS and US GAAP, according to Madhu Mathew, Director of Technology at the VRF. Companies can therefore make use of their existing digital reporting processes and structures for making sustainability disclosures.
The significance of the development of the SASB taxonomy is its likely contribution toward a globally accepted set of sustainability standards by the proposed International Sustainability Standards Board (ISSB).
In an article published on the day the taxonomy was released, Mathew wrote about a future roadmap for the SASB taxonomy. The following points came as feedback during the public comment period, informing “…(the organization’s) thinking about the future roadmap”.
Global adoption of the SASB taxonomy
As SASB standards evolve to be globally applicable, so must the taxonomy evolve. To this end, the SASB taxonomy also makes room for extensions or custom tags. These are company-specific tags that are prepared to deal with disclosures that do not have a right fit element in the base taxonomy.
“We will continue to engage and collaborate with regulatory bodies globally. Public comments have been very supportive about anchoring to ensure data consumers understand the reasoning behind the extension,” Mathew wrote.
An approach similar to that of the TCFD
Based on the feedback the VRF received from the public, the block-text tagging approach of the Task Force on Climate-related Financial Disclosures (TCFD) framework might be a good starting point for the SASB taxonomy. However, more granular tagging would soon be required.
Tagged Examples and a Central Repository
The VRF will look to make available reference documents wherein sustainability disclosures are tagged using the SASB taxonomy. “We realize the need to provide real-world examples of tagged instance documents. We are working with filing software providers and filers to publish examples,” Mathew wrote in his blog.
The VRF has identified the need for a central repository of tagged SASB Standards reports. “Many regulatory initiatives globally provide such repositories as part of the reporting mandate. Our first preference is to leverage such repositories where possible.”
Maintenance of the SASB taxonomy
The VRF has set up a Taxonomy Review Committee (TRC) to help govern the ongoing maintenance of the SASB taxonomy. The TRC will have volunteer experts from public companies, software providers, data aggregators, audit professionals, regulators, and other interested parties.