SASB reinforces internal structure to become a standards-setting body in line with accounting peers

The Sustainability Accounting Standards Board (SASB) has rebuilt its internal governance structure to become a standard-setting body in line with international peers in the financial space, in preparation for the final stretch of its definitive standards which SASB says will be ready to use by the first quarter of 2018.

SASB will be governed and overseen by a Foundation whose trustees are called board directors and are led by Michael Bloomberg and Mary Schapiro, the former SEC Chair.

A technical board of nine members, called just The SASB is chaired by founder and former CEO Jean Rogers, who will be in charge of exclusively developing standards.

Former COO and now President of the SASB Foundation, Matthew Welch, will take over much of Rogers’s executive duties leading the staff and fundraising efforts.

So far, SASB’s funding has come in part from grants given by a number of organisations (such as the Rockefeller, Bloomberg, Packard or F.B. Heron foundations) and to a lesser extent, about 12%, from its own fee-earning activities.

SASB’s new structure mirrors that of the IFRS Foundation and the Financial Accounting Foundation and their respective standard-setting bodies, the International Accounting Standards Board and the Financial Accounting Standards Board.

“This structure strengthens our organisation because we are separating the responsibility for the finances and the governance from the standard-setting process and technical work,” Jean Rogers told RI.

Rogers explained this “Chinese wall” is a key element for the SEC’s acknowledgement of SASB final standards.“There is a perception that if you don’t separate those duties, board members could be held captive to the interest of the people who fund the organisation.”

Among the nine members of SASB’s new technical board are Verity Chegar, Vice President and ESG Strategist at BlackRock; Lloyd Kurtz, Head of Social Impact Investing at Wells Fargo Private Bank and Elizabeth Seeger, Director at KKR.

The technical board will start next meetings immediately as its faces a frantic activity during 2017, according to Rogers.

“Our aim is to finalise the standards by the end of this year, basically first quarter of 2018, so we hit the next round of filings.”

Rogers said the board will adopt the technical agenda, publish an exposure draft of the whole set of standards comprising 79 industries, followed by 90 days of public comment and an additional one to address remaining issues.

Two key areas will be the focus of the new board, one on climate risks to incorporate the work of the FSB Task Force on Climate-related Financial Disclosures (TCFD).

The other one is to strengthen metrics to address human capital, following feedback from investors who have requested more clarification across the 79 industries on this topic.

In her new role, Rogers will be particularly overseen by the Standard Oversight Committee, formed by three trustees, chaired by former SEC Chair Elisse Walters, a body that will also deal with appeals and complaints from stakeholders in relation the standard-setting processes.