ISSB Begins Update Of Sector-Focused SASB Standards

The International Sustainability Standards Board (ISSB) of the IFRS Foundation has issued an important milestone in harmonizing and renewing sustainability disclosure frameworks with a series of exposure drafts describing proposed revisions to the SASB Standards. It is an important milestone in the ISSB strategy as a whole to lead the development of sector-specific ESG disclosure and global consistency of sustainability disclosure.

Created in 2011, the Sustainability Accounting Standards Board (SASB) was initially responsible for creating industry-specific standards for sustainability disclosure that guide investors in assessing the materiality of ESG information across industries and firms. SASB was formally incorporated into the ISSB in 2022, which is now responsible for creating and maintaining these standards. Currently, the SASB standards are an integral part of the ISSB framework and a guiding principle for the release of the ISSB's IFRS S1 and IFRS S2 climate and sustainability disclosure standards. The standards require companies to determine whether or not SASB guidance is relevant and applicable when disclosing ESG.

SASB currently addresses 77 industries with industry-specific guidance relevant to each respective sustainability-related risk and opportunity. The new exposure drafts are the first wholesale revision of the SASB Standards since ISSB assumption. They are part of the ISSB's 2024–2026 work plan and seek to maintain the relevance, simplicity, and global applicability of sector-tailored ESG disclosures in the face of a quickly evolving global sustainability environment.

The nine priority sectors have been brought to attention due to high sustainability risks and their significance to the capital markets. Some of them include significant extractive industries like oil and gas, mining and metals, building materials, and coal mines. Also under consideration is the Processed Foods sector as part of the broader Food & Beverage sector. In addition to these nine industries, the exposure drafts introduce alignment-related amendments for 41 industries involving critical metrics in topics like Water Management and Workforce Health & Safety. The amendments are intended to enhance comparability and interconnectivity of disclosures geographically as well as across industries.

Most importantly, the drafts also suggest improvements in the industry-specific guidance on implementing the ISSB's climate-related standard, IFRS S2, in a manner that the latter is synchronised with the revised SASB guidance. These updates represent the initial opportunity that stakeholders will have to provide specific comment on the SASB standards within the context of the ISSB framework. The ISSB views it as a critical point for regulators, investors, preparers, and other stakeholders to provide their feedback regarding the cost-effectiveness and decision-usefulness of SASB's approach by industry.

To guide its proposals, the ISSB consulted extensively with various stakeholders such as investors, preparers, and sustainability experts. Notably, it consulted intensively with other major standard-setters such as the Global Reporting Initiative (GRI), the European Financial Reporting Advisory Group (EFRAG), and the Taskforce on Nature-related Financial Disclosures (TNFD). These initiatives sought to enhance congruence among reporting frameworks and to make sure new SASB standards will be suitable for the evolving global expectations regarding sustainability disclosure.

Talking about the importance of exposure drafts, ISSB Vice-Chair Sue Lloyd emphasized the building block character of the SASB standards in the broader ecosystem of the ISSB. She highlighted that use of SASB standards is presently voluntary but gives crucial sector-level guidance to complement the cross-industry emphasis of the ISSB's overall sustainability reporting framework. The present consultation, Lloyd views, is a welcome and significant chance for market participants to influence the way forward on sector-specific ESG disclosure over the next few years, particularly against the context of increasing global interest in harmonized sustainability reporting.

The exposure drafts are now available for public comment until 30 November 2025. The ISSB will finalize the revised SASB standards in 2026 after considering stakeholder feedback. Concurrently, it also put in place plans to issue later in the year three additional exposure drafts on three additional SASB industries, i.e., Electric Utilities & Power Generators, and two more in the Food & Beverage industry. These follow-up reviews will inform the ISSB in making decisions on which new batches of industry sectors to address in its continuing standard enhancement programme.

With this effort, the ISSB is not only reshaping the existing frameworks but also solidifying its leadership position in creating a global common baseline for sustainability disclosure. The new SASB standards are likely to enhance transparency, comparability, and efficiency in reporting the ESG factors so that companies as well as investors can make more informed decisions in an environmentally and socially risk-driven world.