SAN FRANCISCO, May 23, 2017 /PRNewswire/ -- The Sustainability Accounting Standards Board™ (SASB™) today announced commissioning a rigorous, independent analysis of the potential economic implications of widespread corporate adoption of SASB standards by publicly-traded U.S. companies for the disclosure of material sustainability information. The academic research team conducting the analysis comprises professors Christian Leuz and Hans Christensen from the University of Chicago Booth School of Business; and Luzi Hail from the Wharton School of the University of Pennsylvania.
"This paper is being developed to examine and understand the potential costs and benefits surrounding the implementation of SASB's standards," says Bob Herz, Former Chairman of the FASB, and member of the SASB Foundation Board of Directors. "It will help advance the dialogue on the subject of sustainability reporting by uncovering the potential costs incurred to implement the standards and whether those costs are justified in relation to overall expected benefits."
The report will focus on three main areas. First, the analysis will explore the potential consequences in the capital markets of widespread adoption of SASB standards, and will consider the effect on constructs such as firm value, cost of capital, market liquidity, and information asymmetry between firms and investors. Second, the investigation will consider potential real effects, proprietary costs of disclosure, and litigation risks firms may face. Third, the paper will consider key potential implementation issues; e.g., materiality, standardization of disclosures across firms, boilerplate language, and the role of oversight and enforcement.
"SASB has commissioned this report in response to the market's call for a greater understanding of the value of adopting and implementing SASB standards relative to our objective of improving the disclosure of material sustainability information for the benefit of companies and investors," says Dr. Jean Rogers, Founder of SASB and Chair of the SASB Standards Board.
For each of the areas discussed above, the team plans to draw on research related to sustainability disclosure and existing corporate social responsibility (CSR) literature (as well as broader literature in accounting, economics, and finance) to evaluate potential outcomes, and to discuss the general economic forces at work, while also applying existing research findings to the CSR setting to the extent possible.
The researchers carry expertise in finance and accounting, financial reporting standards, sustainability, and economics. They plan to deliver the findings in January 2018.
Established in 2011, the Sustainability Accounting Standards Board (SASB) is an independent standards-setting organization dedicated to enhancing the efficiency of the capital markets by fostering high-quality disclosure of material sustainability information that meets investor needs. The mission of the SASB is to maintain sustainability accounting standards that help public corporations disclose material information to investors in SEC filings, such as the Forms 10-K, 20-F, and 40-F, in a cost-effective and decision-useful manner. The SASB maintains standards for 79 industries, focusing on sustainability-related factors that are reasonably likely to have financially material impacts. SASB's mission is accomplished through a rigorous process that includes evidence-based research and broad, balanced stakeholder participation. The SASB Standards Board comprises nine members with diverse backgrounds encompassing capital markets regulation and policy, investing, financial accounting, securities law, corporate finance, and sustainability matters. The Standards Board is responsible for setting the standards, maintaining technical agendas, responding to stakeholders, and proposing updates to the standards.
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SOURCE Sustainability Accounting Standards Board (SASB)