With Whirlpool’s recently released 2019 corporate sustainability report they join the growing list of companies to adopt some portion of the Sustainability Accounting Standards Board (SASB) reporting standards.
The SASB standards are growing in use and support as ESG-focused investors push for clear, useful, and standardized reporting of environmental, social, and governance factors. The SASB standards attempt to identify those ESG factors that are most “material” to the firm’s business performance. Despite adopting SASB, Whirlpool continues to report according to the Global Reporting Initiative (GRI) standards and show how their goals align to the United Nations’ Sustainable Development Goals (UN SDGs).
Unfortunately, given that each reporting standard has different methodologies (and target audiences) all corporations will need to continue reporting across multiple standards. We expect most companies who will publish a sustainability report this year will use some combination of the GRI, SASB, and the UN SDGs standards. And, with Michael Bloomberg’s full weight behind the evolving Task Force on Climate-related reporting (TCFD) and, as of February 2020, 1,000 firms declaring support for the standards, we expect to see more disclosures.
In fact, we see the multitude of reporting standards and 3rd party firms attempting to directly collect ESG data from the companies as one of the primary impediments to better, more meaningful disclosures. Effectively, every standard that a company reports on is a tax on their business as they have to spend resources not just on the reporting, but also the collection of various data points that are not common across the frameworks.
Using Whirlpool as the example, they’ve chosen to report according to the voluntary SASB standards for Consumer Goods Sector—Appliances Manufacturing. According to the SASB Materiality Map there are two dimensions of materiality for these types of companies: Social Capital and “Product Design & Lifecycle Management.” Each of these dimensions has several sub-components as shown below in the below table:
Whirlpool’s 2019 sustainability report demonstrates how progress is being made toward comprehensive, standardized ESG reporting. However, it also shows the current limits and how far it has to go before it matches the quality and value of today’s standardized financials data.