5 Reasons Why Privately-held Companies Should Incorporate SASB Metrics Into Benchmarking & Strategy
1) Cut Through the Noise: Not every sustainability issue is material to every company. Because SASB standards are research-based and founded on evidence of financial or operational impact in a given industry, every company can use them to cut through the noise and focus on sustainability issues that may matter to that company right now.
Using SASB’s industry-specific short list of standards that may matter, companies can then conduct an annual materiality assessment in order to decide how best to allocate their capital, talent, and time.
2) Benchmark to Competitors: SASB standards are also deliberately designed to allow effective comparison across companies in the same industry. Therefore, private companies can use SASB sustainability standards internally to understand their performance vis-à-vis their publicly traded competitors.
Because private companies can maintain the confidentiality of their performance on SASB standards, having a clear and objective method of comparing their performance to their publicly-traded peers is a significant market advantage akin to comparing profit and loss on financial balance sheets.
3) Leverage in Negotiations: Data based on SASB sustainability standards may be useful when planning to seek new investment capital or loans, or to prepare for a merger or acquisition – private companies with objective, industry-relevant metrics from SASB may improve their bargaining position by showing they understand and manage the full-range of risks.
4) Connect Financial and Sustainability Performance: Understanding, measuring, and managing non-financial risks in quantifiable ways allows us to connect sustainability performance to financial performance in ways that we could not do in the past. Understanding connections between sustainability performance and financial performance enhances leadership’s ability to manage non-financial risks and spot market opportunities.
5) Context to Performance Data: SASB’s sustainability accounting metrics are paired with activity metrics that give context to the data. It is not enough to know that year-over-year water usage went down. While reduced water usage may appear to be a success story, actual performance may be more complex – what if the reduction was caused by the closure of a feedlot or factory rather than greater efficiency?
SASB’s industry-specific accounting and activity standards help all companies develop more accurate understandings of their non-financial performance.