Note: This article has been updated to correct SASB's time-frame for expanded standards.
The Sustainability Accounting Standards Board (SASB) has released its first set of provisional standards for industries in the health care sector.
SASB is a San Francisco-based 501(c)3 nonprofit organization that provides sustainability accounting standards for publicly listed corporations. These standards are designed for disclosing sustainability-related information in Form 10-K, 20-F, and other required Securities and Exchange Commission filings.
“We’re working within the law that already exists to give companies and their accountants tools to give much better disclosure to investors on these issues,” SASB co-founder Jean Rogers told CorpCounsel.com. “I think what we’ve really tried to do is acknowledge that there are other forms of capital other than financial capital that are essential to long-term value creation. More and more investors want to understand how well companies are positioned in a world that has more regulations and finite resources, as well as new opportunities for sustainability.”
SASB’s provisional standards are available for companies working in biotechnology, pharmaceuticals, medical supplies and equipment, health care delivery, health care distribution, and managed care, and address issues like resource management, pharmaceutical water contamination, drug safety and side effects, ethical marketing, affordability and fair pricing, managed care price performance, and safety of clinical trial participants.
SASB has already made similar standards available for the financial and technology and communication sectors. Within 2 years, Rogers says they hope to have standards available for more than 80 industries in 10 sectors. Health care is a particularly important sector to address, Rogers says, as it makes up more than 18 percent of the U.S. GDP—and also accounts for 8 percent of greenhouse gas emissions.
Rogers says corporate counsel are key to making the standards work. She recommends counsel evaluate issues addressed by the standards and understand where their company is in terms of disclosure, and ascertain which issues are material to the individual company. Of the nearly 150 survey respondents in the group that helped developed the health care standards—including representatives from Baxter, Cleveland Clinic, Johnson & Johnson, Kaiser Permanente, Pfizer Inc., and Merck & Co. Inc.—nearly 80 percent agreed on the issues designated as material in the standards are material for their individual companies.
Rogers says that before the SASB standards, counsel didn’t have common standards on how to meaningfully provide disclosure on sustainability issues. “Our goal is actually to move the needle so we’re not stuck at either no disclosure or boilerplate disclosure, but moving toward meaningful disclosure,” she says.
