The Sustainability Accounting Standards Board held its first board meeting under its new leadership this week to discuss progress on its provisional standards, with an eye to releasing them in the fall.

Members of the board met in New York on Wednesday at Fordham University, with a remote phone connection to SASB headquarters in San Francisco. The meeting was led by Jeffrey Hales, a professor of accounting at the Georgia Institute of Technology, who took over the role as chair of the SASB Standards Board after founder and former CEO Dr. Jean Rogers announced in April that she was stepping down (see SASB founder Jean Rogers steps down). A few days later, SASB Foundation chairman and former New York City Mayor Michael Bloomberg also announced he was stepping down, ceding the role of chair to Robert Steel, a former deputy mayor in Bloomberg’s administration who is currently CEO of the financial services firm Perella Weinberg Partners (see SASB names former New York deputy mayor to succeed Bloomberg as chair). Bloomberg is now chair emeritus of the SASB Foundation and he provided a $2.4 million grant to the organization to help implement its standards.

Hales opened the meeting by describing some of the extensive changes that have been going on since SASB’s last public meeting in March at Fordham.

“Obviously some of the biggest things that have happened in the intervening period, in addition to making some decisions about technical standard-setting issues, is some major changes in the leadership of the SASB,” he said. “That includes both at the foundation level and at the standards board level. The founding chair, Mike Bloomberg, after about four years as chair of the foundation, announced that he is going to step down. We’re very grateful for all the work he has done as leader of the foundation, as chair of the foundation. He also announced a $2.4 million gift at that time, and we’re very, very grateful for that. And we also saw Jean Rogers, the founder of SASB, announced that she was going to step down after dedicating nearly a decade of her life to the work that we’re pushing forward today, to the principles of that. We’re extraordinarily grateful for the work that she’s done to the point where this organization can survive without her, which we absolutely could not have done for many years.”

Hales noted that Rogers would be coming to the meeting. “We’re excited to have her back to pay some respects to the work that she has done,” he said.

He also updated them about the new chair of the SASB Foundation, which was set up last year to oversee the work of the board, similar to the way that the Financial Accounting Foundation oversees the Financial Accounting Standards Board and the IFRS Foundation oversees the International Accounting Standards Board (see SASB reconfigures board structure).

“We have Bob Steel, who was the co-vice chair of the foundation along with [former SEC chair] Mary Schapiro,” said Hales. “He has taken on the leadership role as chair of the foundation. For those of you who know Bob, he’s got a tremendous career. He’s the CEO and partner of Perella Weinberg. He’s also the former deputy mayor for the Bloomberg administration, undersecretary of the Treasury, spent three years at Goldman Sachs, really quite a leader in industry, and we’re really grateful that he has agreed to take the lead of the foundation. He will also be here later today as part of honoring Jean Rogers.”

Hales was formerly vice chair of SASB under Rogers, and two vice chairs have now been tapped to fill in his former role: Verity Chegar, a vice president and ESG (environment, social and governance) strategist at the investment management firm BlackRock, and Bob Hirth, who formerly chaired COSO. “I’m very appreciative of their level of engagement with the standards board and taking time to be part of this process as well,” he said.

Hales told Accounting Today about some of the progress the board has been making on sustainability accounting standards amid all the changes. “There’s a whole process involved of going through and reviewing the provisional standards and proposing a set of changes and putting them out for public comment,” he said. “We’ve been deliberating those in public meetings and additional work that we’ve done. Today’s meeting is really to go over each of the sectors and talk about some of the revisions that have been proposed, the ones that most deserve additional attention from the full board.”

The board reviewed some of the changes that have been suggested in the standards for specific industries, in some cases aligning them with existing standards the industries themselves have already established while also taking outside feedback into account.

“Some of the sectors are just more complicated,” said Hales. “The financial sector is one example. It’s one of the first provisional standards which we finished, and we put it out for public comment as a provisional standard. We got a lot of feedback on it. With each addition to the provisional standard, we again put it out for public comment. If you look at this particular round of revisions before going to codification, it’s one of the sectors where we made the most changes. People are proposing about 65 revisions across that sector, which is made up of a number of industries.”

Some companies are already implementing the standards, even though they are still in a provisional state.

“We’ve been seeing uptake by a number of companies, and again they’re provisional standards, so they know these are likely to change in the short term,” said Hales. “Despite that we’ve seen a number of companies that have been utilizing the standards. Some of the early users were JetBlue and then more recently Nike, GM, and some consumer goods, processed foods and real estate firms. Some hotel lodging resorts have also been using them. We definitely haven’t seen significant use in all sectors yet, but there are some industries that are more consumer-facing where they know consumers who buy their products are thinking about these issues. Others, like in the real estate industry, know climate risk, for example, poses significant risks to their properties. They have been thinking about this longer than some of the other industries have.”

He anticipates the standards will be finalized in the fall. The deregulatory trend in Washington, where the Environmental Protection Agency and other departments have been rolling back regulations around carbon emissions and other areas, may actually be helping drive more interest in sustainability accounting standards.

“It’s impossible to say exactly what’s driving interest in the work that we’re doing, but it seems reasonable to me that some of the interest in what we’re doing might be in a world that feels more deregulated, that if there is a greater range of activities that companies can engage in, it becomes all that much more important to have companies to report on what they are doing,” said Hales. “What is your strategy? Since you don’t all have to do the same thing, please tell us what you’re doing? It raises the value of the reporting.”

SASB stays involved with the Financial Accounting Standards Board and Hales noted that he sits on FASB’s Advisory Committee, FASAC. The board also works with the International Integrated Reporting Council.

“We try to maintain a good working relationship with all of the key stakeholders that are out there, and the IIRC is definitely one of them,” said Hales. “They convened the Corporate Reporting Dialogue, and we’ve had representation there. That’s an effort with all of these different types of standard-setters to understand and coordinate our activities, and see where there’s alignment, where there’s differences in the scope of the work that’s being done, to try to work well with the good work that’s being done already by a number of standard-setters.”

He has found the new governance structure at SASB has been working well over the past year. “I think it’s been a really healthy change for the organization to have that independent board that oversees the work of the research team, and also we’ve been very focused on making sure that we’ve got good communications with the foundation,” said Hales. “It’s two boards, but it is one organization that we’re aligned on, and we try to follow the best practices of other good-functioning organizations out there like the FASB or the IASB, which have similar two-tiered structures. I think that’s working.”

Hales has been finding investors are giving input on the standards as they develop. “We have seen a tremendous amount of interest in what we’re doing, and I think that in some ways that’s been kind of a surprise for me, given all the work that I’ve done in policymaking and financial accounting standards over the years, attending the FASB at a lot of public meetings and not seeing much investor interest in those meetings,” he said. “But I think that’s also a statement of how robust that framework is. It’s been developed over a much longer period of time. Now investors in a lot of ways can take for granted the quality of those standards and maybe don’t get as engaged on the technical, whereas we’re still at the forefront of reporting around ESG issues, especially through the lens of financial materiality, we’ve seen a lot more interest from the investor community in what we’re doing. It’s a statement about where we are in the process of developing the standards.”

David Post, director of research at SASB, said during the board meeting that six years of standards development have already occurred at SASB since it was founded in 2011. “Our standards are designed to identify issues and factors reasonably likely to affect the financial condition or operating performance of companies within an industry, so our standards require both evidence of investor interest and evidence of financial impact,” he said. “Our disciplined standards development process is designed to develop a minimum set of financially material sustainability standards in 77 different industries. Our foundation board, with two former SEC chairs [Mary Schapiro and Elisse Walter], and a former FASB chair [Bob Herz], has extensive experience in understanding how to develop standards, so I think you can be fairly confident that the oversight of our standards development process is really pretty high quality. I would also add that although SASB standards are certainly recognized here in the U.S., they’re also beginning to be recognized outside the U.S., having recently been acknowledged by the E.U. Commission as one of a number of frameworks for nonfinancial reporting.”

SASB is trying to develop a complete set of financially material topics in each industry, he noted.

“The standards are a minimum set of financially material sustainability topics and metrics in each industry,” said Post. “Each industry has typically five topics and 13 associated metrics in a minimum set. IFRS and U.S. GAAP are the standards that have driven comparable, consistent and reliable financial reporting for many decades, and SASB standards are fairly new to the scene. We’ve only been around since 2011, but they complement for investors and companies these robust financial accounting standards. SASB standards are similar to financial accounting standards. They’re intended to drive comparable, consistent and reliable reporting of financially material sustainability issues. Our topics and associated metrics are designed to guide corporate reporting in annual reports and SEC filings, in other regulatory filings, in sustainability reports and other reports to investors, so many possible locations for which companies can report using our standards. Given the strong standards development process, the conceptual framework, our approach, it’s our view that our standards can be used by investors to integrate sustainability issues into their decision-making process.”