Proposed Changes to the Sasb Conceptual Framework & Rules of Procedure Bases for Conclusions & Invitation to Comment On
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PROPOSED CHANGES TO THE SASB CONCEPTUAL FRAMEWORK & RULES OF PROCEDURE BASES FOR CONCLUSIONS & INVITATION TO COMMENT ON EXPOSURE DRAFTS Issued: August 28, 2020 Comments Due: November 30, 2020 Prepared by the ® Sustainability Accounting Standards Board Notice of public comment period on proposed changes to the SASB Conceptual Framework & SASB Rules of Procedure The SASB Standards Board invites comments on the enclosed exposure drafts of the SASB Conceptual Framework and SASB Rules of Procedure. Because the Conceptual Framework and Rules of Procedure documents are intended to complement each other, exposure drafts of each of these documents are undergoing public comment periods concurrently. The exposure drafts may subsequently be modified as a result of deliberations by the SASB Standards Board following the public comment period, which will remain open for 90-days and closes on November 30, 2020. All comment letters should be submitted to SASB’s Public Comment Portal or emailed to [email protected] by November 30, 2020. The Standards Board and the technical staff tracks and considers all comments from stakeholders. All comments submitted will be on the public record and posted on the SASB website. While the SASB Standards Board may not provide specific responses to each public comment, the Standards Board will acknowledge receipt of, review, and summarize all public comments received. Established in 2011, the Sustainability Accounting Standards Board (SASB) is the independent standard-setting organization for sustainability accounting standards that meet the needs of investors, lenders, and other creditors by fostering high-quality disclosure of financially material sustainability information. © 2020 SUSTAINABILITY ACCOUNTING STANDARDS BOARD BASES FOR CONCLUSIONS & INVITATION TO COMMENT | 2 Contents Bases for Conclusions & Invitation to Comment ..................................................................................... 4 Background & Context ................................................................................................................................... 4 Invitation to Comment ................................................................................................................................... 5 Next Steps ...................................................................................................................................................... 5 Basis for Conclusion – Conceptual Framework .............................................................................................. 6 Questions for Stakeholders – Conceptual Framework ................................................................................ 10 Basis for Conclusion – Rules of Procedure ................................................................................................... 13 Questions for Stakeholders – Rules of Procedure ........................................................................................ 15 Conceptual Framework Exposure Draft ................................................................................................ 18 Rules of Procedure Exposure Draft ....................................................................................................... 36 © 2020 SUSTAINABILITY ACCOUNTING STANDARDS BOARD BASES FOR CONCLUSIONS & INVITATION TO COMMENT | 3 Background & Context SASB issued the existing Conceptual Framework and Rules of Procedure in February 2017. The Conceptual Framework sets out the basic concepts, principles, definitions, and objectives that guide the SASB Standards Board and technical staff in their approach to setting sustainability accounting standards. The Rules of Procedure establishes and describes the policies and practices followed by the Standards Board in developing, issuing, and maintaining the SASB Standards. Together, these documents serve as the primary governance documents that guide the activities of the Standards Board in its efforts to fulfill SASB’s organizational mission. In September 2019, the Standards Board began projects to revise and update the 2017 Conceptual Framework and Rules of Procedure. The Board’s decision to undertake these projects was based on the outdated organizational mission statement contained in the existing documents, as well as the Board’s view that the existing documents do not reflect SASB’s global context and that they contain outdated assumptions, definitions, and data. Notably, it is not the intent of the Standards Board to fundamentally change its approach to sustainability accounting or the processes it uses to conduct standard setting. The revisions proposed in the Conceptual Framework and Rules of Procedure exposure drafts are intended to help SASB further clarify and explain its approach to standard setting and its processes and practices. In other words, these revisions are being proposed to help SASB more clearly articulate its existing approach to setting sustainability accounting standards. On August 25, 2020, the Standards Board voted unanimously to release the Conceptual Framework and Rules of Procedure exposure drafts for 90-day public comment periods. The Standards Board encourages companies, investors, and subject matter experts, as well as other interested parties and the general public, to review the exposure drafts and the corresponding questions for stakeholders and to provide comments by November 30, 2020. This Bases for Conclusions & Invitation to Comment contains the Conceptual Framework and Rules of Procedure exposure drafts. The “Basis for Conclusion – Conceptual Framework” and “Basis for Conclusions – Rules of Procedure” sections primarily summarize the considerations of the Standards Board when developing the exposure drafts. Furthermore, the “Questions for Stakeholders – Conceptual Framework” and “Questions for Stakeholders – Rules of Procedure” sections provide background and context, as well as questions for stakeholders to respond to during the comment periods. The Current Projects page on the SASB website contains further historical information on these projects. The Conceptual Framework exposure draft and Rules of Procedure exposure draft are contained in this consolidated document after the sections cited above. © 2020 SUSTAINABILITY ACCOUNTING STANDARDS BOARD BASES FOR CONCLUSIONS & INVITATION TO COMMENT | 4 Invitation to Comment The Standards Board invites comments on the Conceptual Framework and Rules of Procedure exposure drafts, particularly on the questions set out further below. Comments are most helpful if they: (a) address the questions as stated; (b) indicate the specific paragraph(s) to which they relate; (c) contain a clear rationale; (d) include any alternatives the Board should consider, if applicable. Respondents do not need to comment on all of the questions posed. Next steps Upon conclusion of the 90-day public comment period, the Standards Board will consider all comments submitted and conduct deliberations based on the comments received. At that time, the Standards Board may pursue further revisions of the Conceptual Framework and/or Rules of Procedure or may approve the exposure drafts as presented in this document. Upon the approval of the Conceptual Framework and Rules of Procedure by the Standards Board, the approved versions will supersede the 2017 versions of the Conceptual Framework and Rules of Procedure. © 2020 SUSTAINABILITY ACCOUNTING STANDARDS BOARD BASES FOR CONCLUSIONS & INVITATION TO COMMENT | 5 Basis for Conclusions – Conceptual Framework In initiating the project to revise the 2017 Conceptual Framework, the Standards Board sought to improve the Conceptual Framework by focusing on four primary themes, listed below. The revisions contained in the Conceptual Framework exposure draft are guided by these themes: • Incorporate SASB’s updated mission statement, which better reflects SASB’s global perspective • Remove and/or modify references to US-based regulations, as SASB operates in a global context • Update assumptions, definitions, and data cited in the document • Address opportunities to improve the clarity of core principles and concepts The Conceptual Framework exposure draft aims to clarify that SASB is a global standard setter, place SASB into a broader landscape of corporate reporting, and strengthen SASB’s definition of financial materiality and related concepts, such as the primary intended users of the SASB Standards. It also contains a revised, and more succinct, discussion of the characteristics of topics and metrics that will support the objectives of the SASB Standards. In addition, the Conceptual Framework exposure draft now includes a discussion of the importance of transparency in its activities as a standard setter. Overall, it is important to emphasize that through the proposed changes in the exposure drafts, it is not the intent of SASB to fundamentally change its approach to sustainability accounting or to standard setting. The revisions made to the Conceptual Framework have been made to help SASB further clarify its approach to standard setting for external stakeholders. In other words, it was the intent of the Standards Board to clarify and improve many definitions and concepts throughout the exposure draft without fundamentally altering the underlying concepts. The below subsections describe the considerations and conclusions of the Standards Board in three key areas of change seen in the Conceptual Framework exposure draft. Transparency as a Fundamental Tenet The 2017 Conceptual Framework details three tenets