In Japan, the disclosure of sustainability information is mandatory in annual reports and other documents from 31 March 2023 onwards.

The SASB Standard, proposed by the SASB (US Sustainability Accounting Standards Board) as an international framework (standard for disclosure requirements) for sustainability information disclosure, is a standard that is gaining international recognition, and the number of companies adopting it in all countries and regions is increasing.

The SASB Standard stipulates ESG information disclosure in each of 11 industries and 77 business sectors, primarily aimed at investors. By ensuring fair company-to-company disclosure, this not only provides investors and evaluation criteria with material for deciding what to invest in, but is also expected to have a significant effect in hedging risks and improving branding in corporate management.

In the past, aiESG has published two articles on the SASB Standard, one before and one after, summarising the benefits of adopting the SASB Standard and the detailed disclosure requirements.

Commentary] What is the SASB Standard for ESG Information Disclosure? (Part 1) SASB Overview
Commentary] What is the SASB Standard for ESG Disclosure? (Part 2) Benefits for companies

This article summarises the latest information on the state of adoption by Japanese companies for those in charge who are considering adopting the SASB Standards within their own company. In addition, aiESG is the first ESG assessment organisation in Japan to be licensed under the international sustainability standard SASB Standards. In addition to the latest information, this report also discusses the services we provide as aiESG for the preparation of reports.

1. international status of SASB standards

The SASB Standards set out a set of standards for non-financial disclosures, categorised by industry, to provide clarity for investors. The standards are set out in the following table.

As shown in Figure 1, since the SASB Standards were proposed, an increasing number of companies, both national and regional, have adopted the SASB Standards in their sustainability information reports. In addition, 906 of the companies in the S&P Global 1200 Index that provide effective exposure to global equity markets have adopted the SASB Standard in their sustainability reports (cumulative total since 2021).

Figure 1: Number of companies producing SASB Standard reports (red graph: number of companies by year; blue graph: cumulative number of companies since 2021) -. SASB websiteAdapted from. 

Despite the fact that the SASB standards are not legally binding, one of the reasons why the number of companies adopting them is on the rise is that non-financial information disclosed in accordance with the standards has significant Price Informativeness [1].

Price informativeness indicates the degree of information and value contained in the asset price. This means that the information disclosed has financial relevance to investors. This means that disclosure in accordance with SASB standards is advantageous to investors as a basis for determining whether the actual share price corresponds to the price of the stock according to the information made public.

In addition, it has been confirmed that price informativeness works strongly with companies that have a large number of investors interested in sustainability, so the SASB standard is expected to be important in a commercial environment where international awareness of sustainability is increasing.

Figure 2: Sector classification of companies adopting the SASB standard (cumulative number of companies from 2020 to 2023):. SASB websiteSee also.

As Figure 2 shows, although the number of companies adopting the SASB standard may be small or large, it can be seen that all sectors (which are further classified from here into industries) are supported by the SASB standard.

As the SASB becomes more widespread, Japanese companies will increasingly consider adopting the SASB standards in their sustainability reports in order to provide transparent information to investors.

As a practical example, examples of adoption by Japanese companies are reviewed in the next section.

2. the situation of domestic companies adopting the SASB

An increasing number of Japanese companies are adopting the SASB standards for their own sustainability information reporting.Official websiteThe total number of companies that have adopted the SASB standard published above is 84 since 2020.

Many Japanese companies have adapted to the SASB Standard by adding a separate section to the back of their reports (e.g. Sustainability Report, Integrated Report, etc.), such as a 'SASB Index Response Table'.

This report introduces the form of the SASB report after selecting five Japanese companies that have included SASB Standard compliance in their 2023 reports.

Company Name	sector	industry	report format
Asahi Kasei	resource transformation	Chemical	Sustainability report
Kyushu Electric Power Co.	infrastructure	Electric Utilities & Power Generators	Integrated Reporting
Mazda	transportation	Automobiles	SASB Indicators Report.
Nissui	Food and beverages	Processed FoodMeat, Poultry & Dairy	Sustainability report
Takeda Pharmaceutical Company Limited	health care	Biotechnology & Pharmaceuticals	SASB Indicators Report.

Table 1: Companies that have complied with the SASB Standard in 2023 (prepared by the authors)

The five companies mentioned above have all prepared their reports in a way that matches their non-financial information with the disclosure requirements specified by the SASB Standards. In addition, as Nissui illustrates, it is also possible to combine major businesses across multiple industries within the same report, confirming that the SASB Standard is a sustainability standard that allows for flexible and concise presentation of information.

Two forms of compliance with the SASB standard can be identified

1. utilise corresponding hyperlinks within the report to the pages where the designation requirements are described
　(Asahi Kasei, Mazda, Nissui)

2. a table showing the specified requirements and their responses on the same page. (Kyushu Electric Power Company, Takeda Pharmaceuticals)


Both formats have been able to produce reports in accordance with SASB standards in both cases, which is an important indicator for investor decision-making.

The reports published by Asahi Kasei also provide information on the process of indicator publication, including annotations in the reports on the calculation methods for greenhouse gas emissions as specified in the SASB Standard.

Another highly commendable aspect of the Kyushu Electric Power and Takeda reports is that they provide detailed reasoning for the indicators not to be made public; the SASB, for its part, suggests that while there is no obligation to address all of the requirements, it would have a positive impact on investors to include the reasons when it is not possible to do so.

Thus, complying with the SASB Standard is synonymous with clarifying the relevance of the requirements specified on the part of the SASB to the disclosure of non-financial information disclosed (maintained) by the company.

However, there are many examples of limited compliance with the SASB Standard, such as many companies disclosing information on some of the requirements without trying to fulfil all of them, as the companies mentioned above.
This is also an advantage because the SASB Standards are not mandatory, meaning that companies can take steps to find the relevance of their public information to the SASB Standards.

3. aiESG's services for compliance with SASB standards

The SASB Standard is divided into 'quantitative indicators' and 'qualitative indicators (discussion)', regardless of industry.

Qualitative indicators are often asked about medium- and long-term strategies on the part of companies, and it is expected that they can be addressed through coordination with the company's own management plan.

On the other hand, it is confirmed that indicators such as 'greenhouse gas emissions in the supply chain' cannot be calculated using only the information held within the company, which is often a major barrier to compliance with the SASB standard.

One of aiESG's major strengths is its ability to calculate quantitative indicators with our own big data, using basic transaction information held by the company. The indicators that can be calculated cover both environmental and social aspects, including not only 'greenhouse gases' but also 'wastewater treatment' and 'potential for forced labour'.

Company representatives considering the calculation of quantitative indicators when complying with the SASB Standard are encouraged to contact aiESG.


Enquiry: 
https://aiesg.co.jp/contact/


(Reference.)
1: Grewal, J., Hauptmann, C. & Serafeim, G. Material Sustainability Information and Stock Price Informativeness. J Bus Ethics171, 513-544 (2021). https://doi.org/10.1007/s10551-020-04451-2


*Related articles*.
Report list : Regulations/standards
https://aiesg.co.jp/report_tag/基準-規制/

Commentary] What is the SASB Standard for ESG Information Disclosure? (Part 1) SASB Overview
https://aiesg.co.jp/report/2301025_sasb1/

Commentary] What is the SASB Standard for ESG Disclosure? (Part 2) Benefits for companies
https://aiesg.co.jp/report/2301115_sasb2/

[Commentary] Alphabet soup - The disorder and convergence of sustainability standards.
https://aiesg.co.jp/report/2301226_alphabet-soup/

[Commentary] Non-financial capital: trends in human and natural capital - domestic and international disclosure regulations and guidelines.
https://aiesg.co.jp/report/240329_human-natural-capital/