A number of U.S. states have created new corporate forms that let companies focus on sustainability and other social goals, as well as shareholder value. [See “Risk & Responsibility,” MoFo Tech, Spring/Summer 2012]. Now, we are seeing the “logical next step” in corporate sustainability, says Morrison & Foerster partner Susan Mac Cormac, with the formation in October 2012 of the Sustainability Accounting Standards Board. In those new corporate forms, companies are required to use best practices for reporting on social and environmental factors–and the SASB is establishing those best practices.

The board is determining what is material in terms of sustainability and disclosure and creating industry-specific standards for including sustainability information in Form 10-K and other filings. These standards are designed for use by all public companies, whether they are using the new or traditional corporate forms. The SASB plans to develop standards for 89 industries in two and a half years, with the ultimate goal of bringing clarity to sustainability reporting. “The simple innovation of providing the accounting infrastructure for comparable, industry-specific sustainability information within existing market systems makes SASB a game-changer,” says Jean Rogers, executive director of the SASB.

Clear standards will help companies on several fronts, says Mac Cormac, who sits on the SASB board of directors. Many companies are already reporting sustainability information in separate and often voluminous statements. “Standards can streamline those efforts by letting companies know precisely what to report, and help them improve compliance with SEC rules about disclosing material issues,” she says. Standards will also let them know what not to report, reducing costs and the risk of unnecessarily reporting information that might have a negative effect on shareholder value. Moreover, Mac Cormac adds, companies can use standards to enhance their long-term competitiveness. “Standards can help companies better understand their sustainability challenges and focus on addressing the things that have a material impact on the business.”