The Sustainability Accounting Standards Board (SASB) recently released a new set of provisional, voluntary standards for companies to follow when reporting on Environment, Social and Governance (ESG) related risks and opportunities in their annual filings to the Securities and Exchange Commission (SEC). The guidance is tailored for six industries within the health care sector: biotechnology, pharmaceuticals, medical equipment and supplies, health care delivery, health care distributors, and managed care. The new standards highlight the growing demand for public reporting on ESG-related issues due to their potential to have a significant impact on companies’ financial performance. SASB utilizes the same definition of materiality as is used in public reporting, based on the Supreme Court’s determination in TSC Indus. v. Northway, Inc., (426 U.S. 438 (1976)) that an issue is material if there is “a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of the information made available.” By following these standards, SASB believes the health care sector will be better able to recognize, inform investors about, and address material sustainability issues and their attendant risks and opportunities.
For each industry in the health care sector, SASB has identified the following sustainability issues as most likely to be material to six health care sector industries:
Biotechnology and Pharmaceuticals • Access to medicines • Drug safety and side effects • Safety of clinical trial participants • Affordability and fair pricing • Ethical marketing • Employee recruitment, development, and retention • Employee health and safety • Counterfeit drugs • Energy, water, and waste efficiency • Corruption and bribery • Manufacturing and supply chain quality management
Medical Equipment and Supplies • Product safety • Ethical marketing • Affordability and fair pricing • Energy, water, and waste efficiency • Product design and lifecycle management • Corruption and bribery • Manufacturing and supply chain quality management
Healthcare Delivery • Quality of care and patient satisfaction • Access for low income patients • Employee recruitment, development, and retention • Pricing and billing transparency • Energy, water, and waste efficiency • Climate change impacts on human health and infrastructure • Fraud and unnecessary procedures • Patient privacy and electronic health records
Healthcare Distributors • Product safety • Counterfeit drugs • Fuel efficiency • Product life cycle management • Corruption and bribery
Managed Care • Access to coverage • Improved outcomes • Plan performance • Pricing transparency and plan literacy • Customer privacy and technology standards • Climate change impacts on human health
A diverse stakeholder group has worked with SASB on a consensus basis to develop these new sustainability standards. Dr. Jean Rogers, founder and executive director of SASB notes, "The broad participation in our standards setting process demonstrates the unmet need in the U.S. financial accounting system to articulate material, non-financial risks and opportunities via the channel through which investors are accustomed to receiving information. SASB standards are cost-effective, relevant, useful, comparable and auditable."
To read the standards in full, click the following link: