The Sustainability Accounting Standards Board (SASB) recently launched the Fundamentals of Sustainability Accounting (FSA) Credential, the first of two exams that explore concepts on the materiality of sustainability information. The FSA is designed for a wide range of professionals who benefit from understanding the link between material sustainability information and a company’s financial performance, including financial and sustainability reporting teams, investors, consultants and securities lawyers.
We asked two early test takers - Jaxon Love, Sustainability Manager at Shorenstein; and Amy Springsteel, Director of Corporate Responsibility at Voya Financial - about their experience with the exam.
How do you see your field evolving, and what’s needed to keep up?
JL: The field of corporate sustainability management is evolving incredibly fast. Only 10 years ago, sustainability was a little-used term. At the time, most companies thought of environmental and social issues from a regulatory and liability standpoint only. There were almost no dedicated business positions responsible for voluntary tracking of environmental impacts.
Today, most Fortune 500 companies and many mid-size companies, public and private, voluntarily disclose sustainability performance information. These companies now recognize sustainability as a source of competitive advantage.
The recent diesel emissions failure that has escalated into an existential problem for Volkswagen is one instance of what I expect will be a wave of sustainability opportunity and risk management cases in the future. I see the next several years bringing greater scrutiny of sustainability claims and stronger demand for standardized and reliable sustainability performance information. The sustainability professional needs to integrate deeper into the core business operation, strategy, and risk management. Sustainability KPIs need to align more closely with drivers of business success.
AS: The corporate responsibility/sustainability (CR) field is evolving into a data-driven, performance-oriented discipline. Increasingly, companies are seeking ways to quantify the impact of corporate responsibility on the business’ bottom line and in doing so, practitioners need facts and figures to support the business case. The need for comparable metrics and the increasing integration of CR into overall business strategy is driving more analytical thinking and data-related decision-making. What is needed to continue to advance the field are creative ways to address the measurement of non-traditional or new metrics (often referred to as “non-financial,” but I’m opposed to that language).
Why did you decide to pursue the FSA credential?
JL: I distinctly remember sitting in my financial accounting class as a sustainable business MBA student at the University of Oregon in 2010, and thinking "there needs to be a Sustainability Accounting Standards Board" for sustainability accounting, the way that we have a FASB for financial accounting." I chose to spend a third year in graduate school in order to earn a Master of Accounting because I was convinced that sustainability was fundamentally in need of accounting standards similar to financial management. I was thrilled when I first heard about SASB in late 2011 and have followed the development of SASB closely since.
For me, pursing the FSA was an obvious next step in my career. Having spent three years developing a sustainability program for my company, a real estate owner and manager, I needed to take a step toward refining my sustainability accounting competencies. I have thought for a long time that existing sustainability reporting frameworks do not provide sufficient sector and industry-specific guidance for determining which issues should be monitored and which information is relevant for disclosure. I wanted to understand the SASB standards because I believe they appear to be the best framework for sustainability management for U.S. companies.
AS: SASB’s industry disclosure topics guidance is a tool that feeds our field with comparable data – something that is increasingly in demand. People affiliated with SASB tend to be credible and experts in the field are increasingly referring to SASB as a viable tool for corporations and investors alike. I also thought it would be valuable knowledge to bring back to my firm. Given those factors, I believe SASB will continue to grow in popularity. Additionally, there are very few options for experienced professionals in this field to advance their knowledge base when it comes to professional certifications outside of university continuing education courses, which are costly both in time and money. I therefore thought it would be valuable to be certified in the usage of SASB.
How does the content of the exam inform your current role?
JL: My study preparation for the exam has substantially shaped the way I think about my role within my organization and the performance indicators I am responsible for managing. As one example, I have taken steps to develop a stronger relationship with our investor reporting group in light of my study.
AS: Level I did not address the industry-specific application of SASB disclosure topics in detail; I believe that is planned for Level II. So the Level I readings were applicable in terms of providing a solid foundation for the requirements for SEC-related corporate reporting. It enabled me to better speak with our legal team and bridge their financial knowledge with my corporate responsibility knowledge related to sustainable risks and opportunities for the firm. Also, it offers another standard by which we (my company) can choose to benchmark ourselves in relation to best practice. The content speaks to the needs of one of our most important stakeholders – investors so it helps someone in my role gather the right information to provide to that stakeholder and helps open the lines of communication.
How many hours did you take to prepare for the Level I exam?
JL: I prepared for about 35 hours.
AS: I didn’t keep track but probably 30-35 hours. It was definitely more preparation than the recommended 20 hours and frankly, I would have liked to add group study to my preparation. I suggested that SASB offer an online study group option but I don’t believe there was enough time to implement it. This subject matter can be heady and it’s helpful to run thoughts and ideas by others and discuss the study questions together.
Who would you recommend take it, and why?
JL: I recommend the FSA credential for sustainability professionals who are responsible for reporting functions, as well as accounting professionals with an interest in sustainability. These job functions will both benefit from the conceptual framework that SASB brings to the field of business sustainability management.
AS: For those corporate CR practitioners who have been in the field for a while and don’t have a degree in this area (since university degrees are only recently an option) but are looking to add CR-specific credentials to their background, this is a good option. It’s also interesting for those of us who are certified in the GRI (Global Reporting Initiative) standard, because the definitions of materiality for each of these two entities differ. It’s important to understand and be able to differentiate them in order to meet various stakeholders’ needs. The process would also benefit lawyers who are responsible for corporate 10K submissions because the content focuses quite a bit on corporate SEC reporting.