FSA LEVEL 1 EXAM STUDY GUIDE
QUESTIONS AND ANSWERS
What are some of the most common disclosure frameworks and standards? In what
ways are they different? In what ways are they complementary? - Answer- Common
frameworks and standards: CDP, CDSB, GRI, IIRC, SASB and TCFD. Complementarity
can be focused on type of guidance and approach to materiality.
Frameworks (CDSB, IIRC, TCFD) and standards serve distinct functions. Standards
(GRI, SASB) offer specific and replicable guidance for disclosure.
How do jurisdictions throughout the world traditionally define materiality? - Answer-
Focus on financial significance of a single piece of information and providing a
framework for reporting companies to determine what information it must disclose.
What are disclosure topics in a SASB standard and what purpose do they serve? -
Answer- topics in the SASB standard likely to have financially material impacts on a
company in a given industry.
What are the different types of metrics in a SASB standard and what purpose do they
each serve? - Answer- Accounting metrics - like KPIs or benchmarks
Activity metrics - used to quantify the scale of a business to support comparative
analysis
How does SASB achieve each of the four fundamental tenets to SASB's approach to
standard-setting? - Answer- evidence based, market informed, industry specific and
transparent
What two documents define SASB's governance procedures, and what purpose do they
each serve? - Answer- Conceptual Framework - defines the principles and
characteristics of standard-setting process, framework to resolve questions
Rules of Procedure - establishes the processes and practices followed by SASB in its
standard setting and governance and oversight of related processes and practices
How do the SASB Standards evolve over time? - Answer- SASB implements a project
based model for standards development. Proposal -> Standard setting project -> Board
approval
What are two reasons why companies report using SASB standards? - Answer-
Primarily to meet unique ESG disclosure objectives alongside other reporting
frameworks like GRI, IIRC to link sustainability management and financial performance
to investors.
, Where do companies disclose SASB data? - Answer- annual reports, integrated reports,
regulatory filings and sustainability reports.
How do companies disclose SASB-aligned data when a Standard does not perfectly
align with their business? - Answer- SICS developed to identify topics that are likely
financially material to companies in a given industry. Choose disclosure topics from
secondary industries or omit or modify the topics and metrics and share rationale.
What presentation formats have companies embraced when reporting sustainability
information aligned with SASB standards? - Answer- Assurance statements to signal
reliability of SASB-disclosed data, data visualizations and downloadable spreadsheets
In what ways do investors typically demonstrate demand for sustainability information to
companies, and how has the growth of index funds shaped corporate-investor
communication? - Answer- Public calls for enhanced disclosure and direct engagement
with companies, shareholder proposals and proxy voting and sometimes buy/sell
How do SASB Standards support cross-functional communication - Answer- Requires
data collection from BUs, can help smooth internal comms by helping identify a
common set of metrics used to measure financially material sustainability topics.
Why do companies pursue sustainability disclosure? - Answer- Aligning on "why" gives
internal stakeholders better understanding of audience needs. Can also be motivated by
peer effects, investor requests etc.
How do metrics/KPIs contribute to a successful sustainable business strategy? -
Answer- Relevant KPIs can be the difference between effectively managing
sustainability performance or experience performance declines. ESG metrics tied to
financial materiality can directly inform business strategy.
How do disclosures based on SASB Standards help meet the needs of different types of
investors? - Answer- Tracking certain CPIs, ESG screens etc. the use of ESG data on
financially material topics is used to enhance pre and post investment decision making
Why are SASB Standards best suited for ESG integration? - Answer- With ESG
integration, investors adjust traditional analysis using sustainability information such as
financial models to consider ESG factors contributing or detracting from performance.
Why are investors demanding quality sustainability information? - Answer- Investors
source quality sustainability info to meet their investment goals.
What factors drive demand for quality sustainability information within companies? -
Answer- Sustainability data, both qualitative and quantitate can contribute to company
success in the near, medium and long term by improving the management of
sustainability-related risks and opportunities.
QUESTIONS AND ANSWERS
What are some of the most common disclosure frameworks and standards? In what
ways are they different? In what ways are they complementary? - Answer- Common
frameworks and standards: CDP, CDSB, GRI, IIRC, SASB and TCFD. Complementarity
can be focused on type of guidance and approach to materiality.
Frameworks (CDSB, IIRC, TCFD) and standards serve distinct functions. Standards
(GRI, SASB) offer specific and replicable guidance for disclosure.
How do jurisdictions throughout the world traditionally define materiality? - Answer-
Focus on financial significance of a single piece of information and providing a
framework for reporting companies to determine what information it must disclose.
What are disclosure topics in a SASB standard and what purpose do they serve? -
Answer- topics in the SASB standard likely to have financially material impacts on a
company in a given industry.
What are the different types of metrics in a SASB standard and what purpose do they
each serve? - Answer- Accounting metrics - like KPIs or benchmarks
Activity metrics - used to quantify the scale of a business to support comparative
analysis
How does SASB achieve each of the four fundamental tenets to SASB's approach to
standard-setting? - Answer- evidence based, market informed, industry specific and
transparent
What two documents define SASB's governance procedures, and what purpose do they
each serve? - Answer- Conceptual Framework - defines the principles and
characteristics of standard-setting process, framework to resolve questions
Rules of Procedure - establishes the processes and practices followed by SASB in its
standard setting and governance and oversight of related processes and practices
How do the SASB Standards evolve over time? - Answer- SASB implements a project
based model for standards development. Proposal -> Standard setting project -> Board
approval
What are two reasons why companies report using SASB standards? - Answer-
Primarily to meet unique ESG disclosure objectives alongside other reporting
frameworks like GRI, IIRC to link sustainability management and financial performance
to investors.
, Where do companies disclose SASB data? - Answer- annual reports, integrated reports,
regulatory filings and sustainability reports.
How do companies disclose SASB-aligned data when a Standard does not perfectly
align with their business? - Answer- SICS developed to identify topics that are likely
financially material to companies in a given industry. Choose disclosure topics from
secondary industries or omit or modify the topics and metrics and share rationale.
What presentation formats have companies embraced when reporting sustainability
information aligned with SASB standards? - Answer- Assurance statements to signal
reliability of SASB-disclosed data, data visualizations and downloadable spreadsheets
In what ways do investors typically demonstrate demand for sustainability information to
companies, and how has the growth of index funds shaped corporate-investor
communication? - Answer- Public calls for enhanced disclosure and direct engagement
with companies, shareholder proposals and proxy voting and sometimes buy/sell
How do SASB Standards support cross-functional communication - Answer- Requires
data collection from BUs, can help smooth internal comms by helping identify a
common set of metrics used to measure financially material sustainability topics.
Why do companies pursue sustainability disclosure? - Answer- Aligning on "why" gives
internal stakeholders better understanding of audience needs. Can also be motivated by
peer effects, investor requests etc.
How do metrics/KPIs contribute to a successful sustainable business strategy? -
Answer- Relevant KPIs can be the difference between effectively managing
sustainability performance or experience performance declines. ESG metrics tied to
financial materiality can directly inform business strategy.
How do disclosures based on SASB Standards help meet the needs of different types of
investors? - Answer- Tracking certain CPIs, ESG screens etc. the use of ESG data on
financially material topics is used to enhance pre and post investment decision making
Why are SASB Standards best suited for ESG integration? - Answer- With ESG
integration, investors adjust traditional analysis using sustainability information such as
financial models to consider ESG factors contributing or detracting from performance.
Why are investors demanding quality sustainability information? - Answer- Investors
source quality sustainability info to meet their investment goals.
What factors drive demand for quality sustainability information within companies? -
Answer- Sustainability data, both qualitative and quantitate can contribute to company
success in the near, medium and long term by improving the management of
sustainability-related risks and opportunities.
