SASB FSA LEVEL I: CHECK YOUR
UNDERSTANDING QUESTIONS AND
ANSWERS
1.1 Why do investors demand quality sustainability information? - Correct Answers -
Investors express demand for and source quality sustainability information to meet their
investment goals. While investors are generally defined as people or organizations that
allocate financial capital with the goal of achieving a profit, not all investors are the
same. Investment goals and accompanying strategies may include using the
information to achieve above-market returns, assessing risk to protect against
diminished returns and major losses, or evaluating the predictability of investment
outcomes. Whether operating in public or private markets, the ability of investors to use
financially material sustainability information to achieve enhanced outcomes is
evidenced by an increasingly robust body of independent research.
6.2 Describe the four distinguishing characteristics of sustainability disclosure
guidance? - Correct Answers -Prior to the formation of the ISSB, existing guidance for
voluntary sustainability disclosure could (and in many cases still can) be distinguished
based on whether or not it is a standard or a framework, and whether it supports the
production of industry-agnostic or industry-specific information. Standards constitute a
set of specific, replicable and detailed guidance for what topics and metrics should be
disclosed. Frameworks provide a set of concepts and principles for how information is
structured and prepared, as well as what broad topics are covered. Industry-agnostic or
'cross-industry' disclosure guidance provides reporting criteria that can be ubiquitously
applied by any company, regardless of the industry in which it operates. Industry-
specific disclosure guidance establishes criteria that are relevant to companies in a
specific industry. Prevalent sources of sustainability disclosure guidance today, such as
the IFRS Sustainability Disclosure Standards and European Sustainability Reporting
Standards (ESRS) contain all four characteristics to support comprehensive disclosure
6.3 What two main events contributed to the formation of the ISSB? - Correct Answers -
First, the CDP (formerly the Carbon Disclosure Project), the Climate Disclosure
Standards Board (CDSB), The Global Reporting Institute (GRI), the International
Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board
(SASB) published a joint 'Statement of Intent to Work Together Towards
Comprehensive Corporate Reporting.' The statement described a collective view of how
each organization's standards and/or frameworks align with the others', provided a joint
, vision for the development of a comprehensive corporate reporting system and stated a
commitment to work together to provide joint market guidance.
Second, the IFRS Foundation Trustees released and invited public comment on the
'Consultation Paper on Sustainability Reporting' to gather feedback on the need for
consistency in reporting and the potential creation of a new international sustainability
standards board under the governance of the IFRS Foundation. Combined, these two
events helped to establish a vision and gather the necessary public input to determine
the needs of the market, which led to the formation of the International Sustainability
Standards Board (ISSB) under the IFRS Foundation.
1.2 What factors drive demand for quality sustainability information within companies? -
Correct Answers -Sustainability data, both qualitative and quantitative, can contribute to
company success in the near, medium, and long term by improving the management of
sustainability-related risks and opportunities. Where sustainability-related risks and
opportunities are measured and managed, companies may be better equipped to
identify and mitigate risks, reduce costs, optimize efficiencies, and even increase
market share and revenue growth through new products and services. Indeed, by
demonstrating an ability to manage sustainability-related risks and opportunities to
bolster company performance, companies can leverage sustainability disclosure to
effectively communicate with investors and improve cost of capital. Simply put, demand
for sustainability information within companies is often (though not always) driven by the
goal to improve bottom-line performance
1.3 Besides companies and their investors, what other institutions influence demand for
sustainability information across capital markets? - Correct Answers -The performance
benefits that investors and companies experience when integrating sustainability
information into their decision-making processes are not the only factors driving demand
for sustainability information. Other organizations, both public and private, influence the
global sustainability dialogue. International, national, and local policy-based initiatives
stimulate sustainability disclosure by passing recommendations and guidance, as well
as regulatory requirements, for the disclosure of sustainability information from publicly-
listed companies. Non-policy efforts, particularly those initiated by securities exchanges
and industry associations, increasingly encourage sustainability disclosure among
listees and members.
2.1 Why was disclosure the basis of regulatory reform in the wake of the 1930's stock
market crash? - Correct Answers -The stock market crash of 1929 sent shockwaves
throughout global markets, leading to global economic declines and the onset of the
Great Depression in the United States. The event provides perhaps the most striking
example of how lack of transparency in capital markets can have disastrous
consequences - harming socioeconomic well-being, bankrupting companies, and
eroding investors' confidence in the information they rely on from companies to make
investment decisions. Disclosure was the basis of regulatory reform in this defining
period because disclosure is a means to promote transparency, and transparency is
essential to fostering sound and efficient capital markets. As evidenced by the formation
UNDERSTANDING QUESTIONS AND
ANSWERS
1.1 Why do investors demand quality sustainability information? - Correct Answers -
Investors express demand for and source quality sustainability information to meet their
investment goals. While investors are generally defined as people or organizations that
allocate financial capital with the goal of achieving a profit, not all investors are the
same. Investment goals and accompanying strategies may include using the
information to achieve above-market returns, assessing risk to protect against
diminished returns and major losses, or evaluating the predictability of investment
outcomes. Whether operating in public or private markets, the ability of investors to use
financially material sustainability information to achieve enhanced outcomes is
evidenced by an increasingly robust body of independent research.
6.2 Describe the four distinguishing characteristics of sustainability disclosure
guidance? - Correct Answers -Prior to the formation of the ISSB, existing guidance for
voluntary sustainability disclosure could (and in many cases still can) be distinguished
based on whether or not it is a standard or a framework, and whether it supports the
production of industry-agnostic or industry-specific information. Standards constitute a
set of specific, replicable and detailed guidance for what topics and metrics should be
disclosed. Frameworks provide a set of concepts and principles for how information is
structured and prepared, as well as what broad topics are covered. Industry-agnostic or
'cross-industry' disclosure guidance provides reporting criteria that can be ubiquitously
applied by any company, regardless of the industry in which it operates. Industry-
specific disclosure guidance establishes criteria that are relevant to companies in a
specific industry. Prevalent sources of sustainability disclosure guidance today, such as
the IFRS Sustainability Disclosure Standards and European Sustainability Reporting
Standards (ESRS) contain all four characteristics to support comprehensive disclosure
6.3 What two main events contributed to the formation of the ISSB? - Correct Answers -
First, the CDP (formerly the Carbon Disclosure Project), the Climate Disclosure
Standards Board (CDSB), The Global Reporting Institute (GRI), the International
Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board
(SASB) published a joint 'Statement of Intent to Work Together Towards
Comprehensive Corporate Reporting.' The statement described a collective view of how
each organization's standards and/or frameworks align with the others', provided a joint
, vision for the development of a comprehensive corporate reporting system and stated a
commitment to work together to provide joint market guidance.
Second, the IFRS Foundation Trustees released and invited public comment on the
'Consultation Paper on Sustainability Reporting' to gather feedback on the need for
consistency in reporting and the potential creation of a new international sustainability
standards board under the governance of the IFRS Foundation. Combined, these two
events helped to establish a vision and gather the necessary public input to determine
the needs of the market, which led to the formation of the International Sustainability
Standards Board (ISSB) under the IFRS Foundation.
1.2 What factors drive demand for quality sustainability information within companies? -
Correct Answers -Sustainability data, both qualitative and quantitative, can contribute to
company success in the near, medium, and long term by improving the management of
sustainability-related risks and opportunities. Where sustainability-related risks and
opportunities are measured and managed, companies may be better equipped to
identify and mitigate risks, reduce costs, optimize efficiencies, and even increase
market share and revenue growth through new products and services. Indeed, by
demonstrating an ability to manage sustainability-related risks and opportunities to
bolster company performance, companies can leverage sustainability disclosure to
effectively communicate with investors and improve cost of capital. Simply put, demand
for sustainability information within companies is often (though not always) driven by the
goal to improve bottom-line performance
1.3 Besides companies and their investors, what other institutions influence demand for
sustainability information across capital markets? - Correct Answers -The performance
benefits that investors and companies experience when integrating sustainability
information into their decision-making processes are not the only factors driving demand
for sustainability information. Other organizations, both public and private, influence the
global sustainability dialogue. International, national, and local policy-based initiatives
stimulate sustainability disclosure by passing recommendations and guidance, as well
as regulatory requirements, for the disclosure of sustainability information from publicly-
listed companies. Non-policy efforts, particularly those initiated by securities exchanges
and industry associations, increasingly encourage sustainability disclosure among
listees and members.
2.1 Why was disclosure the basis of regulatory reform in the wake of the 1930's stock
market crash? - Correct Answers -The stock market crash of 1929 sent shockwaves
throughout global markets, leading to global economic declines and the onset of the
Great Depression in the United States. The event provides perhaps the most striking
example of how lack of transparency in capital markets can have disastrous
consequences - harming socioeconomic well-being, bankrupting companies, and
eroding investors' confidence in the information they rely on from companies to make
investment decisions. Disclosure was the basis of regulatory reform in this defining
period because disclosure is a means to promote transparency, and transparency is
essential to fostering sound and efficient capital markets. As evidenced by the formation
