Short answer
The answer, before the reasoning
IFRS S1 requires an entity to refer to and consider the applicability of SASB disclosure topics when identifying sustainability-related risks and opportunities and to refer to and consider SASB metrics when preparing disclosures in the absence of a specific IFRS Sustainability Disclosure Standard. Consideration is mandatory; automatic application of every SASB topic or metric is not.
The entity selects industries by its actual business models and activities, assesses whether the topics and metrics are relevant and material, reads the technical protocols, and decides whether to use, modify, supplement, replace or not apply a metric. The final decision must still produce material information that is relevant and faithfully represents the risk or opportunity. Sources and industries actually applied are disclosed under IFRS S1.59.
In practice
At a glance
| Question | Practical answer |
|---|---|
| Must an entity look at SASB? | Yes. In the situations covered by IFRS S1.55 and 58, the entity must refer to and consider the applicability of SASB disclosure topics and metrics. |
| Must every SASB topic and metric be reported? | No. An entity might conclude that a topic or metric is not applicable in its circumstances or does not provide material information. |
| How is the industry selected? | By actual business models, activities and common industry characteristics—not simply the legal name, stock-exchange classification or parent-company label. More than one industry can apply. |
| Can a SASB metric be modified? | Yes, where a modification provides more relevant and faithfully represented information. Explain the definition, source difference, method and limitations as required for the resulting metric. |
| Can other sources be used? | Yes, within IFRS S1.58 and Appendix C conditions. They must not conflict with ISSB Standards and must assist the entity in meeting IFRS S1’s objective. |
| What must be disclosed about the process? | IFRS S1.59 requires identification of sources and industries actually applied. Significant source-of-guidance judgements may also require disclosure under IFRS S1.74–75. |
Why SASB creates practical confusion
SASB Standards are organised by industry and contain disclosure topics, metrics and technical protocols. This makes them operationally useful, but it also encourages a checklist mindset. Teams sometimes download one industry Standard, copy all metrics into a data request and call the result “IFRS S1 metrics”. That approach misses the central judgement: the entity must identify sustainability-related risks and opportunities that could affect its prospects and provide material information about them. SASB is a source of guidance that supports that work; it does not replace the IFRS S1 materiality and faithful representation requirements.
Rule
CORE RULE
“Refer to and consider” is neither optional browsing nor automatic adoption. It is a documented assessment of applicability followed by an entity-specific disclosure decision.
In practice
1. Where the SASB requirement sits in IFRS S1
| IFRS S1 stage | SASB role | Possible conclusion |
|---|---|---|
| Identify risks and opportunities | Refer to and consider SASB disclosure topics when no specific ISSB Standard applies to the matter. | A topic is applicable; another topic is not applicable; an additional matter is identified outside SASB. |
| Prepare material disclosures | Refer to and consider SASB metrics associated with relevant disclosure topics. | Use the metric as issued; modify it; supplement or replace it; conclude it is not applicable. |
| Test other sources | Consider permitted external sources where SASB and applicable ISSB materials are insufficient. | Use a non-conflicting standard-setter metric, industry practice or another permitted source. |
| Disclose sources used | Identify the specific standards, pronouncements, industry practice and industries actually applied. | A clear source note linked to the metric and industry decision. |
| Disclose significant judgements | Explain judgements that have the most significant effect on reported information, including source selection where relevant. | A concise judgement note, not a dump of every working-paper decision. |
Rule
REQUIREMENT / PRACTICE DISTINCTION
IFRS S1 requires consideration and disclosure of sources actually applied. It does not prescribe a particular form of internal SASB assessment documentation. An applicability matrix is a strong implementation practice because it creates evidence for management review, assurance, regulatory challenge and year-on-year consistency.
In practice
2. Understand the structure of a SASB Standard
| Component | What it does | How to use it under IFRS S1 |
|---|---|---|
| Industry description | Describes the business activities intended to fall within the industry. | Compare the description with the entity’s actual revenue streams, assets, operations, customers and strategic activities. |
| Disclosure topic | Identifies a sustainability-related risk or opportunity likely to be relevant for entities in the industry. | Test whether the matter exists in the entity’s circumstances and could affect its prospects; then test material information. |
| Accounting metric | Provides a quantitative or qualitative measure associated with the topic. | Assess definition, decision usefulness, data availability, boundary and whether modification or an additional metric is needed. |
| Technical protocol | Explains scope, calculation, definitions, exclusions and presentation for the metric. | Read before accepting the metric; use it to design the methodology and to identify differences. |
| Activity metric | Provides scale or operational context for interpreting other metrics. | Use where relevant to comparability, denominator design or understanding the business activity. |
3. Select the relevant industry or industries
Industry selection is based on business models and activities. A legal entity can participate in several activities that correspond to different SASB industries, and a diversified group can require more than one industry Standard. The selection should be performed at the level needed to capture the group’s substantive activities without fragmenting the assessment into immaterial side businesses.
In practice
| Selection input | Question to ask | Evidence |
|---|---|---|
| Revenue and profit | Which activities generate material current or expected revenue and profit? | Segment reporting, management accounts, business plans. |
| Assets and capital allocation | Which activities use significant assets, capital expenditure or investment? | Asset register, capex plan, investment papers. |
| Risk and opportunity profile | Which activities create distinct sustainability-related exposures or opportunities? | Risk register, strategy, scenario and market analysis. |
| Management structure | How does management monitor and make decisions about the activity? | Board papers, segment dashboards, operating model. |
| Future business model | Are emerging activities expected to become material over the relevant time horizons? | Approved strategic plan and transaction pipeline. |
| External classification | Do legal, exchange or market classifications provide useful context? | Classification records—used as evidence, not as the sole conclusion. |
Rule
NO UNIVERSAL THRESHOLD
IFRS S1 does not prescribe a fixed revenue or asset percentage for SASB industry selection. Use materiality, business-model facts and decision usefulness, and retain the judgement and approval.
4. Apply the refer-and-consider decision flow
Figure 1. Mandatory consideration leads to an entity-specific decision: apply, modify, supplement, replace or document non-applicability.
Identify one or more candidate SASB industries using actual business models and activities.
Review each relevant disclosure topic. Connect it to the entity’s risk-and-opportunity register rather than treating the topic title as automatically material.
For an applicable topic, review the associated metrics, activity metrics and full technical protocols.
Test whether each metric provides relevant information and a faithful representation of the entity’s material risk, opportunity or performance.
Decide whether to use the metric as issued, modify it, supplement it, replace it with a more useful metric, or conclude that it is not applicable.
Test completeness: consider whether material information exists outside the selected SASB topics or metrics.
Approve the decision, record the evidence and disclose the sources and industries actually applied under IFRS S1.59.
In practice
5. The five metric decisions
| Decision | When it can be appropriate | Disclosure and control implications |
|---|---|---|
| Use as issued | The SASB definition and protocol fit the entity’s activity and provide material, comparable information. | Record the SASB code, industry and protocol version; disclose the source and apply consistently. |
| Modify | The metric is useful but its definition, boundary or method needs adaptation to faithfully represent the entity. | Explain the resulting metric under IFRS S1.50, including source differences, method, assumptions and limitations. |
| Supplement | The SASB metric addresses part of the information need but another metric or qualitative disclosure is necessary. | Explain how the measures work together and avoid duplicate or obscuring information. |
| Replace | Another metric provides more relevant and faithfully represented information for the material matter. | Document why the SASB metric was not used and fully explain the replacement metric and source. |
| Not applicable | The topic or metric does not fit the entity’s activities or circumstances, or it would not provide material information. | Retain the applicability rationale. Public explanation may be needed where the judgement is significant or users could otherwise be misled. |
6. Modifications and entity-developed metrics
Modifying a SASB metric does not create a weaker metric by definition. A modification can improve faithful representation—for example, by changing a denominator, disaggregating a population, aligning the boundary with the actual business activity or using a more reliable data source. The risk is silent modification: retaining the SASB label while changing the method so substantially that users assume comparability that does not exist.
In practice
| Modification field | What to explain |
|---|---|
| Original source | SASB industry, disclosure topic, metric code, title and protocol edition. |
| Reason for change | Why the issued metric is not sufficiently relevant or faithful in the entity’s circumstances. |
| Definition difference | What population, numerator, denominator, unit, boundary or event definition changed. |
| Method and inputs | Calculation, source systems, estimates, assumptions and technical methodology. |
| Comparability | Whether the result is comparable with the issued SASB metric or peer information, and any limitation. |
| Governance and review | Owner, technical approval, third-party validation where applicable and change control. |
7. Additional sources permitted by IFRS S1
SASB may not cover every material matter or every useful disclosure. IFRS S1.58 permits consideration of other sources within defined conditions. The entity can refer to CDSB Framework Application Guidance, recent pronouncements of other standard-setting bodies designed to meet the information needs of general purpose financial-report users, and information disclosed by peers in the same industry or region, provided those sources do not conflict with ISSB Standards. Appendix C sources can also be considered when they assist in meeting IFRS S1’s objective and do not conflict with the Standards.
In practice
| Additional source | Permitted role | Control question |
|---|---|---|
| CDSB Framework Application Guidance | A source for subject-specific implementation information where relevant. | Does it assist the IFRS S1 information objective without conflict? |
| Other standard-setter pronouncement | A metric or disclosure designed for users of general purpose financial reports. | Is the source current, authoritative and consistent with IFRS S1 definitions and materiality? |
| Industry or regional peers | Evidence of market practice, metric design and user expectations. | Is the metric comparable and decision-useful, or merely popular? |
| Appendix C sources, including GRI or ESRS where conditions are met | Possible assistance in identifying risks, opportunities or disclosure information. | Does reuse preserve the investor-focused IFRS S1 objective and address residual differences? |
| Entity-developed source | A bespoke metric or method when prescribed sources are insufficient. | Can users understand the definition, method, assumptions, limitations and validation? |
Rule
NON-EQUIVALENCE WARNING
Using a GRI, ESRS or other metric as a source under IFRS S1 does not make the underlying framework equivalent to IFRS S1. Scope, materiality, boundary, purpose and disclosure detail must still be tested.
8. The SASB applicability matrix
Figure 2. The applicability matrix preserves the evidence behind industry, topic and metric decisions and separates internal judgement from public source disclosure.
In practice
| Field group | Recommended fields |
|---|---|
| Decision identity | Decision ID; entity or business unit; reporting period; owner; reviewer; approval date; status. |
| Business activity | Activity description; products or services; geography; revenue, assets or other scale evidence. |
| Industry selection | SASB sector and industry; alternative industry considered; reason for selection. |
| Topic assessment | Disclosure topic; linked risk or opportunity ID; applicability; materiality conclusion; evidence. |
| Metric assessment | Metric code and title; technical protocol reviewed; activity metric; data availability; boundary. |
| Decision | Use as issued; modify; supplement; replace; not applicable. |
| Differences and sources | Modification; replacement or supplementary source; definition and method differences. |
| Publication | Metric register ID; source note; disclosed industry; significant-judgement note; report location. |
Hypothetical scenario
HYPOTHETICAL SCENARIO
CityLink Mobility is a fictional listed group with an app-based ride platform, a vehicle-leasing business and an electric-vehicle charging network. The parent’s market classification points to software, but the group’s material activities span technology, transportation services, asset financing and charging infrastructure. The reporting team therefore evaluates several SASB industries rather than selecting one Standard solely from the parent-company label.
Illustrative only. It shows how the decision is made, not wording that can be copied or relied on.
In practice
9. Hypothetical example: a mobility platform
| Assessment | Illustrative decision |
|---|---|
| Platform data security topic | Applicable to the digital platform; relevant SASB metric used as issued with the protocol and incident population documented. |
| Driver safety topic | Applicable to the platform activity; the issued metric is modified because the group does not employ all drivers. The denominator and event population are explained. |
| Vehicle-fleet emissions topic | Applicable to leased vehicles; supplemented with a value-chain metric because customer vehicle use extends beyond the consolidated accounting group. |
| Charging-station availability | A SASB metric from a candidate industry is not sufficiently representative; replaced with an entity-developed uptime and utilisation metric linked to the material opportunity. |
| Minor advertising activity topic | Not applicable and not material. The conclusion is retained internally; no separate public discussion is necessary because it is not a significant judgement. |
10. Illustrative source and metric disclosure
Why this works: the wording identifies industries and sources actually applied, explains a material modification and an entity-developed replacement, and avoids claiming that every candidate industry or metric was adopted. The public note should be supported by the full applicability matrix, metric methodologies and approval record.
Hypothetical scenario
ILLUSTRATIVE WORDING — ADAPT TO FACTS
In identifying industry-based disclosures for our digital mobility platform, vehicle-leasing and charging activities, we referred to and considered the applicable SASB Standards. We applied disclosure topics from the Internet Media & Services and Car Rental & Leasing industries and considered additional topics from infrastructure-related industries. The driver safety incident rate is based on a SASB metric but has been modified to cover active platform drivers and completed journeys; it is therefore not directly comparable with an employee-based rate. The charging-network uptime metric is entity-developed because the candidate industry metrics did not faithfully represent the availability risk identified by management. Definitions, boundaries, methods and limitations are provided with each metric.
Illustrative only. It shows how the decision is made, not wording that can be copied or relied on.
In practice
11. Weak versus stronger SASB wording
| Weak wording | Why it is weak | Stronger wording pattern |
|---|---|---|
| “We report in accordance with SASB.” | The relationship with IFRS S1, industry, metrics and actual reporting basis are unclear. | Identify the SASB industries, topics and metrics applied and describe the IFRS S1 reporting basis accurately. |
| “All SASB metrics are material.” | SASB supports likely investor relevance but does not replace entity-specific materiality. | Document applicability and material information for each topic and metric. |
| “The group is classified as technology, so only one Standard applies.” | Legal or market classification may not represent diversified activities. | Select industries using business-model and activity evidence and consider multiple Standards. |
| “Metric X is SASB-aligned.” | The metric may have been modified without explanation. | Identify the source, code, definition differences, method, boundary and comparability limitation. |
| “No SASB metric exists, so no disclosure is required.” | IFRS S1 still requires material information and permits additional sources or entity-developed metrics. | Use the IFRS S1 source hierarchy and develop a transparent metric where necessary. |
In practice
12. Common mistakes
| Mistake | Why it creates risk | Correction |
|---|---|---|
| Selecting industry only at parent-company level. | Material subsidiary and activity profiles can be missed. | Map actual activities and use more than one industry where necessary. |
| Reviewing metric titles but not technical protocols. | Boundary and calculation differences remain invisible. | Record protocol review and compare the method with available data. |
| Treating SASB topic inclusion as automatic materiality. | The disclosure set can become cluttered and entity-specific matters may be missed. | Link the topic to the identified risk or opportunity and assess material information. |
| Silently modifying metrics. | Users infer comparability that does not exist. | Explain source differences under IFRS S1.50 and apply change control. |
| Stopping when SASB does not cover an emerging matter. | The entity can omit material information merely because the industry Standard is incomplete. | Consider permitted additional sources and entity-developed information. |
| Publishing the full applicability matrix. | Internal commercially sensitive evidence and immaterial decisions can obscure the report. | Disclose sources and significant judgements; retain detailed working papers internally. |
| Using an exposure draft as though final. | The issued reporting basis may be misstated. | Record current issued editions and keep proposals as update triggers only. |
In practice
13. Myth versus reality
| Layer | Statement |
|---|---|
| MYTH | IFRS S1 says SASB is optional, so the reporting team can ignore it. |
| REALITY | IFRS S1 requires the entity to refer to and consider SASB topics and metrics in the specified circumstances. What is not automatic is application of every topic or metric. The entity applies judgement and may conclude that a topic or metric is not applicable or that another metric is more useful. |
| PRACTICAL CONSEQUENCE | The working papers need evidence of consideration even when the final public disclosure does not use a particular SASB metric. |
Readiness
14. SASB application checklist
- The risk-and-opportunity register is stable enough to connect SASB topics to identified matters.
- Candidate industries were selected from actual business models and activities.
- Alternative and multiple industries were considered where appropriate.
- Industry descriptions, disclosure topics, metrics, activity metrics and technical protocols were reviewed.
- Each topic has an applicability and materiality conclusion supported by evidence.
- Each metric has a use, modify, supplement, replace or not-applicable decision.
- Modified or entity-developed metrics contain the IFRS S1.50 information.
- Additional sources do not conflict with ISSB Standards and preserve the IFRS S1 objective.
- Sources and industries actually applied are identified for IFRS S1.59 disclosure.
- Significant source-selection judgements are assessed under IFRS S1.74–75.
- Issued SASB editions are recorded; exposure drafts are tracked only as update triggers.
- The applicability matrix, metric register and published source note reconcile.
- Owner, reviewer and governance approval are documented.
In practice
15. Related requirements and next steps
| Requirement | Relationship to this article | Relation |
|---|---|---|
| IFRS S1.54–56 | Sources for identifying risks and opportunities and SASB disclosure topics. | Direct |
| IFRS S1.57–58 | Judgement and sources for preparing material disclosure information, including SASB metrics. | Direct |
| IFRS S1.59 | Disclosure of standards, pronouncements, practices, topics and industries actually applied. | Direct |
| IFRS S1.45–53 | Metrics and targets requirements, including entity-developed metric information. | Supporting |
| IFRS S1.74–75 | Disclosure of significant judgements, including sources of guidance selected. | Supporting |
| IFRS S1 Appendix C | Additional sources that may be considered when conditions are met. | Supporting |
| IFRS S2.23 and 32 | Refer-and-consider role of IFRS S2 industry-based guidance for climate matters. | Comparison / climate |
Sources
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