SUSTAINABILITY STANDARD SETTING: DIVERSITY AND INCLUSION AS AN EXAMPLE

Standard-setting bodies have long recognized that reporting requirements should be analyzed with a cost-benefit perspective. The International Sustainability Standards Board has noted it will follow the old Sustainability Accounting Standards Board’s (SASB’s) industry-based standard-setting approach when setting sustainability standards. This study investigates the value of industry-based standard setting for disclosure of one construct that falls within the sustainability umbrella: diversity.  The SASB industry-based approach, or its classification of diversity as “material” for specific industries, appears flawed.  Standards should certainly be set to provide information that investors are demanding, but any specific requirements should also consider the cost of disclosures in relation to benefits to investors and other stake-holders.