Former FASB member Marc Siegel joins SASB
Marc Siegel, a longtime member of the Financial Accounting Standards Board, is now joining the Sustainability Accounting Standards Board.
Siegel served for nearly a decade on FASB, helping set many of its major recent standards. He completed his second and final term at the end of June 2018 and is currently a partner in Big Four firm Ernst & Young’s financial accounting advisory service practice.
“My passion has always been around corporate reporting, whether it's inside the financial statements or outside the financial statements,” Siegel told Accounting Today. “The information that investors are using to make their investing decisions comes from a whole host of different things. To me, SASB is a natural extension of what I did at the FASB and what I've always been interested in, which is the whole realm of communications between companies and their investors in order to make informed investment decisions.”
The SASB Foundation announced Thursday he has been appointed to join SASB, which has been promulgating standards related to sustainability reporting. “We are pleased to welcome Marc to the Sustainability Accounting Standards Board,” said Bob Steel, who chairs the foundation's board of directors, in a statement. “Marc’s reputation, knowledge and experience will further enhance the important work of the standards board and we look forward to his contributions.”
Siegel sees more interest in sustainability issues from investors, in addition to financial reporting. “There has definitely been much more focus by investors on ESG- [environmental, social and governance] related issues,” he said. “I was just looking at a report by Edelman that came out a couple of months ago that talks about how 90 percent of U.S. investors have changed their voting and/or engagement policy to be more attentive to ESG risks, and of those two-thirds of them said they have changed their policy in the last year, so this has definitely been an ongoing thing. And it seems to me that the investors have definitely taken it to the next level, particularly with Vanguard and BlackRock issuing CEO letters to companies about how they're going to be engaging with issuers and preparers about these kinds of issues. To me that was sort of the tipping point. This is becoming more of a mainstream thing when passive investors are now starting to take notice of these issues.”
He sees some similarities between the ways SASB and FASB work. “Much of the governance structure and much of the due process structure was mirrored after the FASB type of due process and governance structure,” said Siegel. “There's a governance board that's called the SASB Foundation that sits above the standards board. The standards that the SASB just issued that were recently codified in November were all done with due process. In other words there were exposure drafts where people had public ability to make comments and give feedback to the SASB. The meetings that the board members held were held in public and could be viewed. A lot of the infrastructure and due process — there's a conceptual framework as well — are very similar in my understanding to the FASB structure.”
Siegel will be working with some of his former FASB colleagues at SASB, including Jeffrey Hales, who chairs SASB. “I overlapped Marc when I was a research fellow at the FASB and have followed his work as a board member since then, so I have a lot of respect for Marc and all he has accomplished,” Hales said in a statement. “Marc is well known and widely respected for his commitment to improving transparency and communications between preparers and the capital markets, which aligns perfectly with our mission at SASB.”
Siegel has a long career in the accounting profession. Besides his work at FASB and EY, he led the sccounting research and analysis team at the RiskMetrics Group; and before that, he was the director of research at the Center for Financial Research & Analysis, prior to its acquisition by RiskMetrics. He joined CFRA in 2001, after spending 10 years at Arthur Andersen as an auditor and a consultant focusing on litigation support. Siegel is a CPA and a member of both the American Institute of CPAs and the New York State Society of CPAs, and he has served on the FASB Investors Technical Advisory Committee from 2007 to 2008.
The mission at SASB
Last November, SASB published a set of 77 industry-specific sustainability accounting standards to help businesses to identify and communicate what they are doing in the sustainability area to investors. It has also been working to harmonize its standards with other groups such as the International Integrated Reporting Council and its Corporate Reporting Dialogue.
“They're looking for something that is market-driven that will serve as a good communication tool, that will focus in on the issues in their particular sector that are more relevant for them,” said Siegel. “That’s how SASB went about building the standards that they did, sector by sector. I think where there are specific issues they will try to converge them more, sooner rather than later. That's particularly the case with climate change and the Task Force on Climate Change that was run out of the Financial Stability Board. I think they're going to try to figure out a way to enhance those stands, but now that the SASB standards have been codified, there needs to be a period where those are implemented and they can't be changing every single quarter. Companies need to adopt the standards and there needs to be an approach that will allow there to be a stable platform while also staying flexible enough where, if need be, some of the metrics can be changed or tweaked to best reflect the cost benefit.”
He is seeing more companies beginning to use the SASB standards in their sustainability reports, including Nike, JetBlue and Merck.
“I’ve been pleasantly surprised that there have been some companies that have employed some of the standards even before they were codified,” said Siegel. “Now that they've been codified, I'm sure there will be more companies that are looking to give information to investors that they know has already been negotiated and there's been a due process around them. They’re still voluntary disclosures, but more companies, especially the larger companies, are already doing sustainability reports. This just provides a set of comparable and consistent metrics for them to provide to investors that will be useful in their decision making.”
Siegel believes companies should still have flexibility about where they provide the sustainability information. “There's been a lot of questions over time about where these metrics should be included, whether they should be included in the 10-K or not in the 10-K, or audited or not. To me, at this stage of the game, it’s much more about the quality of the content of the metrics, as opposed to the geography of the metrics. If they're in a sustainability report or if they're in the unaudited part of a 10-K, that's less important to me than just having them be available somewhere for investors to use to build that fundamental, consistent and comparable set of information that people can use to make their investment decisions.”