A Sustainable Standard When Accounting For Marketing

The Sustainability Accounting Standards Board (SASB) seems to have been remarkably successful. They have recruited some well-known board members, including Michael Bloomberg, Mary Schapiro (former SEC chair), and Laura Tyson (former London Business School Dean). This has helped them raise their profile.

SASB issue best practice guidance on how firms should report their activities. Interestingly they have issued some guidance for those involved in the “advertising and marketing industry”. Their guidance covers three topics relevant to sustainability.

  • Advertising Integrity
  • Data Privacy
  • Workforce Diversity & inclusion

Integrity includes disclosures of fines, campaigns reviewed for adherence with the Advertising Self-Regulatory Council’s Standard, and Campaigns that promote harmful products and services.

Complying with the Data Privacy standards involves “Discussion of policies and practice relating to behavioral advertising and consumer privacy”. (SASB, 2014, page 8). It also involves disclosing fines and settlements to do with privacy, and data on the targeting of impressions to customer audiences.

Finally, Workforce Diversity and Inclusion includes disclosing the gender and racial/ethnic composition of executives, professionals and others.

One of the things I found interesting was how SASB explained activity metrics. Activity metrics should:

  • Convey contextual information
  • Be deemed generally useful by investors
  • Be explained and be consistently disclosed from period to period.

This all seems to be a move in the right direction. SASB are making best efforts to come up with something practical that can be enacted and be useful in promoting best practice and shining light on some of the practices in the advertising industry. (I’m not saying advertising is worse than any other industry — I believe in shedding as much light as many places as one can shed it.) I hope SASB continue to be successful in improving the disclosure of relevant information.

Read: SASB (2014) Advertising & Marketing Sustainability Accounting Standard, (Provisional), December.