The Sustainability Accounting Standards Board (SASB) seems to have been remarkably successful. They have recruited some well-known board members. These have included Michael Bloomberg, Mary Schapiro (former SEC chair), and Laura Tyson (former London Business School Dean). This has helped them raise their profile. They have been working on a sustainable standard when accounting for marketing.
A Sustainable Standard When Accounting For Marketing
SASB issues best practice guidance. This covers how firms should report their activities. They 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, Privacy
Integrity includes disclosures of fines. This also involves having campaigns reviewed for adherence with the Advertising Self-Regulatory Council’s Standard. What is more campaigns that promote harmful products and services should be disclosed. That makes sense. Go beyond even the ethics. One can see bad practice as a reason to doubt the sustainability of the firm. Enron? Plus the hero always survives in Hollywood movies. The villain never does. Except in horror movies. Being a psychopath in horror movies seems to give you multiple lives.
Complying with the Data Privacy standards involves its own set of challenges. SASB don’t ask too much.
Discussion of policies and practice relating to behavioral advertising and consumer privacy.
SASB, 2014, page 8
Basically, they want you to at least say what you are up to. It isn’t too much to ask.
Having a good policy also involves disclosing fines and settlements to do with privacy. I guess not getting fined is best. But holding up your hands is a pretty good second.
Also included is giving data on the targeting of impressions to customer audiences. This is a big topic. More to come I’m sure.
Diversity And Inclusion
Finally, Workforce Diversity and Inclusion includes disclosing the gender and racial/ethnic composition of executives, professionals, and others. Again, it is easy to see why this is important. The link to sustainability may be less than perfectly direct. Still, a push for the industry. This can’t be a bad thing.
Activity Metrics
I found it interesting 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.
These should actually inform. I’m all for metrics being useful. there are challenges here. How do we decide what is generally useful? But the conversation is a good one to have.
A Sustainable Standard When Accounting For Marketing
This all seems to be a move in the right direction. SASB are working to come up with something practical. The idea is that this can be enacted. If so it will be useful in promoting best practice. It should shine a light on some of the practices in the advertising industry. (I’m not saying advertising is worse than any other industry. I generally believe in shedding as much light as many places as one can shed it.) I hope they continue to be successful in improving the disclosure of relevant information.
For more on sustainability see here, here, and here.
Read: SASB (2014) Advertising & Marketing Sustainability Accounting Standard, (Provisional), December. For the latest SASB standards see here.