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Adding SASB ESG to Electric Utility Reporting and Strategies

Russ Hissom's picture
Owner Utility Accounting Education Specialists -

Russ is the owner of Utility Accounting Education Specialists a firm that provides power utilities consulting services and online/on-demand courses on accounting, finance, FERC best-practices,...

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  • Mar 15, 2021

What is ES&G?

Environmental, Social, and Governance (ESG) and sustainable business practices are a key component of utility strategy. Sustainability measurescan be woven into business planning and financial reporting. This article discusses how.

ESG refers to:

·      E - Environmental - the impact of the company's activities on the environment

·      S - Social - how the company provides for employees, pays attention to safety, is a good community steward, and contributes to the communities in which it operates

·      G - Governance - how the organization conducts business and approaches diversity within its governing structure and board makeup

ESG has hit the mainstream conversation, but actually, ESG has been around for some time. I've been teaching measuring and reporting on ESG in accounting based on industry standards in my classes since 2013, but even before that, organizations like the Global Reporting Initiative (GRI - founded in 1997 - and the Sustainability Accounting Standards Board (SASB - founded in 2011 - have been issuing reporting standards and measures for ESG in any number of industries.

This article discusses the approach of the SASB, since that approach fits well with the accounting/finance/reporting structure of what many US companies follow in other industry accounting standards from the Financial Accounting Standards Board (FASB) and Governmental Accounting Standards Board (GASB).

Utilities lead in sustainability spending and strategy

The utility industry, in general, gets a bad rap when it comes to the E in ESG. Still, dig behind the numbers. You'll find that utilities spend a great deal to support environmental activities in areas such as:

·      Environmental power plant emission controls

·      Energy-efficient approaches to motors and transformers

·      Load management of their system

·      Natural gas usage for vehicles

·      Promotion of energy efficiency programs and load management for customers

·      Installing renewables in their power supply portfolios

One of the more significant drawbacks of reporting this spending is that it can be buried in the utility’s financial statements through the necessity of industry standards' accounting structure based on the Federal Energy Regulatory Commissions’ (FERC) Uniform System of Accounts (USOA). The FERC USOA does not have specific accounts and categories for separately reporting on “E” spending in a manner that reaches out to the financial statement reader.

Utilities are also promoting greater adoption of electric vehicles (EV's), and some have developed incentive rates for EV charging. The EV's fuel source and production of EV's "E" impact are dependent on the power supply portfolio of the utility generating power for EV production or the electric charging source for EV's. So, the E impact is not always as straightforward as may be reported.

SASB standards

The GRI and SASB have stepped in to fill this reporting void and provided guidance and standards to shine a light on ESG efforts by organizations. SASB has established benchmarks and reporting metrics for a number of ESG measures for 77 industry groups, including electric utilities. The latest electric utility standards can be found at under the “Infrastructure Standards”.

Reporting under SASB standards is voluntary for an organization, but SEC entities are rapidly working these disclosures into their filings or issuing separate ESG reports. The SEC is currently evaluating making some form of ESG reporting a requirement of SEC-governed entities.

The SASB standards detail each metric, related inputs, and calculations. For example, some of the standard metrics for the electric infrastructure group include:

·       Greenhouse gas emissions and energy resource planning

·       Air quality

·       Water management (for electric generating utilities)

·       Coal ash management

·       Energy affordability

·       Workforce health and safety

·       End-use efficiency and demand

·       Nuclear safety and emergency management

·       Grid resiliency

The disclosure vehicle and format is generally up to management and management decides what to disclose. That's one of the beauties of the SASB standards - i.e., management can choose which metrics to disclose. In theory, successful measures can be disclosed while the organization is working on less-successful ones before unveiling them to financial statement readers.

ESG impact on bond ratings

The major bond rating agencies: Moody's, Standard & Poors, Fitch, and KBRA; use ESG as part of their weighted bond rating factors. While there is some overlap between the rating agency's ESG views and an organization's ESG reporting, the rating agency's focus is geared towards evaluating factors that may impact the organization's ability to repay bond debt, rather than measuring progress towards ESG goals.

The agencies evaluate some of these factors:


-     is there sufficient funding for environmental obligations?

-     is the organization vulnerable to environmental pressures?


-     is the organization vulnerable to safety issues? Have they addressed these issues?

-     does the organization have contractual obligations that may impact its ability to repay debt?


-     are the organization's internal controls sufficient?

-     is the oversight board independent of the organization?

-     has the organization addressed cybersecurity issues?

Practical usage of ESG standards

While use of SASB standards is optional, the list of utilities disclosing ESG continues to grow. This begs the question, "What are some of the tangible and intangible advantages of ESG disclosures?" Here are some thoughts:

1.    SASB metrics provide a tool to highlight the benefits of spending and strategy already being done by a utility for financial statement readers

2.    ESG metrics guide business planning, budgeting, and measurement towards meeting ESG goals

3.    SASB metrics can be used as economic development and marketing tools as part of an overall package presentation to businesses wishing to locate in a community whose electric utility/coop practices ESG principles

4.    ESG reporting can also be used as a community marketing tool to attract potential residents who use ESG to consider where they will locate their homes

Further considerations and comments

An excellent template example on SASB standards reporting is this report from Alliant Energy , a Midwest investor-owned utility.

While SASB standards are voluntary, given the direction the SEC is moving towards requiring some form of ESG disclosures, it would be prudent to know and understand current reporting standards and plan to incorporate some form of ESG reporting into your electric utility or cooperative’s financial reporting.

Russ Hissom is the owner of Utility Accounting Education Specialists (UAES), a company that offers online, on-demand, and custom utility accounting and finance business process courses; and thought leadership. You can reach him at The website has a wealth of classes, articles and other online resources that will benefit your utility’s accounting and customer ratemaking strategies.


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