Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/335204 
Year of Publication: 
2025
Citation: 
[Journal:] Review of Accounting Studies [ISSN:] 1573-7136 [Volume:] 30 [Issue:] 4 [Publisher:] Springer US [Place:] New York, NY [Year:] 2025 [Pages:] 3596-3639
Publisher: 
Springer US, New York, NY
Abstract: 
The Sustainability Accounting Standards Board (SASB) has classified sustainability topics as material or not material for investors. We leverage the staggered release of the SASB classifications from 2013 to 2016 to examine whether and how they prompt changes in U.S. firms’ sustainability performance. We measure sustainability performance using RepRisk scores, which reflect environmental, social, and governance (ESG) incidents. We find that RepRisk scores on sustainability topics classified as material decrease following the release of SASB classifications. Conversely, incident scores on nonmaterial sustainability topics increase. This suggests that firms improve their sustainability performance on topics the SASB deems relevant for investors while simultaneously performing worse on irrelevant topics. Firms adjust their internal sustainability policies to mirror these changes. The changes in sustainability performance occur primarily through two channels. We document that higher exposure to the classifications from shareholder pressure and sustainability-linked executive compensation prompts managers to prioritize sustainability topics classified as relevant for investors over irrelevant ones.
Subjects: 
Corporate sustainability
Materiality classifications
Real effects
Sustainability incidents
JEL: 
G18
K22
L21
M14
M41
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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