Which SASB Five-Factor Test factor highlights geography and regulatory intensity, with some industries more regulated?

• A. Factor 3: Industry Norms, Best Practices & Competitive Drivers
• B. Factor 4: Stakeholder Concerns & Social Trends
• C. Factor 2: Legal, Regulatory, and Policy Drivers (SASB's Five-Factor Test)
• D. Factor 5: Opportunities for Innovation

Answer: (C)

Legal, regulatory, and policy drivers describe how where you operate and how strictly rules are enforced shape a company’s sustainability risks and opportunities. Geography matters because regulatory regimes differ by country and region, and some industries face heavier oversight due to potential societal or environmental impacts. This factor specifically captures how regulatory intensity, permitting and compliance demands, and policy shifts across jurisdictions influence risk exposure and strategic decisions. That focus makes it the best fit for highlighting how location and regulation shape sustainability profiles.

The other factors touch on different angles: industry norms and competitive dynamics look at peer practices; stakeholder concerns and social trends address external expectations; and opportunities for innovation concerns new ideas and technologies. They don’t zero in on the legal and regulatory landscape in the way this factor does.