Which statement best characterizes when a SASB topic is considered material?

• A. A topic is material if it could have a potential financial impact and influence investment decisions.
• B. A topic is material if it is relevant to corporate culture.
• C. A topic is material only if regulated by government.
• D. A topic is material if it has a given ESG score.

Answer: (B)

In SASB, materiality is about financial relevance to the company and usefulness for investors. A topic is material if it could have a potential financial impact on the enterprise and could influence investment decisions by users who rely on this information. Corporate culture, while important for governance and operations, isn’t the criteria SASB uses to define materiality. Regulation by government isn’t required for a topic to be material, since some material topics are voluntary or driven by market expectations. An ESG score itself doesn’t determine materiality; scores are ratings, not the measure that defines whether a topic could affect financial results or investment decisions. So the best statement is that a topic is material if it could have a potential financial impact and influence investment decisions.