FASB

The Financial Accounting Standards Board (FASB) is the independent, private-sector organisation that establishes financial accounting and reporting standards in the United States. The standards it issues form US Generally Accepted Accounting Principles (US GAAP), which public and many private companies follow when preparing their financial statements.

What FASB is and how it works

Founded in 1973, FASB is a non-profit body that operates under the oversight of the Financial Accounting Foundation (FAF). Its mission is to develop and improve US GAAP to ensure that financial reporting is transparent, consistent and comparable. It issues Accounting Standards Updates (ASUs) and maintains the FASB Accounting Standards Codification. Internationally, it works alongside the International Accounting Standards Board (IASB), the body responsible for IFRS Accounting Standards.

FASB and sustainability: what it does and does not cover

It is a common misconception that FASB sets greenhouse gas or climate disclosure rules. It does not. FASB's remit is what appears in the financial statements; it does not set standards for measuring or disclosing an entity's greenhouse gas emissions. In the United States, climate-related disclosure rules have been pursued by the Securities and Exchange Commission (SEC), while at the international level dedicated sustainability disclosure standards are issued by the ISSB (for example IFRS S2).

Where FASB does intersect with sustainability is in the accounting for sustainability-related transactions. In May 2026 it issued ASU 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818), which sets out how companies recognise, measure, present and disclose environmental credits (such as carbon credits and renewable energy certificates) and the obligations that may be settled with them. For public business entities the guidance applies to annual periods beginning after 15 December 2027, with early adoption permitted.

Why this matters for companies with climate goals

As more organisations buy and retire environmental credits to support carbon neutrality or net-zero claims, the accounting treatment of those instruments affects reported assets, liabilities and results. Clearer rules improve comparability between companies and reduce the risk of inconsistent or misleading reporting of offset purchases.

How it fits with emissions reporting

FASB accounting and emissions reporting are complementary but separate. A company still measures its carbon footprint using frameworks such as the GHG Protocol and discloses it under sustainability frameworks, while FASB governs how the financial effects of related transactions appear in the accounts.

At Manglai we help companies measure their carbon footprint and prepare their sustainability reporting, so that climate data and financial reporting tell a consistent story. Discover how Manglai can help you.