Pure Play 101
What is pure play?
A pure play is a company that focuses all of its efforts on a single business, product, or industry
What is pure play in sustainability?
To group industries based on their sustainability impacts, where other traditional classification systems take either a supply-side, production-oriented approach or a demand-side, market-oriented approach to classifying companies, sustainability frameworks such as SASB (Sustainability Accounting Standards Board) use a methodology focused on impacts from risks and opportunities, which can have implications for either side. It builds on and complements traditional classification systems by grouping companies into industries based on their value creation model, their resource intensity and sustainability impacts, and their sustainability innovation potential.
Why should we care?
Just as a price-to-earnings ratio is assessed in the industry context (since different industries have different norms for this ratio), it is extremely useful to analyze sustainability data, such as carbon emissions or employee safety, in an industry context.
Setting the Standards on an industry-by-industry basis is another way to balance cost-effectiveness and decision-usefulness. By grouping topics and metrics by industry, companies can focus on collecting and reporting the information most relevant to their business model and corresponding sustainability risks and opportunities, reducing the cost burden of reporting by narrowing disclosure scope to the most relevant information.
Industry specificity supports decision-usefulness by structuring the information most relevant to the industry-specific value drivers.
