With increasing numbers of companies participating in S&P Global’s Corporate Sustainability Assessment (CSA) due to its relevance for the stakeholders, being up-to-date regarding the latest methodology changes is a priority. Speakers Lim Adriaenssens, Senior ESG Benchmarking Specialist at S&P Global Sustainable1, and Nikkie Vinke, Director Communication at Finch & Beak, summarized the key take-aways from last week’s in-person training in Amsterdam.

S&P Global’s highlights on main challenges regarding three key CSA criteria

Climate Strategy: More companies evolved their focus from risk management to scenario analysis to better understand how climate change will impact their business under different potential future scenarios and then translate it into adaptation plans.

Only 1 in 5 CSA-assessed companies have a physical risk adaptation plan, even if S&P Global expects that investments in adaptation will increase in the near future. In addition, almost 50% of the companies will implement an adaptation plans within 10 years while only a third have already implemented them or aim to do within 5 years – which is S&P Global’s expected best practice.

Supply Chain Management: For the critical supplier identification question, the critical component category is the most widely used while the non-substitutable suppliers are not commonly used as a criterion for criticality. In addition, there is a lack of transparency on supply chain spending while companies do not have problem to report on how they integrate ESG requirements in their procurement process.

Based on the CSA 2022 results, human rights commitments (covering suppliers) are broadly adopted by companies, while companies underreport on the due diligence process compared to the actual assessments being done. In addition, very few companies have already included Scope 3 emissions into their net-zero targets.

Biodiversity: The highest shares of companies which have already conducted a biodiversity assessment are found in the Materials, Utilities and Energy sectors. However, biodiversity and no-deforestation commitments are not yet broadly adopted.

For biodiversity commitments, companies have mainly focused on their own operations for now and target years are relatively far in the future with an average around 2030. Furthermore, biodiversity commitments are already more commonly present than no-deforestation commitments.

Insights from practice: ASML’s Road to Net Zero

A concrete example on climate strategy came from ASML, an innovation leader in the semiconductor industry, whichhas set the target to achieve net-zero greenhouse gas emissions in the value chain by 2040.

In its net-zero roadmap, ASML has split out across sub-targets for Scope 1, 2, 3 by 2025, 2030 and 2040. The company has done this in order to have clearer idea on the different business categories and the improvement levers for each of them. In order to tackle the most impactful downstream and upstream sources of Scope 3 emissions, the company collaborates with its suppliers as well as within the semiconductor industry to set out activities as part of its roadmap.

Insights from practice: Nature, Natural Capital & Biodiversity

In order to align companies with the global target set at COP 15 to protect 30% of the world’s land and oceans by 2030, Stewart Lenton, SLR’s Natural Capital & Nature Lead, illustrated the main approaches to assess a company’s exposure to biodiversity.

New frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD) and Science-Based Targets for Nature (SBTN) are helping companies to analyze, manage and disclose the risks and opportunities related to biodiversity, and to set targets to reduce negative impacts. However, as 2030 is approaching quickly, companies shouldn’t wait until all the standards are crystal clear: action is required now.

To understand impacts and dependencies of the supply chain related to biodiversity, practical steps were therefore suggested such as locating and mapping company’s supply chain, identifying high-risk supply chain products and the best tool available to understand risks, or start building strategy/set targets using SBTN and develop actions for it.

New changes: CSA 2023 timeline and methodology updates

The main updates for the 2023 CSA methodology have been announced by S&P Global to companies on March 6th. The following are the main drivers behind the methodology changes:

1. Simplified structure of the questions, some have been deleted or consolidated into other criteria.
2. Restructured of some topics in order to do not have duplicates in qualitative and quantitative data.
3. Division of the Real Estate industry into two separate industries, bringing the total number of industries in the CSA to 62.

These changes and adjustments were made in order to align the CSA with recognized standards and frameworks such as SBTi, CDP, TCFD and TNFD, but also to stay ahead of industry trends, to provide forward-looking data for investors, and to encourage companies to make their disclosures publicly available.

Regarding the timeline for participation and submission of the CSA questionnaire, companies now have the opportunity to select two-month assessment windows starting from April 4th, with the July-August window as the last chance to be considered for the Dow Jones Sustainability Index, and August-September window as last opportunity to be considered for the Sustainability Yearbook 2024. To conclude, the last assessment window will start in December of this year.

Eager to improve your 2023 CSA score?

Eligible companies looking to be included or improve their position on the Dow Jones Sustainability Index, which are selected based on the CSA scores, are advised to get ready for the release of the new S&P Global Company Sustainability Assessment on the 4th of April.

If you are looking for personal guidance in the assessment process, please contact Gijs-Jan Groeneveld at gijs-jan@finchandbeak.com or call +31 6 28 02 18 80 to discuss how Finch & Beak can help you improve your ESG performance.

Photo by Vita Maksymets on Unsplash.