Leveraging S&P Global's CSA as a Roadmap for CSRD

A look into how your S&P Global CSA participation allows you to armor up for the forthcoming CSRD
Leveraging S&P Global's CSA as a Roadmap for CSRD
Publ. date 9 Oct 2023
Earlier this year, the European Commission issued the Corporate Sustainability Reporting Directive (CSRD), a new EU regulation that will require companies to disclose detailed information about their sustainability performance. With large companies having to comply from 2025 (reporting on 2024 data), companies in the EU are bracing for a transformative shift in sustainability disclosure.

The S&P Global Corporate Sustainability Assessment (CSA) is an ESG rating tool that helps companies identify and disclose their sustainability risks and performance covering a wide range of sustainability topics. It provides participating companies with a score that reflects their ESG performance, which can be used by investors, customers, and other stakeholders to make informed decisions. and identifying areas of improvement.

Exploring how the CSA can serve as a compass for companies navigating the complexities of CSRD compliance, this article provides insights on the alignment between the CSA's comprehensive sustainability coverage and the CSRD's mandated disclosure themes.

The CSA offers a wide range of sustainability topics, many of which overlap with the requirements of the CSRD. This overlap can assist companies in identifying the sustainability topics needed for disclosure, collecting and analysing sustainability-related information, developing ESG targets and metrics, and receiving valuable feedback on their sustainability performance, ultimately supporting enhanced environmental, social, and governance stewardship within the forthcoming regulatory landscape.

While ESG metrics are vast and vary by industry, company size, company location and complexity, there are still synergies across the sustainability topics. The S&P Global CSA covers the main disclosure themes for the CSRD, including:

  • General Disclosure, which covers governance structure, risk governance, risk management practices, and approach to sustainability, whereas themes such as emerging risks stick more with CSA only. The double materiality focus has been adopted by S&P Global, assessing the involvement of external stakeholders in identifying material issues and metrics.
  • Climate Change, which covers greenhouse gas emissions, efforts to reduce emissions, climate-risk management and resilience to climate change risks. Risk and opportunities analysis is a highlighted topic in the CSA for both physical and transition risks, and it also assesses a company’s emission reduction targets.
  • Pollution, which covers air pollution, water pollution, and waste management. This criterion is applied across various industries, even more so for industries with heavy impact. While the CSA introduces a trend-line element, the CSRD takes a more standardised reporting approach.
  • Water & Marine Resources, which covers use of water resources and impact on marine ecosystems. The CSA and CSRD both request disclosure with regards to water consumption, withdrawals, discharges, as well as exposure to water stressed areas water risk management for suppliers for industries of higher water-related impact.
  • Biodiversity & Ecosystems, which covers impact on biodiversity and ecosystems, including biodiversity risk assessment and mitigating actions. With a focus on direct and indirect impact drivers of biodiversity loss and ecosystems, participating in the CSA facilitates the collection and disclosure of related biodiversity information, including conducting a biodiversity risk assessment.
  • Resource & Circular Economy, which covers use of resources and its efforts to promote a circular economy, including energy consumption and commitments related to circularity. As the CSRD focuses on resource use, resource outflows related to products and services, as well as waste, the CSA allows for the collection of data with regards to circularity topics.
  • Own Workforce, which covers employment practices, including diversity and inclusion, gender pay indicators, working conditions, and occupational health and safety. As a company is requested to collect a wide range of data with regards to its own workforce, the CSRD might require an additional set of policies.
  • Workforce in the Value Chain, which covers due diligence practices for a company’s supply chain, including its efforts to prevent human rights abuses and environmental damage. S&P Global assesses whether a company has policies and procedures in promote equal opportunity, and address child and forced labour, as well as working conditions, all of which are requested by the CSRD.
  • Consumers and End-Users, which covers products and services, including their environmental and social impacts, as well as engaging with consumers. Industries with higher impact also have additional criteria in the CSA, such health and nutrition for food and beverage companies as well as financial inclusion for banks. While these topics are not covered as straight-forwardly as CSRD as it is generally industry-agnostic, the impact of products and services is deemed material for both.
  • Business Conduct, which covers anti-corruption and bribery practices, as well as its efforts to promote responsible business conduct, including reporting on breaches, freedom of association and collective bargaining, political engagement, and compliance with codes of conduct and ethics, which are covered in both the CSA and CSRD.

To learn more about how the CSA aligns with the General Requirements of the European Sustainability Reporting Standards (ESRS) issued by the CSRD, download our analysis in the attached.

The questions and criteria in the CSA are aligned with the CSRD's requirements across its disclosure themes. This can help companies to identify the sustainability issues that are most material to their business and to start collecting data on their performance in these areas. While the CSA preselects the material issues based on industry, the CSRD is industry-agnostic and the material issues are based on what is deemed material through conducting the double materiality assessment.

It is good to keep in mind that the effort put in closing the gaps when participating in the CSA may yield gains in CSRD preparedness. Practicing through responding to the CSA can help companies practice data collection with the provision of a score that can inform companies on how well they are performing and disclosing prior to the CSRD coming into effect as of 2025. By participating in the CSA, companies can gain the knowledge and insights they need to comply with the CSRD and to communicate their sustainability performance effectively, and start proactively preparing for CSRD compliance.

While the CSA provides a roadmap for CSRD readiness, it is not a comprehensive tool to prepare for disclosure in accordance with the directive. Want to ensure that you are CSRD ready? In just 5 days, Finch & Beak could provide you with full visibility of your CSRD gaps. Finch & Beak could help you understand and prepare for the CSRD, future-proof your company for upcoming regulations and fast-track your CSRD alignment.

Finch & Beak enables companies across various sectors to gain a deep understanding of S&P Global’s CSA, its structure, relevance, and how to unlock the full potential of their participation in the assessment. Along with our benchmarking tools across ESG rating systems such as the ESG Streamliner, we have prepared an acceleration checklist for CSA activation, to help drive your company’s sustainability performance. To know more, and to further discuss how to make the most of the array of benchmarks to mobilize your sustainability action, please contact Johana Schlotter at Johana@finchandbeak.com or call +31 6 28 02 18 80. 

About Dena Maraka

Dena provides analytical support in ESG consulting projects including assisting clients in enhancing their sustainability reporting and operational performance. 

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