Raising the Bar for the 2021 Corporate Sustainability Assessment

Our summary of the S&P Global's webcast on methodology changes
Raising the Bar for the 2021 Corporate Sustainability Assessment
Publ. date 4 Mar 2021
During a webcast, S&P Global announced the methodology changes for the 2021 Corporate Sustainability Assessment (CSA), that opened on Tuesday 6 April 2021. The updates are significant compared to the previous years’ changes and the majority of them concern all industries. Download our summary of the methodology changes to review which of the updates are applicable to your industry, and what you should be prepared for.

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Every year, S&P Global raises the bar of its CSA and applies methodology changes to identify the world's ESG leading companies. These changes are motivated by different factors, including evolving trends and emerging material issues, company engagement, alignment with thought leaders and the most important sustainability reporting standards such as CDP, GRI, and TCFD. And finally, the investor audience which makes use companies’ ESG scores also provide input for which elements they would like to see assessed in the CSA.

This year, S&P Global has announced methodology changes which concern 22 criteria. From these, changes across 12 criteria are applicable for all 61 industries, while the changes across the remaining 10 criteria concern specific industries. Altogether, 16 new questions have been introduced, and 29 questions have been updated as part of this year’s CSA methodology changes. The most important methodology changes are found in the fields of Climate Strategy, Labor Practice Indicators, and Talent Attraction & Retention, and are applicable to all the companies assessed in the CSA.

Highlighted changes for the 2021 CSA

Climate Strategy
S&P Global has updated this criterion to further align with the Task-Force on Climate-related Financial Disclosure (TCFD) and the EU Taxonomy Regulation. Two climate risk assessment questions were added to replace the question on scenario analysis. Two other questions were introduced to assess whether companies apply the Task Force on Climate-related Financial Disclosures (TCFD) framework in management of climate-related risks and opportunities and have a plan to adapt to identified physical climate risks. These changes are applicable to all industries.

Labor Practice Indicators
This criterion has been reviewed to reflect the ongoing developments in the fields of diversity, inclusion and equity. The main changes include that companies are now assessed on the quality of their non-discriminatory and anti-harassment policy, and on inclusive labor practice indicators beyond gender diversity. This also aims to prepare companies for upcoming regulatory and investor requirements. These changes are applicable to all industries.

Talent Attraction & Retention
This criterion was updated to include three new questions to assess companies’ ability to attract qualified and talented employees, and companies’ human capital management using data analysis. In addition, two questions were updated to allow for greater transparency in data breakdown. These changes are applicable to all industries.

Human Capital Development
The Training and Development Inputs question has been amended to incorporate the aspects of coverage and data breakdown (into groups such as age, gender, management level, race/ethnicity and types of training), and to reward companies that publicly report on this topic. In addition, the Return on Employee Development Investment question has been deleted. These changes are applicable to all industries.

Human Rights
S&P Global updated all the questions in this criterion to incorporate new elements concerning the companies’ human rights commitments and due diligence processes. This change was motivated by a need to better align with the most relevant frameworks on the topics of business and human rights. These changes are applicable to all industries.

Risk & Crisis Management
The structure of the Emerging Risks question has been updated to further clarify and specify S&P Global’s expectations. In this regard, a list of requirements that need to be met for a risk to be considered emerging has been added to the question to facilitate companies’ understanding of this question. These changes are applicable to all industries.

Biodiversity
The application of this criterion has been extended to include companies producing agricultural commodities. Next to this, one new question was introduced to assess companies on their no-deforestation commitment and target. Additionally, two questions on the companies’ commitment and exposure & assessment were expanded to include scope and supporting evidence. These changes are applicable to 16 industries.

Food Loss & Waste
This new criterion has been introduced to assess companies’ preparedness in dealing with food loss and waste issues and is applicable to the consumer services industries. S&P Global now looks at organizations’ programs and performance to manage food loss & waste volumes. These changes are applicable to 9 industries.

Living Wage
As the topic of Living Wage has become more prominent with governments around the world establishing minimum wages for all workers in their respective countries, S&P Global has now moved this criteria from the Future Questions section to the scored part of the CSA. In addition, the criterion was updated with one question newly introduced concerning companies’ commitment to living wage. Moreover, the question on methodology was expanded to include the scope of the assessment. These changes are applicable to 44 industries.

Occupational Health & Safety
S&P Global has expanded the types of metrics companies can use to report on Lost Time Injury Frequency Rate (LTIFR) and Total Recordable Injury Frequency Rate (TRIFR). These changes are applicable to 44 industries.

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About Agathe Letzelter

Young professional enthusiastic about helping businesses integrate and benefit from sustainability. | agathe@finchandbeak.com

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