DJSI: Increasing Standards, More Transparency

Only 35% of assessed companies are aligned with TCFD requirements
DJSI: Increasing Standards, More Transparency
Publ. date 21 Dec 2021
Reflecting emerging issues and new frameworks, the 2021 Corporate Sustainability Assessment (CSA) raised the bar on topics including diversity, equity & inclusion, climate scenario analysis, and biodiversity. Last December, S&P Global conducted a webcast on the Corporate Sustainability Assessment (CSA) 2021 results and methodology. Download our free summary of webcast's highlights in the attachment of the article.

Downloads

The 2021 participation rate surpasses the record high year 2020

While already in 2020, the participation rate increased by 19% over 2019, the CSA participation rate 2021 broke that record with an increase of 33% compared to the previous year. In this year’s assessment, from the 5,266 companies across the globe that were invited and eligible for inclusion in S&P Global’s ESG Indices, 1,843 companies actively participated in the assessment, showing a participation rate of 35%. Consequently, this is a record participation increase for the third consecutive year.

With a share of 36.2%, Asia Pacific is the region with the highest participation rate, followed by North America with 26.3%, and Europe with 25.8%. Furthermore, most companies participated in the CSA 2021 are located in the United States (395), Japan (190) and on third position is the United Kingdom with 101 companies participating.

Going into the industry level, the industries showing the highest absolute increase in participation are Banks with an addition of 40 companies participating, Real Estate shows an increase of 31 and Diversified Financial Services has a growth of 28 companies. Noteworthy is that already in the 2020 CSA, these three industries registered the highest absolute increase in participation.

Main developments in 2021

It can be observed that investor attention to ESG data and company scores is strengthening. In addition to investors paying more attention to companies’ ESG performance, new regulatory frameworks and standards, such as the EU Taxonomy Regulation or the recommendations from the Task-Force on Climate-related Financial Disclosure (TCFD) continue to influence the ESG landscape.

With the four pillars of standard and regulatory frameworks, investor feedback, company feedback, and industry and topics expertise, each year S&P Global applies methodology changes to the CSA in order to identify the world’s leading ESG companies. Moreover, S&P Global has further aligned its methodology with widely accepted sustainability reporting frameworks, like GRI and CDP. Overall, in 2021, 21 criteria were revised, with 23 newly introduced questions and 29 updated questions.

Highlighted dimension and criteria developments

Within the governance and economic dimension, the main updates were applied in the field of companies’ readiness and management of risks and opportunities.

Main updates in the environmental dimension were applied to increase higher resource efficiency, such as through climate change scenarios, biodiversity commitment or conducting life cycle assessment for products. This dimension in particular is experiencing increasing regulatory changes as well as trends, such as reducing waste or offering low-carbon products. Therefore, the environmental dimension will most likely continue to evolve.

The social dimension was subject to major methodology changes, as overall 7 new questions were introduced, with 6 of them applying to all industries. Additionally, 14 questions were updated, including sharpened requirements to provide supporting internal or external documentation. Main updates were made in the Talent Attraction & Retention criterion, as well as to Labor Practice Indicators, to ensure an equal working environment for all employees.

Please find the details of these criteria in the summary available as a download at the top of the page.

Key conclusions of the DJSI 2021 results:

  • Most companies are not yet aligned with the TCFD requirements and do not have physical climate risk adaptation plans. Hence, those companies run the risk of not meeting investors’ expectations or upcoming regulatory requirements. Consequently, companies need to develop and/or sharpen their climate strategy by increasing the level of physical and transition climate risk assessment and implementing a clear timeline for physical climate risk adaptation.
  • Only a few companies apply policies and guidelines on biodiversity or sustainable agricultural commitment beyond their own operations, including tier 1 or non-tier 1 suppliers. In order to build and move towards a sustainable business, companies must integrate their entire supply chain in environmental, social and economic regulations and policies.
  • Improvements are to be made in gender equality by paying equally for equal work.
  • Companies across all industries need to strengthen their Talent Attraction & Retention practices to ensure competitiveness.

Finch & Beak helps you to accelerate results from ESG benchmarking

With almost 25 years of experience in sustainability and ESG, Finch & Beak is Europe’s leading expert in building improving our clients’ sustainability strategy and ESG program performance.

From the Finch & Beak company purpose to accelerate sustainability, we are supporting clients around the globe. Our ESG and sustainability strategy work is characterized by a continuous improvement method that leverages existing assets in the short term while identifying opportunities for strategic development in the future.

If your organization is looking to accelerate its sustainability performance, download our service description or contact Josée van der Hoek, Director at josee@finchandbeak.com or call +34 682 048 301.

Photo by Ryoji Iwata on Unsplash

About Josephin Schulz

Ambitious professional aiming to make sustainability understandable and accessible for everyone. | josephin@finchandbeak.com

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