Take-Aways from CSA 2023: Increased Need for Transparency

Learnings and tips to prepare for the 2024 Corporate Sustainability Assessment
Take-Aways from CSA 2023: Increased Need for Transparency
Publ. date 13 Nov 2023
As S&P Global maintains its current approach to releasing company scores in batches based on when a company has submitted its assessment, there will not be a clear picture on the universe-wide trends until Dow Jones Sustainability Indices (DJSI) memberships are announced on December 8th. However, companies can already gain valuable insights from this year’s assessment. This article summarizes Finch & Beak’s observed trends from the 2023 cycle and contains a practical checklist for getting prepared for the CSA 2024.

Important themes that have started to arise are that (1) S&P Global is aiming to bring down the scoring ceiling, primarily aiming to do this through a push for increased transparency, higher standards for integration of policies and practice into strategy, and (2) increased demands for tracking data on relevant issues that have important implications on scores of previously high scoring criteria. It is good to note that S&P Global’s actions are not isolated, these changes indicate a broader shift within the ESG space that demands increased transparency and expanded commitments to material issues. Responding to the CSA and utilizing the insights via the scoring can simply help a company get ahead on preparing for these increased stakeholder demands. Our downloadable checklist provides practical tips for companies to get prepared for CSA 2024 early.

Higher bar set for integrating policies & practices into strategy

Across the entire questionnaire, it has been observed that there is an increasingly stringent standard applied to evaluating company’s responses. This is particularly evident in a push for having standalone policies (Supplier Code of Conduct, Biodiversity Commitment, and Human Rights Commitment) and actions for relevant material topics. Previously, these elements might have just been mentioned in the annual report, but it is increasingly seeming that S&P Global will be looking for this to be an independent document including signoff from executives or the Board.

For companies who will fall under the Corporate Sustainability Reporting Directive (CSRD) in Europe, this will be an approach that they will have to implement for this regulation as well. For a company to understand where to start, conducting a double materiality assessment can help highlight where a company’s impacts are, or have the potential to be, the highest.

Starting with creating comprehensive policies including actions to address identified gaps, and KPIs to track how these gaps are being closed can be key to setting a company up to avoiding risks of high negative impacts. And, it can help communicate to stakeholders the commitment a company has to the issue—and in many instances like with S&P Global, lead to a higher score on the relevant assessments of management of these issues.

Supply chain curveball proves tough across industries

One such issue where companies will have to take steps forward is on that of Supply Chain Management, a criterion where S&P Global also introduced significant changes the past year. S&P Global’s decision to do so aligns with a broader trend of increasing focus on supply chain issues and in particular to have more transparency into the supply chain.

Practically speaking, for those responding to the CSA, this has translated into a need to collect a large amount of data to be collected on assessment, development, and screening of suppliers. This includes the approaches to doing so as well as KPIs to ensure that the commitments in the Supplier Code of Conducts and ESG Programs are held up. Additional steps for how to implement sustainability measures in the supply chain can be found here to strategically leverage a sustainable supply chain.

Push for transparency leaves room for improvement in 2024

With the methodology updates the past fall, following a longer-term trend of the last years, companies were also faced with an increasing demand for public information to support answers provided to S&P Global. This increase in disclosure requirements came across criteria with strong implications particularly in Human Capital Development, Policy Influence, and Risk & Crisis Management amongst others.

The learning point in this increasing demand for public disclosure, is to take a close look at your company’s material topics and understand what the associated risks and opportunities for each of these topics are. Once this is understood, it is then critical to establish associated commitments, action plans, targets, and KPIs to make sure that the management of these issues is properly implemented. This exercise can also be helpful in steering companies who will fall under jurisdiction of the CSRD to be better prepared for disclosure.

Given that there is an increasing push for transparency within the CSA, while at the same time companies are facing other increasing reporting demands, is there a way to get ahead? Starting to work on your CSA 2024 responses early can ensure that relevant information can go through the appropriate approval processes by the time that the submission deadline rolls around.

Insights that are gathered as a part of the CSA scoring can also help a company ensure its sustainability strategy is robust and keeping up with stakeholder expectations. Finch & Beak can help accompany your company through the process of CSA 2024 and highlight spaces for mid-to long-term action that can help your sustainability strategy excel.

Looking to accelerate your journey towards improved ESG performance?

With over 15 years of experience in ESG rating & benchmarking support including the CSA, Finch & Beak is one of Europe’s leading experts in improving our clients’ sustainability programs and ESG performance. If your company is looking for support in its CSA process, please reach out to Johana Schlotter at Johana@finchandbeak.com, or call +31 6 28 02 18 80 to discuss how Finch & Beak can help you.

About Claire Carter

Sustainability professional aiming to help companies implement practical strategies yielding positive ESG results. claire@finchandbeak.com

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