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Publ. date 18 Mar 2024This year the changes made to the CSA seek to 1) promote transparency by increasing requirements on public disclosure throughout the questionnaire, and 2) simplify the questionnaire structure and address the most relevant ESG topics in line with increased public awareness and the recent updates in recognized standards and frameworks.
On 11 March, S&P Global issued an overview of the preliminary changes that will be made to the 2024 CSA questionnaire. Finch & Beak has summarized them in this article. More detailed information on the final changes is expected to be delivered during a webcast and in accompanying documentation on 28 March and at the opening of the CSA portal on 3 April.
The three distinct levels of disclosure requirements introduced by S&P Global, namely, ‘private’ ‘partially public’ and ‘public’, remain unchanged in this year’s CSA questionnaire. However, building on the feedback received through recent public consultation, S&P Global announced that six questions will transition to public questions while 18 other will transition to partially public questions. The impacted criteria that these 24 questions fall into are numerous and most of them are industry specific. Only three of those questions apply to most, if not all, industries. They pertain to the ‘Climate Strategy’ and ‘Talent Attraction & Retention’ criteria and will transition to partially public questions, meaning that companies can gain additional credit for having supporting evidence publicly available.
Risk & Crisis Management: updated criterion
For all industries, while the question about Risk Culture will be deleted, relevant aspects are retained and further disseminated into the questions on Risk Management Processes and Risk Management (for non-listed companies). In addition, key changes will be made to the rest of the questions to reflect best practices such as the implementation of the three lines of defense model as a risk governance framework.
Business Ethics: updated criterion
A new industry-specific question will be introduced for Aerospace & Defense companies. Its goal is to assess if companies producing weapons, components of weapons, or services to the defense industry have a policy in place establishing the company’s position on international treaties and coalitions about the topic.
Energy: new criterion
A new question will be introduced to set specific requirements for energy management system, including energy audits, quantified targets, actions to reduce energy usage, evaluation of progress, use of clean energy and investments in innovation or R&D. This question will be part of a new criterion named “Energy”, replacing “Resource Efficiency & Circularity”, and apply to all industries.
Waste: updated criterion
Similar to the Resource Efficiency & Circularity criterion, a new question will be added to address the presence of a waste management program. This question will introduce a responsibility component and ask companies in all industries about the actions taken to address waste production within operations.
Water: updated criterion
A new question on Water Efficiency Management Programs will be added alongside requirements specific to water management programs implemented by companies in all industries. In addition, for the sake of simplification and better alignment with the CDP’s Water Security questionnaire, the two questions relating to Water Consumption and Water Use will be merged.
Existing questions relating to Quantity and Quality-Related Water Risks and Water-Regulatory Changes and Pricing Structure will be merged and form a new question about Water Risk Management Programs to focus on the most relevant aspects of water risk assessment, though these are applicable to only a handful of industries. This question will also address dependencies on water resources, impacts on local stakeholders and the environment, and the scope of the risk assessment.
Sustainable Finance: updated criterion
Companies involved in the Diversified Financial Services and Capital Markets industry will see changes introduced for two existing questions on the topic. These changes aim to reflect the inclusion of SME Listing, Sustainable Debt Listing and voluntary carbon markets in sustainable exchange programs.
Innovation Management: updated criterion
There will be major changes for this topic. The criterion itself will remain only for the Tobacco industry and some of the Healthcare industries. The theme of innovation will be an integral part of numerous other criteria outlined in the questionnaire and disappear for many industries, such as the Telecommunications Services and Chemicals industry.
Sustainable Raw Materials: new criterion
As a result of greater public scrutiny and awareness of potential environmental and social impacts and business risks stemming from raw materials production, a new criterion on Sustainable Raw Materials will be introduced. This criterion will include both new questions on sustainable raw materials and existing questions applicable to a limited number of industries, 11 in total, including Automobiles, Communications Equipment, Semiconductor Equipment, and Textiles, Apparel & Luxury Goods.
Human Capital Development: merged criterion
This criterion now consolidates the previously separate criteria of Human Capital Development and Talent Attraction & Retention. There are no changes to the questions.
Community Relations: updated criterion
Formerly called Stakeholder Engagement, 15 industries will be impacted by the changes undergone by this criterion. This includes a new question relating to Stakeholder Engagement Policy, and the question about Stakeholder Engagement Program will be updated.
Customer Relations: merged criterion
Four previously separate criteria assessing concepts related to customer management (Customer Relationship Management, Marketing Practices, Content Responsibility & Moderation, Marketing Practices, and Sustainable Marketing & Brand Perception) are now consolidated into this new criterion of Customer Relations.
- Evaluate how prepared your company is for the 2024 CSA
Deep dive into the requirements for this year’s CSA and map your company’s policies, processes and practices against them will help you to understand how much work is still needed to improve your ESG performance and potentially reach index inclusion.
- Monitor the final methodology updates when the questionnaire opens
Unlike previous years, more detailed information on the final CSA methodology updates will be shared by S&P Global shortly before the questionnaire opens on the 3rd of April. While understanding the preliminary updates will help your company to start preparing for the biggest changes, keep yourself informed about the final updates to further adjust your preparation if necessary.
- In the meantime, start to engage with and mobilize topic owners
Engagement with topic owners is key for a successful CSA cycle. Their input, knowledge and experience throughout the process, like when gathering the necessary data and information, will be valuable, and they can gain insights into sustainability issues and the leading corporate sustainability practices to guide them in implementing the necessary changes internally in their own unit.
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. The Finch & Beak company vision is to accelerate sustainability. Our ESG and sustainability strategy work are 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 company is interested in being supported in its CSA process, download our ESG Acceleration Support Service Description or contact Johana Schlotter at johana@finchandbeak.com or +31 6 28 02 18 80 to discuss how Finch & Beak can help you improve your ESG performance.
Enthusiastic professional aiming to support companies in improving their commitment to sustainability. | marie@finchandbeak.com
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