methodology updates csa 2021

METHODOLOGY UPDATES CSA 2021

Sustainable Activities

OVERVIEW:

As part of the methodology development process for the 2021 CSA, we

have created new questions and updated existing ones to ensure we are

capturing the most material sustainability topics. Please find below the new

and updated questions for this criterion in 2021.

The question texts and methodology presented may be subject to change at

any time before the end of March 2021. In addition, questions may look

different in the Online Assessment Tool in terms of question structure and

layout.

Please note that all questions may not be applicable to your industry so

please carefully consult the Industries Impacted section.

Introduction

Criterion Rationale

The purpose of this criterion is to identify the alignment of companies' activities with the EU

taxonomy for sustainable activities.

Summary of Changes

1. New Question: Alignment with EU Taxonomy for sustainable activities: Revenues

2. New Question: Alignment with EU Taxonomy for sustainable activities: Capital

Expenditures

3. New Question: Alignment with EU Taxonomy for sustainable activities: Operating

Expenditure

New Question

Question: Alignment with EU Taxonomy for sustainable activities: Revenues

INDUSTRIES IMPACTED:

AIR Airlines ALU Aluminum ARO Aerospace & Defense ATX Auto Components AUT Automobiles BLD Building Products BNK Banks BTC Biotechnology BVG Beverages CHM Chemicals CMT Communications Equipment CNO Casinos & Gaming COL Coal & Consumable Fuels COM Construction Materials CON Construction & Engineering COS Personal Products CSV Diversified Consumer Services CTR Containers & Packaging DHP Household Durables DRG Pharmaceuticals ELC Electric Utilities ELQ Electrical Components & Equipment FBN Diversified Financial Services and Capital Markets FDR Food & Staples Retailing FOA Food Products FRP Paper & Forest Products GAS Gas Utilities HEA Health Care Providers & Services HOM Homebuilding HOU Household Products ICS Commercial Services & Supplies IDD Industrial Conglomerates IEQ Machinery and Electrical Equipment

IMS Interactive Media, Services & Home Entertainment INS Insurance ITC Electronic Equipment, Instruments & Components LEG Leisure Equipment & Products and Consumer Electronics LIF Life Sciences Tools & Services MNX Metals & Mining MTC Health Care Equipment & Supplies MUW Multi and Water Utilities OGR Oil & Gas Refining & Marketing OGX Oil & Gas Upstream & Integrated OIE Energy Equipment & Services PIP Oil & Gas Storage & Transportation PRO Professional Services PUB Media, Movies & Entertainment REA Real Estate REX Restaurants & Leisure Facilities RTS Retailing SEM Semiconductors & Semiconductor Equipment SOF Software STL Steel TCD Trading Companies & Distributors TEX Textiles, Apparel & Luxury Goods THQ Computers & Peripherals and Office Electronics TLS Telecommunication Services TOB Tobacco TRA Transportation and Transportation Infrastructure TRT Hotels, Resorts & Cruise Lines TSV IT services

QUESTION RATIONALE

The Taxonomy Regulation (TR) creates a legal basis for the EU Taxonomy. It establishes the framework for the EU taxonomy by setting out overarching conditions that an economic activity has to meet in order to qualify as environmentally sustainable, and hence Taxonomy-aligned. The TR sets out the framework and environmental objectives for the Taxonomy, as well as new legal obligations for financial market participants, large companies, the EU and Member States. The final Taxonomy Regulation introduces a new disclosure requirement for companies already required to provide a nonfinancial statement under the Non-Financial Reporting Directive (NFRD). National implementation varies, but NFRD covers, at a minimum, large public-interest companies with more than 500 employees, including listed companies, banks and insurance companies. All companies subject to this requirement will include a description of how, and to what extent, their activities are associated with Taxonomy-aligned activities. For non-financial companies, the disclosure must include:

• The proportion of turnover aligned with the Taxonomy; and • Capital Expenditure and, if relevant, operating expenditure aligned with the Taxonomy. This

disclosure should be made as part of the non-financial statement, which may be located in annual reporting or in a dedicated sustainability report.

This question assesses whether companies are prepared to disclose sustainability related information with reference to the Taxonomy. it specifically evaluates whether companies are able to report the proportion of their revenues aligned with the EU Taxonomy.

KEY DEFINITIONS

Trucost Business Activity: Trucost, an S&P Global company maintains a proprietary classification

system for corporate business activities, based on revenue streams. This information is collected

based on publicly available company reporting, such as financial reports, and is supplemented by

a review from companies. This information is now being integrated into the CSA for future efforts

to provide more detailed and nuanced scoring and benchmarking for companies.

Revenues: Revenues or net turnover means the amounts derived from the sale of products and the

provision of services after deducting sales rebates and value added tax and other taxes directly

linked to tur period of

time.

Environmental Objectives of the EU Taxonomy:

• Climate change mitigation

• Climate change adaptation

• Sustainable use and protection of water and marine resources

• Transition to a circular economy

• Pollution prevention and control

• Protection and restoration of biodiversity and ecosystems

The first step of the EU Taxonomy is to define Screening Criteria (SC) for the two first objectives:

Climate change mitigation and Climate change adaptation. This question currently asks whether

an activity is linked to either Climate Change mitigation (Objective 1) or Climate Change adaptation

(Objective 2).

Screening criteria (SC) of the EU taxonomy:

Performance thresholds for economic activities which make a substantial contribution to climate

change mitigation (Objective 1) or climate change adaptation (Objective 2) and:

• Do no significant harm (DNSH) to the other four environmental objectives

• Meet minimum safeguards

The full list of revised or additional technical screening criteria for economic activities which can

substantially contribute to climate change mitigation or adaptation (including assessment of

significant harm to other environmental objectives) is available here.

The first technical screening criteria, for activities which substantially contribute to climate

change mitigation or adaptation, will be adopted by the end of 2020 and enter into application by

the end of 2021. The second set of technical screening criteria, which cover economic activities

substantially contributing to the other four environmental objectives, will be adopted by end 2021

and enter into application by end 2022.

In this question, alignment with the technical screening criteria of the EU Taxonomy means

alignment with the performance thresholds defined for Objective 1 (climate change mitigation)

and Objective 2 (climate change adaptation).

Do no significant harm (DNSH): Under the proposed Taxonomy regulation, economic activities

making a substantial contribution to climate change mitigation or adaptation must be assessed to

ensure they do not cause significant harm to all remaining environmental objectives. An activity

contributing to climate change mitigation must avoid significant harm to climate change

adaptation and the other four environmental objectives:





Minimum social safeguards: The minimum social safeguards as described in the EU Taxonomy are

those represented by the OECD Guidelines for Multinational Enterprises and the UN Guiding

Principles on Business and Human Rights, including the principles and rights set out in the eight

https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/200309-sustainable-finance-teg-final-report-taxonomy-annexes_en.pdf


fundamental conventions identified in the Declaration of the International Labour Organisation on

Fundamental Principles and Rights at Work and the International Bill of Human Rights.

DATA REQUIREMENTS

Trucost Business Activity: This will be automatically imported from the table completed in the

new question "Denominator - Business Activities" within the Company Information section of

the questionnaire.

Link to environmental Objective: Please indicate whether your business activity contributes

primarily to the environmental objective "climate change mitigation" or to the environmental

objective "climate change mitigation".

% of total revenues from business activity mapped to the EU Taxonomy business

activities: Percentage of business activities mapped to the EU Taxonomy business activities but

that may not yet have been assessed against the technical screening criteria, DNSH criteria and

social safeguards. This is the first step that companies will take in identifying the percentage of

revenues aligned with the EU Taxonomy. 

REFERENCES

Taxonomy Final report of the Technical Expert Group on Sustainable Finance:

https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/docum

ents/200309-sustainable-finance-teg-final-report-taxonomy_en.pdf (p.27)

REGULATION (EU) 2020/852 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 18 June

2020 on the establishment of a framework to facilitate sustainable investment, and amending

Regulation (EU) 2019/2088: 

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32020R0852

Taxonomy Report: Technical Annex:


ents/200309-sustainable-finance-teg-final-report-taxonomy-annexes_en.pdf

https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/200309-sustainable-finance-teg-final-report-taxonomy_en.pdf





QUESTION LAYOUT

Please provide the revenues with the EU Taxonomy for sustainable activities. Information on Trucost Business Activities has been pre-filled using the data from the question Company Information

Denominator Business Activities.

o We have mapped our revenues to the EU Taxonomy economic activities. Please provide supporting evidence.

Trucost Business Activity

Link to environmental objective

% of total revenues from business activity in FY 2020 that is mapped to the EU Taxonomy economic activities

% of total revenues from business activity aligned with technical screening criteria (SC) of the EU taxonomy

% of total revenues from business activity aligned with SC and do no significant harm (DNSH) criteria

% of total revenues from business activity aligned with SC, DNSH and social safeguards

Comments

Business activity 1 (prefilled)

o Climate change mitigation

o Climate change adaptation




References box (max. 5 allowed)




s activity 15 (prefilled)



The mapping of our revenues provided in the table above is based on:

o Initial assessment

o Internal analysis based on a review of company product portfolio and respective screening criteria

o Analysis that has been externally verified. Please attach supporting evidence:

o Other

o No, we have not mapped our revenues to the EU Taxonomy economic activities.

o Not applicable. Please provide explanations in the comment box below. o Not known

Reference box (max. 3 allowed)

Max. 1000 chars

New Question

Question: Alignment with EU Taxonomy for sustainable activities: Capital

Expenditures




QUESTION RATIONALE




This question assesses whether companies are prepared to disclose sustainability related information with reference to the Taxonomy. it specifically evaluates whether companies are able to report the proportion of their capital expenditure aligned with the EU Taxonomy.

KEY DEFINITIONS

Trucost Business Activity: Trucost, an S&P Global company maintains a proprietary classification





A capital expenditure (capex) is a payment for goods or services recorded, or capitalized, on the

balance sheet instead of expensed on the income statement. 









Climate change mitigation and Climate change adaptation. This question asks whether an activity

is linked to either Climate Change mitigation (Objective 1) or Climate Change adaptation (Objective

2).

Screening criteria (SC) of the EU taxonomy









change mitigation or adaptation, have been adopted at the end of 2020 and will enter

into application by the end of 2021. The second set of technical screening criteria, which cover

economic activities substantially contributing to the other four environmental objectives, will be

adopted by end 2021 and enter into application by end 2022.
















fundamental conventions identified in the Declaration of the International Labor Organization on




DATA REQUIREMENTS

Trucost Business Activity: This will be automatically imported from the table completed in the

new question "Denominator - Business

the questionnaire.




% of total capex from business activity mapped to the EU Taxonomy business



social safeguards. This is the first step that companies will take in identifying the percentage of

capex aligned with the EU Taxonomy.

REFERENCES

Taxonomy Final report of the Technical Expert Group on Sustainable Finance:


ents/200309-sustainable-finance-teg-final-report-taxonomy_en.pdf



Regulation (EU) 2019/2088:










QUESTION LAYOUT

capital expenditure (capex) with the EU Taxonomy for sustainable activities. Information on Trucost Business Activities has been pre-filled using the data from the question Company Information Denominator Business Activities.

o We have mapped our capital expenditure (capex) to the EU Taxonomy economic activities. Please provide supporting evidence.



% of total capex from business activity in FY 2020 that is mapped to the EU Taxonomy economic activities

% of total capex from business activity aligned with technical screening criteria (SC) of the EU taxonomy

% of total capex from business activity aligned with SC and do no significant harm (DNSH) criteria

% of total capex from business activity aligned with SC, DNSH and social safeguards

Comments














The mapping of our capital expenditure provided in the table above is based on:




o Other

o No, we have not mapped our capital expenditure to the EU Taxonomy economic activities. o Not applicable. Please provide explanations in the comment box below. o Not know


Max. 1000 chars

New Question

Question: Alignment with EU Taxonomy for sustainable activities: Operating

Expenditure




QUESTION RATIONALE




This question assessed whether companies are prepared to disclose sustainability related information with reference to the Taxonomy. it specifically evaluates whether companies are able to report the proportion of their operating expenditure aligned with the Taxonomy.

KEY DEFINITIONS

Trucost Business Activity: Trucost, an S&P Global company maintains a proprietary classification





Operating expenditure (opex) are shorter-term expenses required to meet the ongoing operational

costs of running a business









Climate change mitigation and Climate change adaptation. This question asks whether an activity

is linked to either Climate Change mitigation (Objective 1) or Climate Change adaptation (Objective

2).

Screening criteria (SC) of the EU taxonomy









change mitigation or adaptation, have been adopted at the end of 2020 and will enter

into application by the end of 2021. The second set of technical screening criteria, which cover

economic activities substantially contributing to the other four environmental objectives, will be

adopted by end 2021 and enter into application by end 2022.
















fundamental conventions identified in the Declaration of the International Labor Organization on




DATA REQUIREMENTS

Trucost Business Activity: This will be automatically imported from the table completed in the

new question "Denominator -

the questionnaire.




% of total opex from business activity mapped to the EU Taxonomy business



social safeguards. This is the first step that companies will take in identifying the percentage

of opex aligned with the EU Taxonomy.

REFERENCES

Taxonomy Final report of the Technical Expert Group on Sustainable Finance: 


ents/200309-sustainable-finance-teg-final-report-taxonomy_en.pdf



Regulation (EU) 2019/2088: 










QUESTION LAYOUT

operating expenditure (opex) with the EU Taxonomy for sustainable activities. Information on Trucost Business Activities has been pre-filled using the data from the question Company Information Denominator Business Activities.

o We have mapped our operating expenditure to the EU Taxonomy economic activities. Please provide supporting evidence.



% of total opex from business activity in FY 2020 that is mapped to the EU Taxonomy economic activities

% of total opex from business activity aligned with technical screening criteria (SC) of the EU taxonomy

% of total opex from business activity aligned with SC and do no significant harm (DNSH) criteria

% of total opex from business activity aligned with SC, DNSH and social safeguards

Comments














The mapping of our operating expenditure provided in the table above is based on:




o Other

o No, we have not mapped our operating expenditure to the EU Taxonomy economic activities.

o Not applicable. Please provide explanations in the comment box below. o Not known


Max. 1000 chars

Contact Us

CSA Helpline

+41 44 529 5160

Copyright© 2021 S&P Global Inc. All rights reserved.

Unless otherwise noted, all information, data and other material, including ratings or scores (all such information,

is the exclusive property of S&P Global (Switzerland) SA, a subsidiary of S&P Global Inc., and/or its relevant affiliates

permission of S&P. The Content shall not be used for any unlawful or unauthorized purposes. This publication is derived

completeness and usefulness of any opinions, statements or other Content contained in this publication. The Content

expressed or implied. S&P Global (Switzerland) SA, a subsidiary of S&P Global Inc., and/or its relevant affiliates disclaim

all warranties, expressed or implied, including, but not limited to, implied warranties of merchantability and fitness for a

particular purpose.

S&P (and any third-party providers, as well as their directors, officers, shareholders, employees or agents) does not

guarantee the accuracy, adequacy, completeness, timeliness or availability of any Content and are not responsible for

any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such

Content. In no event shall S&P (and any third-party providers, as well as their directors, officers, shareholders,

employees or agents) be liable for any direct, indirect, special, incidental, and/or consequential damages, costs,

expenses, legal fees, or losses (including, without limitation, lost income or lost profit and opportunity costs) in

connection with any use of the Content (including, without limitation, any opinions or other information expressly or

implicitly contained in this publication).

Any opinions and views in this publication reflect the current judgment of the authors and may change without notice.

Further, any opinions and views expressed by CSA participants do not reflect the policies or positions of S&P or any

other person, organization or company. The Content contained in this publication is distributed with the understanding

that the authors, publishers and distributors are not rendering legal, accounting or other professional advice or opinions

on specific facts or matters and accordingly assume no liability whatsoever in connection with its use. The Content

contained in this publication constitutes neither a solicitation, nor a recommendation, nor an offer to buy or sell

investment instruments or others services, or to engage in any other kind of transaction, and such information is not

directed to persons in any jurisdiction where the provision of such Content would run counter to local laws and

regulations. S&P keeps certain activities of its business units separate from each other in order to preserve the

independence and objectivity of their respective activities. As a result, certain business units of S&P may have

information that is not available to other S&P business units. S&P has established policies and procedures to maintain

the confidentiality of certain non-public information received in connection with each analytical process.

https://portal.csa.spglobal.com/survey/documents/Use_of_Information_Policy.pdf and for personal information

-policy-english.

S&P Global Switzerland AG, Zurich Branch, Josefstr.218, 8005 Zurich, Switzerland

methodology updates csa 2021

Documents