16 April 2024: New ESG Taxonomy
We’re delighted to announce that the new ESG taxonomy is now live. This new taxonomy:
- Brings greater granularity
- Covers more ESG issues and considers more stakeholders
- Offers better interoperability with third-party classification and international references (UNGC, SDGs, OECD,...)
- Improves the classification of currently captured ESG events
Below we dive into more details on how the taxonomy has evolved and what it means for you.
More subcategories offering greater granularity
With the new taxonomy, the number of subcategories for each pillar has increased:
- Environmental: from 7 to 11 risks
- Social: from 7 to 14 risks
- Governance: From 8 to 15 risks
This increase in subcategories enables the taxonomy to be more granular. For example, the previous subcategory of “Fraud, Embezzlement, Crime” has been split into:
- Terrorism Financing
- Fraud
- Embezzlement
- Accounting and Securities Fraud
As we’ll see, this enhanced granularity enables a better classification of ESG topics.
Covering more issues and stakeholders
The new taxonomy also makes it possible to cover additional sub-risks and to account for different stakeholders: customers, shareholders, and suppliers. Accounting for different stakeholders enables a stronger materiality assessment and a better understanding of a company’s compliance with specific frameworks. For example, “supply chain” is a new sub-risk included in this taxonomy. By including it, we can get a better understanding of how compliant a company is with the German Supply Chain Act, for example. The same goes for the SDG, UNGC, and other frameworks.
The tables below highlight the difference between the previous and new subcategories.
Pillar: Environment
| Previous Subcategory | New Subcategory |
|---|---|
| Climate Change & Atmospheric Pollution | Atmospheric Pollution |
| General Environmental Impact | Climate Change |
| Impact on Biodiversity & Land | Biodiversity & Ecosystems |
| Other Pollutions | Land and Soil Pollution |
| Water Pollution | |
| Animal Cruelty | Animal welfare |
| Overexploitation of Resources | Water Consumption |
| Energy & Natural Resources Management | |
| Waste Management | Waste Management |
| Food Waste | |
| - | Environmental Misreporting |
Pillar: Social
| Previous Subcategory | New Subcategory |
|---|---|
| Human Rights | Right to Property |
| Rights of Indigenous Communities | |
| Fundamental Human Rights | |
| Conflict Zones & Violence | Violation of Human Rights in Conflict or High-Risk Zones |
| Discrimination/Racism/Sexism | Diversity & Inclusion (Beyond the Workplace) |
| Workplace Diversity & Inclusion | |
| Labor Standards | Freedom of Association & Collective Bargaining |
| Child Labor | |
| Forced Labor | |
| Health & Safety at Work | Occupational Health & Safety |
| Employee Relations | Working Conditions |
| Ethical Standards | Social Misreporting |
| - | Customer Relations |
| - | Community Health & Safety |
Pillar: Governance
| Previous Subcategory | New Subcategory |
|---|---|
| Anticompetitive Practices | Anticompetitive practices |
| Price Fixing | |
| Tax Avoidance | Tax Strategy |
| Corruption | Corruption & Bribery |
| Money Laundering | |
| Fraud, Embezzlement, Crime | Terrorism Financing |
| Fraud | |
| Embezzlement | |
| Accounting & Securities Fraud | |
| Cybersecurity | Data privacy & Cybersecurity |
| Executive Pay | Executive Pay |
| Deceptive Communication | Marketing & Communication |
| Incompetence | Board of Directors & Senior Management |
| CSR Misreporting | |
| - | Supply Chain |
Visit here to see each subcategory and its description. If you have any questions, don’t hesitate to reach out to your account manager.