CDP, formerly known as the Carbon Disclosure Project, is a global non-profit organization that operates the world's largest environmental disclosure system for companies, cities, states and regions. Founded in 2000, CDP pioneered using capital markets and corporate procurement to motivate entities to disclose their environmental impacts and take action on reducing greenhouse gas emissions, safeguarding water resources, and protecting forests.
In 2024, CDP is making significant changes to streamline reporting and generate more comparable, comprehensive, and decision-useful environmental data. The organization is combining its water, forests, and climate questionnaires into one CDP full corporate questionnaire to drive multi-environmental management and improve the disclosure experience. Additionally, CDP is introducing a dedicated questionnaire for small and medium enterprises (SMEs) in 2024.
The organization has a global reach, with regional offices and local partners spanning 50 locations. Companies, cities, states, and regions from over 90 countries disclose their environmental data through CDP. In 2024, the Non-Disclosure Campaign is targeting 1,998 companies that have never disclosed through CDP before, marking a 26% increase from the previous year.
CDP's disclosure platform is crucial for investors, with over $130 trillion in assets under management supporting the call for companies to supply environmental data to the organization. This demonstrates the growing importance of environmental disclosure in financial decision-making and risk assessment.
Is CDP reporting mandatory?
While CDP reporting is voluntary, businesses face mounting pressure to disclose their environmental impact. The proliferation of reporting tools and frameworks, coupled with rising investor and consumer demand for sustainability information, is making it increasingly difficult for companies to avoid transparency on environmental issues. As a result, sustainability reporting is becoming an expected practice in the corporate world.
In 2023, CDP saw a record-breaking 23,000+ companies disclose through their platform, representing at least two-thirds of global market capitalization. This marks a 24% increase from the previous year and over 140% more than disclosures in 2020.
What is a CDP score?
CDP scores provide a snapshot of environmental disclosure and performance for entities that disclose through CDP, including companies, cities, states, and regions. The scoring methodology assesses progress towards environmental stewardship as reported in a company's CDP response.
CDP scores range from D- to A, reflecting the company's level of environmental stewardship. The scoring process evaluates the completeness of the questionnaire response, as well as the organization's ambition and performance regarding climate and the environment.
The CDP scoring methodology assesses companies across four levels:
Disclosure (D-/D score)
Awareness (C-/C score)
Management (B-/B score)
Leadership (A-/A score)
Companies that are requested to disclose but fail to do so, or fail to provide sufficient information, may receive an F. These levels represent the steps an entity progresses through on its journey towards environmental stewardship. The scoring methodology takes into account the level of detail and comprehensiveness of the content, as well as the company's awareness of climate change issues, management methods, and progress towards action.
CDP uses a sector-based approach in its scoring, allowing for more meaningful assessments of companies' responses by incorporating each sector's characteristics and nuances. This enables better benchmarking against other companies within the same industry.
Benefits and Challenges of Reporting to CDP
What Is Reported to CDP?
This new Questionnaire consists of 13 modules. Each module contains various questions tailored to your industry and organizational size.
Introduction
Identification, assessment, and management of risks and opportunities
Disclosure of risks and opportunities
Governance
Business Strategy
Environmental Performance – Consolidation Approach
Environmental Performance – Climate Change
Environmental Performance – Forests
Environmental Performance – Water Security
Environmental Performance – Plastics
Environmental Performance – Biodiversity
Environmental Performance – Financial Services
Further Information & Sign-off
Preparing for CDP Reporting
CDP recommends that organizations start preparing for disclosure well in advance of the reporting deadline. The process of gathering and analyzing environmental data can be time-consuming and complex.
To prepare for CDP reporting, organizations should consider the following steps:
Understand CDP requirements: Familiarize yourself with the CDP questionnaire relevant to your organization. CDP provides guidance documents and scoring methodologies on their website to help organizations understand what's expected.
Develop an execution plan: Create a timeline and strategy for completing the CDP questionnaire. This helps manage tasks efficiently and ensures timely submission.
Assemble a cross-functional team: Involve representatives from various departments to ensure comprehensive data collection.
Document policies and actions: Clear documentation of environmental policies and actions supports your reporting responses.
Utilize appropriate tools and technology: Consider using software or other technologies to simplify the reporting process and enhance data accuracy.
CDP provides support to companies at each step of their disclosure journey. By starting the preparation process early and following these steps, organizations can improve their ability to provide comprehensive and accurate environmental disclosures through CDP. This proactive approach can lead to better environmental management and potentially improved CDP scores.
Share this post