Driving corporate accountability from disclosure to action using CDP
The Carbon Disclosure Project, informally known as CDP, has emerged as a critical global platform, holding the largest environmental database in the world. The platform primarily facilitates transparent reporting and disclosure to drive sustainable practices across industries. With approximately 20,000 organisations disclosing data on climate change, water security and deforestation issues via CDP, 2022 set a new milestone for disclosure – a 38% increase since 2021 – including listed companies worth US$60.8 trillion (half of the global market capitalisation)1.
Over time, the platform has evolved to reflect the most recent climate science and global policy developments. The 2015 Paris Agreement marked a turning point in the global response to climate change, demonstrating that ‘business as usual’ is no longer sufficient.
Objectives
CDP’s primary objective is encouraging organisations and cities to reduce greenhouse gas (GHG) emissions, protect water resources and preserve forests. CDP accomplishes this by offering a solid and standardised platform for organisations to voluntarily report their environmental data annually.
The structure of the CDP climate change questionnaire was redesigned in recent years in response to market needs and trends in corporate climate change reporting. Revisions included an increased emphasis on forward-looking metrics, improved alignment with other reporting frameworks and the integration of sector-specific questions.
Significance in climate change mitigation
CDP promotes transparency and accountability by pushing organisations to measure and report their carbon emissions and climate-related data. This incentivises implementing comprehensive sustainability policies, whilst providing stakeholders with crucial information for informed decision-making. Beyond corporate boundaries, CDP allows investors to assess the climate risks and opportunities associated with their portfolios, ultimately promoting a shift towards greener investments2. This harmonisation will help to optimise reporting and accelerate the generation of decision-useful information.
CDP also aligns with other large initiatives, facilitating benchmarking and amplifying the impact of sustainability strategies, addressing interconnected challenges and leveraging expertise and best practices.
CDP in 2023
Developments in 2023 reflect CDP’s strategic priorities to track organisations’ alignment with a 1.5°C world, which include enhancing disclosure, governance, engagement, emissions accounting, carbon credits and carbon pricing.
Respondents are asked whether their spending and revenue is aligned with sustainable finance taxonomies to add credibility to their commitment to mitigate and adapt to climate change.
In alignment with the International Union for the Conservation of Nature’s (IUCN) Corporate Reporting on Biodiversity Guidelines, respondents are required to report on the approach to maintaining and addressing concerns associated with having activities located in or near biodiversity-sensitive areas.
Respondents are also requested to provide emissions data for subsidiaries, which includes a breakdown of their Scopes 1 and 2. As other regulatory frameworks and standards increase their scrutiny around emissions reporting, organisations are encouraged to consider subsidiary emissions, which can represent a significant gap in terms of unassessed climate risks and opportunities.
Conclusion
CDP has emerged as a vital catalyst in the fight against climate change. CDP is transforming corporate behaviour, empowering organisations to embrace sustainability practices and mitigating the adverse effects of climate change.
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Author: Maria Serrano, Climate and Carbon Consultant