What is the CDP?
What is the CDP?
Founded in 2000, the Carbon Disclosure Project (CDP) was the first platform to leverage investor pressure to influence corporate disclosure on environmental impact and has the most comprehensive collection of self-reported environmental data in the world.
The CDP conducts environmental, social and governance (ESG) reporting with the goal of supporting economies and the health of the globe. They believe in acting urgently to prevent dangerous climate change and environmental damage.
With regional offices and local partners spanning 50 countries, there are numerous companies, cities, states and regions from over 90 countries disclosing through the CDP on an annual basis.
The CDP has created a system over the last two decades which has resulted in unprecedented global participation in environmental concerns. Their reports analyse the wealth of data submitted to them, providing vital insight into your business.
Who does it matter to?
Investors and stakeholders are becoming increasingly aware of the impacts that climate change will have on businesses. Disclosing under this framework signals that a business is willing to be transparent about its carbon data, and actively respond to its climate risks and opportunities.
Benefits of disclosing through CDP.
+ Improving the credibility of your business through increased transparency.
Being transparent about the risks and opportunities your business faces shows resilience in the face of climate change and the transition to a low carbon economy.
+ Protecting your company's image by addressing public concern about the environment.
Disregarding the environmental impacts of a business’s actions can have negative financial and brand perception consequences. A well-known example is Volkswagen’s diesel cheating scandal, costing 31.3 billion euro ($34.69) in fines and settlements.
+ Identifying emerging environmental risks and opportunities.
A 2015 study estimated the value at risk, as a result of climate change, to the total global stock of manageable assets as ranging from $4.2 trillion to $43 trillion between now and the end of the century. This can be detrimental to a business’s assets as many will be significantly devalued as a result of increased rates of depreciation. On the other hand, climate investment opportunities have been valued at $23 trillion in emerging markets by 2030. These opportunities provide an edge over competitors and can increase the value of your business.
+ Developing strategic steps your business will take in mitigating environmental impacts.
+ Increasing your competitive advantage in stock market performance and financial availability.
Investors are interested in this information as they are interested in whether your business is a going concern. Planning and disclosing the climate-related financial disclosures increases investor confidence in your business as there is a clear strategic analysis regarding the steps that will be taken. This makes your business less susceptible to current and future emission laws.
+ Preparing your company for upcoming environmental reporting requirements. (See TCFD)
+ Tracking and measuring your progress by comparing your environmental performance to that of your business’s peers.
There is an advantage of being able to compare against industry competitors as it provides a measure of relative performance and the opportunity to express pride in the business’s accomplishments.
+ Aligning with the TCFD recommendations by disclosing 'scenario analysis' to climate change
Doing so provides a heightened understanding of the material, physical and transition risks to your business that may well have been missed or the magnitude not considered.
How are businesses graded?
Scoring is conducted on a scale of A to D- that corresponds to your business’s level of progress.
Areas of assessment.
Your business is assessed across four levels :
Disclosure
Awareness
Management
Leadership
Method.
Scores are calculated from a numerator and denominator score for each of the above areas and multiplied by 100 for a percentage score. This applies to the disclosure and awareness categories. The denominator column indicates the maximum number of points attainable for each question. A weighting of the Management and leadership categories’ percentage scores is calculated and divided by 100 and then multiplied by the percentage.
Why is it done this way?
The sector-based approach enables CDP to make more meaningful assessments of your business’s responses by taking into account each sector's unique characteristics and nuances, resulting in a score that reflects your business’s progress and enabling the company to improve its environmental performance.
Disclosing under CDP demonstrates your business’s commitment to sustainable development.
We can help businesses to get the most value from this exercise, using the data to identify growth opportunities when moving to a low-carbon economy.