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Learn how to navigate the Carbon Disclosure Project (CDP) and take your first steps or continue your journey towards sustainability.

Getting Started: The Carbon Disclosure Project (CDP)

The CDP, formerly known as the Carbon Disclosure Project, is a global non-profit organisation that works with companies, cities, and investors to drive sustainable practices and reduce carbon emissions. The CDP provides a platform for organisations to disclose their environmental performance data based on 4 main pillars: climate change, water usage, deforestation risk, and plastic waste management. By understanding and disclosing these data, companies can identify and address their environmental impacts effectively. This article explores the CDP, their objectives and areas of focus, deep-diving into its questionnaires, step-by-step participation, and best practices to achieve a good CDP score.

About the CDP

The CDP was launched in 2000 in the United Kingdom, and since then, it has become one of the most widely recognised environmental reporting systems globally. Its mission is to accelerate the transition to a low-carbon economy and sustainable future by engaging with organisations around the world. The CDP's influence extends to more than 8,400 companies, 920 cities, and 590 institutional investors.

One of the key aspects of the CDP's approach is its focus on transparency and accountability. By requesting companies and cities to disclose their environmental impacts and risks, the CDP provides a platform for stakeholders to access crucial information for informed decision-making. This transparency not only helps in identifying areas for improvement but also enables investors to allocate capital to sustainable projects effectively.

Furthermore, the CDP's annual scoring and ranking system has incentivised organisations to enhance their environmental performance continually. Companies and cities are evaluated based on their disclosure completeness, awareness of environmental risks, and actions taken to mitigate climate change. This competitive aspect of the CDP drives innovation and encourages participants to set ambitious sustainability targets, leading to tangible positive impacts on the environment.

Key Objectives and Initiatives of the CDP

The CDP focuses on several key objectives to achieve its mission. It aims to incentivise companies to measure, manage, and disclose their environmental impact, enabling informed investment decisions. Additionally, the CDP works towards encouraging companies to set ambitious emission reduction targets and implement climate change mitigation strategies. Furthermore, the CDP advocates for transparent water stewardship and sustainable forest management practices.

One of the primary initiatives of the CDP is the annual disclosure process, where thousands of companies worldwide report their environmental data through a standardised platform. This data is then used by investors, policymakers, and other stakeholders to assess corporate environmental performance and risks. Through this process, the CDP not only promotes transparency but also drives companies to improve their environmental practices.

Another important focus area for the CDP is engaging with cities to address climate change challenges. The CDP Cities program works with urban areas to measure and disclose their greenhouse gas emissions, set emission reduction targets, and develop climate action plans. By collaborating with cities, the CDP aims to drive local climate action, enhance resilience, and create sustainable communities for future generations.

Areas of Focus: Climate, Water, Forests, and Plastics

The CDP's thematic focus encompasses four primary areas: climate change, water security, deforestation, and plastic pollution. By addressing these critical environmental issues, the CDP contributes to building a more sustainable and resilient future.

Climate change is a pressing global issue that is causing shifts in weather patterns, rising sea levels, and increased frequency of extreme weather events. The CDP works with companies and cities to reduce greenhouse gas emissions, transition to renewable energy sources, and develop climate adaptation strategies to mitigate the impacts of climate change.

Water security is essential for the well-being of communities, ecosystems, and economies around the world. The CDP helps organisations assess their water usage, identify water-related risks, and implement water conservation measures to ensure sustainable water management. By promoting responsible water stewardship, the CDP aims to safeguard water resources for future generations.

Deforestation usually occurs when forest lands are converted as agricultural commodities for production, and it is one of the most significant environmental challenges the world is facing. CDP offers companies, investors, states and regions the chance to evaluate and oversee their forest-related dependencies, impacts, risks, and opportunities. This assessment process involves measuring progress and publicly reporting results.

Plastic production has posed great dangers to our global ecosystems, economies, and communities. CDP believes that greater visibility of plastic footprints through corporate disclosure can serve as a foundation for companies and capital markets to create strategies to reduce their use of plastics and the pollution associated with them. This can help them assess their impacts related to plastics, enabling them to effectively manage associated risks and seize opportunities.

Who They Work With

The CDP collaborates with a wide range of organisations to achieve its objectives. It engages with companies across various industries and sectors, including energy, manufacturing, finance, and transportation. By working closely with these companies, the CDP helps them understand and disclose their environmental impact, driving them towards more sustainable practices and transparency.

In addition to its corporate partnerships, the CDP also works with cities worldwide to help them measure and manage their environmental impact. Through initiatives like the Cities Program, the organisation assists urban areas in setting emission reduction targets, implementing climate action plans, and improving their overall sustainability performance. By engaging with cities, the CDP plays a crucial role in advancing climate action at the local level and building more resilient and environmentally conscious communities.

Furthermore, the CDP partners with institutional investors to ensure that environmental risks and opportunities are integrated into investment decisions. By providing investors with data and insights on companies' environmental performance, the CDP helps drive capital towards sustainable businesses and projects. This collaboration not only encourages responsible investing but also fosters greater transparency and accountability in the financial sector, ultimately contributing to a more sustainable global economy.

Getting into the up-to-date CDP space

Participating in the CDP starts with understanding the CDP's requirements and organising the necessary data. Organisations can then complete the CDP questionnaire and submit their responses within the specified timeframe. Following submission, companies should engage with the CDP feedback process, addressing any issues or gaps identified. Finally, by leveraging the insights provided by the CDP, organisations can develop and implement targeted action plans to improve their environmental performance and drive sustainability. The questionnaires contain a big chunk of the whole process, as this step requires the most time and effort in gathering data, analysing it, and reporting it as a response to the questions in the survey. In April 2024, the CDP published changes to their questionnaires. Initially, companies could participate in three separate surveys focusing on climate, water, and forests. These submissions underwent evaluation by CDP-trained and accredited partners and received scores ranging from A to F. These scores served to publicly communicate to stakeholders the effectiveness of corporate sustainability efforts in each area. 

The CDP Scores Explained

A CDP score is a summative evaluation of a company’s disclosure and environmental performance. It serves as the indicator of a company’s progress towards aligning with a 1.5-degree, deforestation-free, and water-secure future. Aligned with the Taskforce for Climate-Related Financial Disclosures (TCFD) and other major environmental standards, the CDP’s methodology has become comparable across the market. 

The scores range from D- to A, guiding companies to four levels: Disclosure, Awareness, Management, and ultimately, Leadership. Achieving an A score signifies excellent performance and transparency in addressing the key issues.

Photo from CDP Scoring Guide

A - Leading: Organisations have demonstrated commendable practices and established strategies in minimising their environmental footprint on climate change, deforestation, and/or water management, aligning with clear science-based targets (SBTi) and action plans across their operations and supply chains.

B - Managing: Organisations acknowledge the environmental impact of their operations and have created strategies or initiatives to mitigate it. However, their objectives lack clarity or sufficient ambition to qualify them as leaders in the field.

C - Awareness: Organisations have recognised the impact of their activities on climate change deforestation, and/or water resources but have yet to integrate this awareness into their corporate strategy fully.

D - Disclosure: Organisations prioritise transparency by disclosing their activity data and environmental impact. However, they have yet to take tangible action beyond responding to the CDP questionnaire.

To earn A or B scores, companies must successfully showcase both awareness of their environmental impacts and their actions mitigating them–ensuring alignment with the 1.5-degree limit from the Paris Agreement. It is important to note, however, that CDP scores alone do not fully encapsulate a company’s sustainability efforts but serve as a marker of reported actions to manage their environmental impacts.

The Questionnaires

On the 30th of April 2024, the CDP released a new questionnaire, integrating the three environmental areas–water, forests, and climate–into a single report. In addition, companies are prompted to include responses about water, biodiversity, plastics, and forests based on their responses on other areas and as they relate to their sector. But even with these additional themes, the initial CDP scores will continue as the status quo. The updated CDP questionnaire utilises the Activity Classification System Methodology, which is the same scoring approach used by CDP to identify reporting requirements. This is employed to also link companies to the relevant themes and indicators for reporting. The linkage demonstrated how various aspects of the report are interconnected with other environmental issue areas covered within the questionnaire.

CDP's Full Corporate Questionnaire

The Full Corporate Questionnaire collects environmental data from large organisations. This questionnaire covers various aspects, such as greenhouse gas emissions, energy consumption, water usage, supply chain management, and climate change strategies. By completing this questionnaire, companies can provide stakeholders with a holistic overview of their environmental performance.

One of the key sections in the CDP questionnaire focuses on greenhouse gas emissions. Companies are required to disclose their Scope 1, Scope 2, and sometimes even Scope 3 emissions. This data is crucial for understanding the company's carbon footprint and identifying areas where emission reductions can be made. Additionally, companies are often asked to provide details on their emission reduction targets and initiatives to mitigate climate change.

Another important aspect covered in the questionnaire is water usage. Companies are requested to report on their water consumption, sources of water and water management practices. This information helps stakeholders assess the company's water stewardship efforts and evaluate potential risks related to water scarcity or pollution. By disclosing their water usage data, companies demonstrate their commitment to sustainable water management practices and transparency in reporting.

Photo from CDP Full Corporate Questionnaire Overview

CDP's SME Corporate Questionnaire

Small and Medium-sized Enterprises (SMEs) also have a questionnaire of their own catering to their specific challenges and experiences. This questionnaire focuses on essential environmental metrics and won’t include sector-specific questions or data points. The SME questionnaire is structured in a way that aligns with the full version but makes it easy for the business to understand where they should focus their attention and drive actionable steps.

The SME questionnaire covers key areas such as greenhouse gas emissions, water usage, and waste management practices but consists of fewer questions and data points, as well as simplifies question formats to reduce the reporting burden on SMEs. By providing data on these critical environmental indicators, SMEs can identify areas where they can reduce their carbon footprint, conserve resources, and implement more sustainable practices. This process not only benefits the environment but also has the potential to generate cost savings and operational efficiencies for SMEs in the long run.

Photo from CDP Corporate Disclosure Key Changes for 2024: Part II

For SMEs, participating in sustainability reporting can be a valuable tool for enhancing their reputation, attracting investors, and gaining a competitive edge in the market. By completing the SME questionnaire, businesses can showcase their commitment to environmental responsibility and transparency, which can lead to increased credibility and trust among stakeholders.

The 2024 Disclosure Timeline for Companies

The CDP company disclosures operate in an annual cycle. This year the schedule is as follows:

Resources and Tools for Navigating the Carbon Disclosure Project

The CDP provides a range of resources and tools to facilitate organisations' participation in the program. These include detailed guidance on completing the questionnaires, sector-specific analyses, webinars, workshops, and access to data-driven insights. Organisations can leverage these resources to navigate the CDP effectively and maximise the value they derive from the program.

On the other hand, NetNada’s CDP Reporting Checklist and in-house team experts can offer your company extra support in navigating the CDP process or other international standards. 

Best Practices for Improving Carbon Disclosure Scores

Many companies are apprehensive about approaching the CDP survey, fearing the risks posed by a potentially low score and its adverse effects on their business. Some may even consider not engaging with it at all. But if you follow these best practices in improving your CDP scores, you’ll turn the risk into a great opportunity for your company.

To improve your carbon disclosure scores, your company can adopt several best practices. Firstly, it’s essential to realise that with the increasing development of environmental regulations, participating in such assessments like the CDP or other similar frameworks, it becomes unavoidable in the near future and you would have to do it sooner or later.

Secondly, engaging in CDP surveys highlights your commitment to transparency–the most valuable for the assessors and investors. It also serves as a chance to take advantage of CDP’s comprehensive guidance and support in your journey towards authentic environmental stewardship.

Thirdly, keep in mind that your CDP score is a reflection of the transparency of your approach. Providing complete and detailed high-quality data can greatly influence your score. 

Another practice you need to consider in improving your CDP score is setting ambitious but realistic reduction targets aligned with science-based standards. Moreover, implementing strong and efficient data and process management systems can contribute to the quality and reliability of your reporting. Additionally, engaging in external verification of emissions data adds credibility and transparency to your company. Lastly, integrating sustainability practices into your operations and across your supply chain with stakeholders can further enhance your carbon disclosure performance.

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