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CDP stands as one of the foremost and globally acknowledged platforms for sustainability reporting. Acting on behalf of investors who collectively manage assets worth US$136 trillion, CDP’s published scores enable these investors to evaluate how well companies integrate sustainability into their strategies and operations, thereby assessing the climate risks within their portfolios.
The urgency of high-quality climate disclosures has reached unprecedented levels, especially given the substantial threat the climate crisis poses to the global economy and the shrinking window to curb global temperature rise and achieve net-zero emissions. The surge in CDP disclosures over the last few years underscores the influential role of the investor community in shaping transparency and advancing climate initiatives.
With the 2024 deadline now behind us, our global team of sustainability reporting experts are shifting focus to 2025. Here are their top five critical insights for the next reporting season:
Why you should amplify your CDP reporting strategy
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CDP has collaborated with leading reporting standards and frameworks bodies across the globe. These partnerships will enhance alignment and significantly alleviate the reporting burden on companies. They will also ensure that corporate disclosures are broadly applicable across the market, guided by the highest ambitions. As a result, corporations will provide consistent, comparable, and valuable environmental data to capital markets, procurement teams, and policymakers globally.
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CDP has added Biodiversity and Plastics to its questionnaire which means companies need to begin building programs, expertise, and data collection on these new reporting themes. There has also been an expansion with Water and Forest. Because climate change is just one aspect of a company’s impact, CDP plans to continue its expansion into other nature-based planetary boundaries. We expect this trend to continue and recommend getting ahead on these additional impact areas.
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Companies must disclose a transition plan aligned with 1.5°C, publicly available, and inclusive of board-level oversight and management responsibility with a feedback mechanism in place or planned within 2 years. Also, a near-term emission target validated by the Science Based Targets initiative (SBTi) is mandatory or the target must be company-wide, cover 95% of Scope 1 and 2 base year emissions, and have a goal date of 5-10 years from the base year.
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1. What does CDP mean?
CDP is a global non-profit organization that was earlier referred to as the Carbon Disclosure Project. Their goal is to work towards environmental sustainability and the mitigation of climate change. Founded in 2000, they wish to encourage companies to disclose their environmental impact. Thanks to their services, it is possible for investors, companies, and governments to assess the extent of impact the companies have on climate change, water security, and deforestation. CDP collects all the data every year and grants ratings based on companies’ sustainability practices. The higher the CDP rating, the more environmentally conscious the company is. This, in turn, translates into better transparency and increases the value of the organization from the perspective of investors and stakeholders.
2. Is CDP an ESG rating?
These are not the same and can’t be used interchangeably. ESG ratings can use the CDP score that promotes environmental sustainability and transparency. This rating is quite popular among investors in assessing how much of an impact a selected company has. CDP is more of a platform that provides investors, companies, and governments with sustainability reporting and performance data. The ESG rating, on the other hand, is a set of formal and widely accepted criteria that entities can use for evaluation purposes.