April 14, 2021
CDP, a globally recognized nonprofit, conducts environmental, social and governance (ESG) reporting with the goal of sustaining economies and the health of the globe. By disclosing ESG data, reporting to CDP helps companies increase their accountability and transparency. The organization emphasizes environmental leadership with a scoring system that ranks companies from D- to A. Each grade corresponds to the company’s level of progress, with the goal of improving toward leadership:
- D score begins with disclosure.
- C score signals a move to awareness.
- B score suggests a transition to managing environmental impact.
- A score culminates in environmental leadership.
According to CDP, “You can’t manage what you don’t measure.” Therefore, a strong CDP score will be fueled by thorough data, which requires collaboration between various parts of an organization.
This detail-oriented approach comes with many sustainability benefits, including:
- Helping companies assess and manage risk.
- Improving reputation and brand image.
- Strengthening employee and community buy-in.
- Attracting investors.
- Slowing global climate change.
Only leaders in environmental transparency and action make the CDP A list. In 2020, 273 companies worldwide made the CDP A List for climate change, 16 made the A list for forests, and 106 companies made the A List for water security. Out of these companies, only 10 made the A list in all three categories. We’ve compiled some tips for gathering data and preparing your organization to improve your CDP score with each annual disclosure.
1. Unify your organization around sustainability
Any ESG tracking and reporting effort will run more smoothly if all parts of your organization function together to support its vision of sustainability. Begin by considering how sustainability integrates into your organization’s entire mission, its products or services, and its long-term business plan.
Sustainability can be integrated into your company’s board of directors, C-suite, management and employees. It can also be reflected in your customer or client base. To generate an organization-wide sustainability initiative, it helps to have clear internal and external communication about your ESG tracking vision. Declaring your commitment to sustainability tells the organization and its stakeholders why you would like to track ESG metrics and how it will happen.
Here are a few additional ways to unify your organization:
- Consider how sustainability is integrated at every step of the process, from product innovation to distribution.
- Create encouragement programs, such as sustainability awards for employees that reduce waste and energy use.
- Educate various parties on the benefits of your sustainability efforts. Educational content can be tailored for employees, managers, customers, etc.
- Create liaisons between different departments when necessary, such as directing marketing to collaborate with development to tell prospective customers why your products or services have become more sustainable.
2. Move from risk to opportunity
Using your CDP report as insight into an organization’s risks and potential growth can help gather a holistic understanding of the purpose of reporting. It also can prepare you to launch initiatives once your report is complete.
Think about each risk and how to transform it into an opportunity by moving from inaction to action. Brainstorm potential initiatives by looking through the risks and opportunities section of the CDP questionnaire. Read the report of a peer or competitor in the same industry to understand how they have worked on converting risks into opportunities.
If you have already reported to CDP in the past, make sure you thoroughly understand your previous year’s score. Then, consider categories you might think of as a risk, such as water consumption. Think of an action to turn the risk into opportunity. Reducing water might bring additional opportunities such as lowering costs, creating innovative products, and gaining a positive public reputation.
3. Set and reach specific targets
The more clearly an organization outlines and tracks its goals, the more easily it will reach those goals. Therefore, setting a distinct target for metrics like emissions, renewable energy or production will keep the organization on track. Science-based targets (SBTs) will help confirm that your goals are in line with expert-backed requirements to restrict global warming below 2 degrees Celsius.
Here are some ways to effectively craft and meet your targets:
- Think about long-term goal(s). Where would the organization like to be in 5 to 10 years? Once the long-term goal has been clarified, break that goal down into achievable benchmarks from year to year, or quarter to quarter.
- Make sure to be thorough and detail-oriented. If you use a reporting software, set it to regularly collect data or remind employees (or suppliers) to input data, if needed.
- Match the ESG metrics to the organization’s business and financial goals. With each reporting cycle, check on the status and alignment of these different, yet related, goals.
Some metrics will be harder to track and manage because of their details and categories, such as greenhouse gas (GHG) emissions. Emissions are broken into Scope 1, 2 and 3 emissions. Tracking Scope 3 emissions might require working closely with your suppliers to understand the output of your entire supply chain. For that reason, having a robust tracking software and the assistance of third-party experts will take your metrics tracking and organizational goals to the next level.
4. Share results
Whether your organization has met its targets or not, communicating your reporting process and results internally and externally has a wide array of benefits. Telling non-governmental organizations (NGO), stakeholders and other communities about ESG tracking efforts can help improve your organization’s reputation by showing a dedicated response to global climate change. Furthermore, ESG-driven initiatives require innovation, which attracts the attention of investors.
Sharing your results internally can also help your CDP score over time. Employees at all levels and departments have a unique understanding of an organization’s business model and functionality. Therefore, sharing results might lead to groundbreaking conversations and plans to improve scores from year to year.
For examples of these tactics, CDP’s Stories of Change from 2020 outlines how companies from a variety of industries have unified, set targets, improved and communicated, all while improving their CDP scores. By aligning every component of your organization’s mission, vision and operations toward sustainability, your CDP score should improve over time.
UL’s 360 Sustainability Essentials data management and reporting solution can assist your efforts to improve your CDP score. Learn more about how to grow your organization and improve its tracking efforts with this CDP Gold-Accredited software.
360 Sustainability Essentials software
Read more about 360 Sustainability Essentials packaged software and how it can help you get up and running in as little as six weeks reporting to all the major frameworks such as CDP, GRI, SASB, DJSI e.g.