April 15, 2021
The global impact of climate change is unprecedented in scope and scale, from fluctuating weather patterns that endanger food production to rising sea levels that intensify the risk of disastrous flooding. Despite the EU, UN, and various multinational corporations working to find solutions, enterprises face their own, urgent workload.
What does this mean for your business? Get on board and take a share of the responsibility through CDP disclosure of your environmental impact.
What is CDP?
CDP is a nonprofit that operates an international disclosure system for companies, investors, states, regions and cities to control and manage their environmental impact. CDP offers the tools and support to make environmental reporting and risk management a corporate standard and part of business strategy.
Despite increasing environmental degradation and global climate change, as detailed by NASA, corporate social responsibility is rising. Corporations are acting as advocates for change and calling attention to ecological issues. As the world progresses toward building a deforestation-free, climate-safe, and water-secure future, CDP disclosure offers the foundation for ambitious activity.
How does it work?
CDP uses scoring procedures to incentivize businesses to calculate and manage their environmental impact by participating in water security, climate change and forest questionnaires.
Each questionnaire has a distinct scoring method, which official in-house scoring teams and partners handle. The teams coordinate, gather scores and perform quality checks to assist aligning criteria scoring between partners and samples.
More than 9,600 companies have publicly disclosed environmental information through CDP since 2002. What is driving them to cause promoting an environmentally stable global society?
Why should a company disclose?
The market demand for environmental disclosure continues to grow. Why? As Forbes Technology Council recently wrote in April 2020 "Meet Investors Halfway With Better ESG Reporting”: "As sustainability and impact investing become mainstream, companies are facing more pressure from all sides — investors, employees, consumers and media — to up their game."
Take a look at the EU’s European Commission “Developments and Forecasts of Climate Change and Environmental Degradation” which delivers shocking news. “Humanity is now using nature 1.75 times as fast as the planet’s ecosystems can regenerate; Carbon Dioxide (CO2) emissions are responsible for an estimated 60% of humanity’s demand on nature.”
Burgeoning market demand for disclosure:
In discussing why to disclose as a company, the CDP reports that 590 stakeholders with assets of more than $110 trillion (USD), and over 150 substantial buyers with more than $4 trillion (USD) to spend on procurement, are demanding that thousands of companies use the CDP.
Morgan Stanley’s third Sustainable Signals 2019 survey shows that 85% of individual investors and 95% of millennials are interested in sustainable investing — an increase of approximately 10% on both since 2017. Additionally, 86% of individual investors are confident that companies adopting environmental, social and governance (ESG) practices will be more lucrative and better long-term investments.
By reporting to CDP and responding to stakeholders’ disclosure requests, you may gain a competitive advantage — potential for improved stock market performance, secured tenders, and access to capital. Disclosure allows you to get ahead of policy and regulatory changes, confront growing risks, and discover new tactics to meet global customer and investor demands.
Gain respect and improve your company’s reputation:
Trust and reputation can never be bought. Transparency and action to address growing public conservational concerns builds trust, proving your environmental leadership and advocacy.
Where to start?
Now that you hopefully appreciate the “why,” you’ll be asking “how?” The CDP website is filled with user-friendly data to spur companies, governments, and cities reporting and annual disclosures. CDP provides practical guidance for first-time reporters, who aren't expected to reach the finish line first.
CDP understands that reporting is a journey and that you might not yet be fortified with the correct systems and information. Nevertheless, the act of starting initiates a conversation between you and your teams about a plan of action to manage question types and to improve each year.
- Customers and investors may ask for information on climate change, water security and forests.
- Visit the CDP corporate guidance page to prepare for the questionnaire(s) to which you have been requested to respond.
- The questionnaires offer a framework to supply stakeholders with ecological data about policy and governance, opportunity and risk management, environmental targets and strategy, and scenario analysis. This process involves data gathering from different company segments, including suppliers, sparking an internal dialogue vis-à-vis environmental issues’ strategic significance.
- Understanding that first-time responders may not answer all the questions, the CDP encourages fully responding to a smaller question set. This response will form a pillar from which to improve and develop in future reporting cycles.
- Meanwhile, you can still provide qualitative, if not quantitative, accounts of your activities and plans. The fact that you have started your CDP journey does much to prove to customers or investors that you value environmental issues and transparency. The framework of the questionnaire helps you achieve that while simultaneously developing best practices.
How to disclose?
Though lengthy, the CDP’s detailed “Using CDP’s Disclosure Platform – Companies” manual contains everything you need to know about how to report — from the basics, to activating your questionnaire, to using your dashboard portal and the Online Response System (ORS).
Use CDP’s disclosure platform to reply to requests and publish data to the CDP and stakeholders. The dashboard contains information regarding questionnaires, a link to activate them, your user account page, guidance tools and more. The ORS is where you insert info into your questionnaire(s) and submit it.
You will receive the information you need, including an invitation email indicating that you have been nominated, invited, or self-selected to participate, deadlines and more.
Companies receive a score, from D- to A. The "A List" identifies sustainability leaders in climate change, water, and forests categories. Although CDP publishes the A List annually, first-time reporters can keep their scores private. In 2020, CDP stated that more than 9,600 companies disclosed their ESG metrics, a 70% increase since 2015. Of those, 313 made CDP's prestigious A List for environmental transparency and action (45% and water security disclosures, only the top 5% made the A List. Question responses are scored on measures of “disclosure, awareness, management, and leadership.”
Measuring and publishing results are the first steps to accountability, which leads to environmental action, and CDP is the gold standard for corporate environmental reporting.
(Measuring and publishing results are the first steps to accountability, which leads to environmental action, and CDP’s reporting system provides businesses with unparalleled engagement on environmental issues worldwide.)
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