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What is CDP Reporting?

CDP reporting standards refer to the process where organisations disclose their environmental impact through the Carbon Disclosure Project (CDP), a global non-profit organisation. CDP collects and scores data from businesses, governments, and investors on how they manage environmental risks, including carbon emissions, water usage, and deforestation.

 

The process involves submitting detailed information through CDP’s questionnaires, which cover areas like greenhouse gas emissions, climate change mitigation efforts, and environmental strategies. CDP scores organisations based on factors like data quality, transparency, and alignment with ecological frameworks. The goal is to enhance environmental transparency and promote sustainable practices, enabling stakeholders to make informed decisions.

Who is using CDP Reporting?

Many different domains are using the Carbon Disclosure Project Framework:

1. Marketers & Advertisers: In the area of Marketing & Advertiser, CDP Reporting standards are used to create opportunities to attract potential customers, marketing strategies, and to clarify the needs of the Customers, and customised Solutions to meet the Business Goals.
2. Companies of Various Sizes and Industries: Any business dealing with scattered data sources or data silos can benefit from a CDP.
3. Enterprise-Level Companies, Agencies, and E-commerce Companies: These organisations often utilise CDPs, programmatic advertising, digital marketing, and advanced analytics.
4. Companies across many sectors, including: Retail, Financial Services, Technology & B2B SaaS, Healthcare, D2C, Media & Entertainment, Travel & Hospitality, Automotive, Insurance, Utilities & Energy, Education, Telecommunications, and Consumer Subscriptions.

Why are CDP Reporting Standards Important?

CDP reporting standards are essential because it promote environmental transparency and drive meaningful action against climate change. Here’s why it matters:

Improves Environmental Accountability: By disclosing environmental data, organisations gain a clear understanding of their ecological impact, including carbon emissions and resource usage, which helps them identify areas for improvement.

Supports Climate Change Mitigation: CDP reporting standards encourage businesses to adopt more sustainable practices, set emission reduction targets, and contribute to global efforts to combat climate change.

Enhances Investor Confidence: Investors increasingly prioritise sustainability. CDP ratings allow businesses to demonstrate their commitment to environmental, social, and governance (ESG) principles, making them more attractive to environmentally conscious investors.

Prepares for Regulatory Changes: As environmental regulations tighten, CDP reporting standards enables businesses to stay ahead of compliance requirements by understanding and proactively addressing their carbon footprint.

Enhances the Brand Reputation : Transparency in environmental practices enhances a company’s image, appealing to consumers and stakeholders who prioritise sustainability in their decisions. 

Building Trust: A company that is transparent about its ESG reports, including its Environmental, Social, and Governance performance, builds trust among stakeholders, investors, and regulators.

CDP (Carbon Disclosure Project) Reporting Services

• Data Collection and Management
• CDP Questionnaire Preparation
• Performance Analysis and Benchmarking
• Strategic Recommendations

Focus Areas of CDP reporting

Climate Change: This includes data collection on GHG emissions in Scope 1, Scope 2, and Scope 3. Under this, the organisations are encouraged to disclose their governance structure, corporate strategies, carbon credits, and climate risks & opportunities. 

Water Security: How organisations are maintaining and impacting the water resources. It encompasses water-related risks, impacts, opportunities, and dependencies. The disclosures contain information regarding the proper usage and efforts to improve the efficiency & quality of the Water. 

Deforestation: Under CDP Reporting, it monitors deforestation practices, focusing on those linked to supply chains, particularly those involving high-risk commodities like soy, palm oil, and timber. CDP monitors deforestation practices and assesses the sustainability of corporate supply chains to promote responsible sourcing and land management. 

Plastics: The organisation promotes transparency in plastic use, waste management, and strategies to reduce the plastic footprint. Companies disclose information on plastic production, usage, and disposal practices.

How does CDP (Carbon Disclosure Project) reporting work?

The CDP reporting standards process involves a structured approach where organisations disclose their environmental impact and sustainability efforts. Here’s a breakdown of how it works:

1. Initial Disclosure:  

Questionnaires: CDP releases its annual questionnaires in January, covering topics like climate change, water security, and deforestation.

Voluntary or Requested Submission: Organisations can voluntarily disclose their data or respond to a direct request from CDP.

Preparation: Companies gather relevant data and metrics to ensure alignment with the CDP’s reporting requirements.

2. Reporting of CDP

Submission Portal: All disclosures are submitted through CDP’s online platform.

Scope of Reporting: Organisations provide data on greenhouse gas (GHG) emissions (scopes 1, 2, and 3), resource usage, and sustainability practices.

Integration with Frameworks: Reporting often aligns with other frameworks, such as the Science-Based Targets (SBT) or the Global Reporting Initiative (GRI).

3. Assessment: 

Criteria Review: 

• CDP evaluates submissions based on several criteria, including.
• Adherence to the GHG emissions target (Scope1,2 & 3)
• Verification and accuracy of data provided.
• Ambition of Climate mitigation and adaptation strategies.

Comparative Benchmark: 

• Submissions are assessed against industry peers and global standards.

 

4. Scoring

Rating Categories:

• CDP scores the organisation across four key categories.
• Leadership: Excellence in climate strategy and execution.
• Management: Active management of environmental risks and opportunities. 
• Awareness: Understanding and monitoring of Environmental Risks.
• Disclosure: Transparency and quality of disclosed information. 

Final Score

Scores range from A (Leadership) to F (Failure to disclose)

5. Carbon Disclosure Rating

Final Outcome: Organisations receive a Carbon Disclosure Rating summarising their environmental performance and readiness.

Strategic Insights: Businesses utilise these ratings to inform their ESG Strategies, enhance practices, and position themselves as leaders in sustainability. 

This process not only helps organisations understand and manage their environmental footprint but also provides a platform for communicating their efforts to stakeholders, investors, and the public.

What are the CDP Disclosure requirements?

The Carbon Disclosure Project varies by Industry, Company Size, and additional CDP commitments from companies and governmental entities that choose to respond. They align with the Task Force on Climate-related Financial Disclosures (TCFD), which requires reporting on Sustainable and Environmental finance, as well as climate risks associated with financial activities.  Climate-related financial risks are a concern for companies and most entities that share climate information. However, companies can also provide additional information on water, forests, and supply chain criteria.

• Climate: Companies share information about how they address climate impacts, risk, emissions management, and decarbonization opportunities.
  
  Water: Roughly 20% of all companies also report on water-related issues and risks.
• Forests: Companies can choose to disclose their efforts to verify and manage forest commodities, as well as identify supply chain risks associated with deforestation. 
• Supply Chains: These criteria enable companies within the supply chain of other organisations to identify climate risks, decarbonization opportunities, and emissions associated with scopes 1, 2, and 3.

For the 2024 CDP Questionnaire, companies will be prompted to include responses on these additional thematic areas tailored to their specific sector. CDP scores will continue to be released across the themes of climate, forests, and water, but companies will be able to comply through a single report. While questions will be included on the new thematic areas of biodiversity and plastics via the climate questionnaire, respondents will not yet receive scores for biodiversity and plastics. Questions about forests and water will largely depend on how relevant these themes are to a company’s sector and its previous responses. 

The new CDP questionnaire will rely on the CDP’s Activity Classification System Methodology, the same scoring methodology CDP uses to identify reporting requests. From 2024, it will also be used to connect companies to the specific themes and indicators for reporting, illustrating how aspects of the report are integrated with other environmental issue thematic areas within the questionnaire.

Why Timely CDP Submission Matters?

• Enhances ESG Ratings
• Improves Investor Confidence
• Supports Regulatory Compliance
• Demonstrates Climate Leadership

Why a good score matters?

By achieving a Carbon Disclosure Project score is crucial for several factors:

1. It signals a strong environmental performance of Company’s commitment to Sustainability & Responsible Practices.
2. Due to CDP reporting consultants the Company’s reputation & credibility enhances per day. It builds up the trust of Investors, Customers, and other stakeholders.
3. High Carbon Disclosure Project attracts investors seeking sustainable investment, potentially lowering financing Costs.
4. It provides a standardized framework for comparing a Company’s environmental performance against its peers.
5. It helps companies better understand and mitigate environmental risks within their operations and supply chains.
6. There are many investors who incorporate sustainability metrics, including CDP score, into their decision-making processes.
7. They prepare for regulatory compliance. The CDP guidelines can help Companies prepare for and comply with evolving environmental regulations.

A good CDP score reflects a company’s journey towards greater environmental Sustainability & Leadership, offering tangible benefits for both the business and the Planet.