CDP questionnaires and publication of results
CDP (formerly “Carbon Disclosure Project”) is an independent organization that conducts annual assessments of companies’ environmental impact worldwide. For this purpose, CDP collects and evaluates data from participating companies. The information is obtained from three detailed sector-specific questionnaires (Climate Change, Water and Forest) that companies are requested to complete.
The latest CDP assessment results for 2022 were published on December 13. They provide a clear insight into the evolution of companies’ transparency on their environmental impact and their willingness to take action in this area. CDP scores range from A to D-.
A clear increase in the participation rate
This year, more than 18,700 companies representing half of the global market capitalization reported their environmental data through CDP and completed at least one of the available questionnaires. Compared to 2015, the year the Paris Agreement was signed, this represents a 233% increase, and a 42% increase compared to 2021.
A-List: Strong increase for Climate, slow progress for Water and Forest
Besides the overall increase in CDP participants, more companies than ever are considering the impact of their business practices on climate change. Among all the scored companies, 411 were listed on the global CDP’s annual A-List, worth a total of $11 trillion. 12 companies out of all 900+ companies requested to disclose against all three CDP questionnaires, were awarded Triple A scores (a straight A in all questionnaires), that is 1.3%.
280+ companies were rewarded with an A-score for their climate change disclosures, which is reflected by a 34% increase since 2021. The requirements to score an A in the climate questionnaire include a diligent risk management, a robust governance structure, oversight on climate issues by the board and verified scope 1 and 2 emissions. In addition, it is beneficial to have emission targets approved by the Science Based Targets initiative. Furthermore, companies should strive to provide a complete inventory of their scope 3 emissions.
Contrary to this, and also to the last year’s increase in A-Listers for both forest and water security, progress on these two questionnaires remains slow in 2022. Only one more company than last year fulfilled the requirements for the A-List for the forests questionnaire. The number of Water Security A-Listers even shows a decrease of 12,7% (118 in 2021 to 103 in 2022).
Stagnating CDP scores and many non-participants
Despite the overall progress in the number of participating companies and the increase in companies on the Climate A-list, it must also be noted that many companies are making only small improvements. Some even are not complying with the disclosure request at all. 66% of companies rated D- to A- in 2021 did not improve their scores in 2022. This calls for accelerated environmental transparency and action efforts. A raised bar and increased challenges in the ranking standards could be one reason for far too many companies remaining stagnant.
In addition, it is important not to ignore the fact that despite the record breaking participation of 18.700+ companies, more than 29.500 companies failed to disclose. These companies are worth at least $24.5 trillion in market capitalization. They received an F for not responding to disclosure requests from their investors and clients or provided insufficient information in their responses.
Environmental transparency as an inevitable requirement
Overall, environmental transparency is becoming more significant across markets. More than 680 investors (590 in 2021) and 280+ major buyers (200 in 2021) requested corporate environmental data through CDP in 2021, covering over US$130 trillion in assets and US$6.4 trillion in procurement spending.
This trend is expected to continue in the coming years. More and more companies will face the challenge of making data on their environmental performance available to their stakeholders or the general public. By accepting it, they create transparency as a basis for trusting business relationships. Participation in CDP not only helps to improve and enhance reputation and thus build a competitive advantage, but also to compare and evaluate one’s own performance and to uncover risks and opportunities.
DFGE’S support
Since 2014, the Institute for Energy, Ecology and Economy (DFGE) has been supporting well-known companies in answering the CDP questionnaire as a Silver Climate Change Consultancy Partner. In addition to assisting with the CDP Climate Change and CDP Supply Chain Program, DFGE also supports companies in the areas of Water and Forest.
DFGE is the first selected CDP partner for the German-speaking region. Its CDP accreditation provides a special quality guarantee including specific Science Based Targets.
DFGE can support you in collecting data for a successful participation in the CDP Assessment. This will not only result in an improved score, but will also generate synergy effects for the fulfillment of customer requests (e.g. regarding participation in EcoVadis), sustainability reporting standards (e.g. GRI) and legal regulations (e.g. the EU Corporate Sustainability Reporting Directive, CSRD). Having environmental performance data available is also needed for the development of a holistic ESG Strategy, which should be the compass for your future sustainability roadmap.
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Sources
- https://www.cdp.net/en/companies/companies-scores
- https://www.cdp.net/en/scores/cdp-scores-explained
- https://www.cdp.net/en/articles/media/just-1-point-3-percent-of-companies-leading-across-all-environmental-issues-cdp-disclosure-scores-reveal
