Deep dive into this guide on CDP and learn what the CDP is, how it works, what is reported, what is a CDP score, and the benefits of reporting to the CDP and how FigBytes powered by AMCS can help.
The CDP is a not-for-profit organization that manages a global environmental disclosure system. It works with businesses, cities, states, and financial institutions. CDP is primarily focused on areas of environmental sustainability, with reporting organizations disclosing topics related to climate change, forests, and water security.
CDP also provides annual sustainability scoring, based on the depth of company reporting and their level of action year-over-year. Investors will refer to CDP’s annual A-List to help set investment priorities and identify sustainable partners.
CDP provides a variety of support materials to help organizations disclose through the CDP platform, such as questionnaires, reporting guidance, and scoring materials.
Companies are asked to disclose through CDP by their customers and investors. By completing CDP’s questionnaires on climate change, forests, and water security, companies can identify ways to manage their own environmental risks and opportunities and provide vital information back to their stakeholders.
CDP produces extensive reporting guidance for each questionnaire to provide clarity around questions, terminology, and requirements. The reporting guidance contains:
Click below to schedule your demo to learn how the FigBytes powered by AMCS can automate the process of reporting to CDP.
As a part of the AMCS suite of global solutions, the FigBytes and Quentic technology platforms combine data collection, management, and calculation with powerful reporting tools that simplify every EHSQ and sustainability compliance challenge.
CDP is an environmentally-focused reporting framework. Originally called the Carbon Disclosure Project, the change to the CDP acronym reflects the way the program has shifted to now include reporting under three categories:
Under each of these headings are a variety of questions based on your industry and size. The CDP has customized questionnaires to complete for each category, and these are updated regularly. Below are details on typical information to be included, but these will vary and should be verified before you begin data collection and reporting.
When thinking about climate reporting, many people go immediately to carbon emissions quantification, and while this is an essential part of a CDP report, it’s not the only factor to consider. Other elements to report are:
Governance – Reporting organizations need to provide details on leadership commitment and competence related to climate-related issues. This includes information on who has expertise and responsibility for climate-related policies and action items, and what incentives are provided to employees to improve climate-related performance.
Risk and opportunities – Organizations should be prepared to discuss their processes for identifying and addressing climate-related risks and opportunities. This includes identifying the people responsible, as well as the risk to any investments or portfolios, and how these risks are mitigated.
Business Strategy – World governments and the business community have made pledges under the Paris Agreement to reduce carbon emissions to the point where global temperature increases will not exceed 1.5oC by 2030. Under the CDP, reports need to include strategy details on how businesses will transition to meet this goal and eventually reach carbon neutrality.
Targets and performance – Once climate change targets are set, CDP reports will need to include annual updates on how those targets are being met, what is impeding performance, and what changes will need to be made in the coming year to ensure targets are reached.
Emissions methodology – In order for investors to make informed decisions using emissions data, they need to know they’re comparing apples to apples. CDP reports need to include information on the methodologies used to calculate emissions, any changes from previous years, and how changes to business activity might
impact data quality.
Emissions data – Reporting organizations will need to provide gross numbers for global Scopes 1, 2, and 3 emissions, as well as information on any excluded emissions including a rationale for this exclusion. Depending on your sector, you may also be required to complete disclosures on topics like energy use, carbon pricing, or biodiversity.
Depending on your sector, you may also be required to complete disclosures on topics like energy use, carbon pricing, or biodiversity.
Water quality and water scarcity are critical concerns for businesses, governments, and everyday people around the world. The CDP’s water disclosures help companies understand and reduce their dependence on freshwater sources, including throughout their value chain. These disclosures include:
Current state – Reporting organizations provide information on the volume of water withdrawn, discharged, and consumed over the year, including how much of that comes from scarce sources and where data gaps exist, including in the value chain.
Business impacts – If businesses or organizations have experienced any actual detrimental water-related impacts or been involved in any compliance or legal actions related to water use or discharge, these are reported here.
Procedures – Under this disclosure, organizations report their procedures for water-related risk assessments both in their operations and within their value chain. Additional questions are asked for water-intensive or higher-risk industries like chemicals, food & beverage, and oil & gas.
Water risk and opportunities – Since CDP is often used as a decision-making tool for investors, organizations need to report not only real business impacts but also potential risks and opportunities and how these are identified and managed. Facility-level accounting may be required if risks are identified.
Governance – As with climate disclosures, water disclosures require documentation on leadership responsibility and competence. This includes information on how C-suite employees or board members are incentivized to address water management, and how water risks are documented in financial reports.
Forests disclosures document an organization’s use and dependence on forest commodities and the risks and opportunities related to this. Disclosures include:
Current state – Reporting organizations will need to document the forest-related products they
buy, produce, use, and sell, as well as the percentage of revenue that is dependent on these products. If they own forestry land, this will also need to be documented.
Procedures – Here, organizations document their procedures for forest-related risk assessments
for both their own products as well as within their value chain.
Risks and opportunities – Under this disclosure, organizations report the identified forest-related
risks and opportunities that pose a substantive impact on their operations. If none are identified, a rationale as to why is to be included. In either case, the report defines what is a substantive financial impact.
Governance – As with climate and water disclosures, the forests disclosure requires details on board-level oversight on forests-related issues, including leadership competence in this area and how executives are incentivized to include forest considerations in their policies and strategies.
Business strategy – Since the CDP report is meant to be forward-looking, under this disclosure, organizations will document how forests-related issues are incorporated into their business strategy going forward.
Reporting organizations will need to document the forest-related products they buy, produce, use, and sell, as well as the percentage of revenue that is dependent on these products. If they own forestry land, this will also need to be documented.
Here, organizations document their procedures for forest-related risk assessments for both their own products as well as within their value chain.
Under this disclosure, organizations report the identified forest-related risks and opportunities that pose a substantive impact on their operations. If none are identified, a rationale as to why is to be included. In either case, the report defines what is a substantive financial impact.
As with climate and water disclosures, the forests disclosure requires details on board-level oversight on forests-related issues, including leadership competence in this area and how executives are incentivized to include forest considerations in their policies and strategies.
Since the CDP report is meant to be forward-looking, under this disclosure, organizations will document how forests-related issues are incorporated into their business strategy going forward.
The level of detail in the forest disclosures will vary significantly by industry or the companies within an investment portfolio.
No one likes a failing grade, but the CDP Score is an important part of tracking a reporting organization’s progress in achieving its environmental goals and improving its overall sustainability performance year-over-year. Scores are given to each disclosure and are, broadly speaking, as follows:
F – This is a Failing score where the necessary information has not been disclosed.
D-/D – This is the Disclosure level score. A D- or D score indicates that a disclosure has been made, but that it perhaps doesn’t include the level of detail needed to show
a real awareness of the implications of the disclosure on a business’s operations or organizational strategy into the future.
C-/C – This is the Awareness level score. Here, the organization has moved beyond simple disclosure and shows a better documented awareness of how the information disclosed has real implications for both the current state of operation and future planning.
B-/B – This is the Management level score. Moving beyond awareness, now the reporting organization has taken real action to manage its environmental impacts. The company has moved past data gathering and is now actively managing risks and seeking opportunities to improve its environmental performance.
A-/A – This highest score is the Leadership score. The organization is showing true environmental leadership. Their disclosures show best practices and how environmental considerations are fully integrated into strategy and policy. The definitions for leadership follow the recommendations of the TCFD Accountability Framework.
As climate and environmental – related disclosures become an increasingly important consideration in investment decisions, reporting to the CDP and programs like it are a standardized way of documenting your environmental performance for investors and may even be mandated by capital partners and financial institutions.
Beyond investor requirements though, there are a number of additional benefits for organizations submitting public environmental reports. These include:
Fully embracing a program like the CDP takes reporting organizations beyond vague and largely unquantifiable claims of sustainability and moves them toward real documented action that can only benefit them over time. Click below to schedule a demo of the FigBytes platform powered by AMCS to learn how it can help you streamline reporting to CDP and other sustainability frameworks and regulations.
Reporting to the CDP framework is a big undertaking for any organization, here are a few tips from FigBytes resident ESG therapist, Rajiv Jalim, on reporting to CDP:
#1 – Begin Reporting Today
Don’t wait till the stars are perfectly aligned with data, systems, and policies. Just start! With governments like the USA, Canada, and the EU already pressing forward
with reporting requirements based on the TCFD framework, disclosing through CDP enables companies to meet reporting rules in multiple regions thanks to CDP being fully aligned with TCFD recommendations.
#2 – Utilize CDP Guidance Resources
With so many reporting frameworks, it can be confusing to know where
to start. Sustainability professionals responsible for CDP reporting can learn a lot by going directly to the
CDP guidance resources and its various live webinars and workshops.
#3 – Deploy Technology to Manage Data
Reporting to the CDP can be overwhelming with the large amount of data needed. Technology solutions like FigBytes powered by AMCS, a CDP-accredited solution provider, can make reporting to CDP and other frameworks easy by collecting and managing all your ESG and sustainability data in one
centralized platform.
Reporting to the CDP can be a labor-intensive undertaking. There is a lot of information to collect from multiple parties, departments, offices, and even from customers and suppliers. If your organization is new to environmental reporting and you need to manage your learning curve, or if you want to streamline your data collection, a software partner like FigBytes powered by AMCS can help.
FigBytes powered by AMCS is a CDP-accredited partner. Our all-in-one sustainability platform will help you keep track of the data you need to compile, use verified methodologies to quantify environmental impacts like carbon emissions and water discharges and provide a report that is CDP compliant and can be customized as you need. If you’re ready to get your CDP reporting program off on the right foot, fill out the form below to contact us today.