Getting Ready for the CDP? Here’s What You Need to Know.

Last year, over 23,000 companies and over 900 cities, states and regions around the globe took a significant step towards environmental transparency and accountability by disclosing their greenhouse gas (GHG) emissions through CDP.  This remarkable (and growing!) participation underscores a trending recognition of the importance of environmental reporting in addressing climate change and promoting sustainable practices.

If you’re considering embarking on the journey of CDP reporting, it’s essential to understand the nuances and benefits of this process. CDP reporting not only helps organizations identify and manage their environmental impacts but also enables them to demonstrate their commitment to sustainability to stakeholders, investors, and the public. By participating in CDP reporting, you’re joining a global movement of entities that are taking proactive steps to measure, manage, and reduce their environmental footprint.

Whether you’re a seasoned reporter or new to the world of environmental disclosure, this guide will provide you with the insights and tools you need to navigate the CDP reporting landscape successfully.

What is the CDP?

CDP is an international not-for-profit charity that operates a reporting system for companies, investors, cities, states, and regions to track and manage their environmental impacts. CDP aims to encourage and facilitate the measurement, reporting, and management of carbon emissions, deforestation, and water usage to promote sustainability and reduce environmental risks. By providing a platform for environmental transparency, the CDP helps investors, companies, and governments make informed decisions to drive environmental action and mitigate climate change.

A Brief History of the CDP

The CDP, formerly known as the Carbon Disclosure Project, was founded in 2000 by Paul Dickinson, Tessa Tennant, and several other individuals in London, UK. The organization was established with the aim of encouraging companies to disclose their environmental impacts, particularly their greenhouse gas emissions, to promote transparency and accountability.

In its early years, the CDP focused on sending questionnaires to the world’s largest companies, asking them to report their carbon emissions and climate change strategies. The response rate grew steadily, as investors and stakeholders increasingly recognized the importance of environmental disclosure in assessing risks and opportunities. 

Over the years, the CDP expanded its scope beyond just carbon emissions to include water security, deforestation and plastic reduction. It also started working with cities, states, and regions to help them manage their environmental impacts.

The CDP operates on the principle that measuring and disclosing environmental information is crucial for managing risks and identifying opportunities for improvement. The organization’s influence extends globally, with its data being used by investors, policymakers, and other stakeholders to make informed decisions and drive environmental action. The CDP’s annual scoring process also encourages continuous improvement in environmental performance among reporting entities. Each year, CDP pays special accolades to its highest scoring ‘A’ List companies.

Today, the CDP is recognized as one of the leading global platforms for environmental disclosure, with thousands of companies, cities, states, and regions reporting their environmental data through its platform annually. In 2021, CDP took it a step further yet again with their Five-Year Strategy to cover more environmental issues, increase their focus of targets and accelerate change through disclosure, insight and action. The organization continues to play a crucial role in driving corporate and governmental action on climate change and sustainability. 

How Does CDP Reporting Work?

CDP reporting works through a standardized disclosure process that enables disclosing entities to measure and manage their environmental impacts. Here’s an overview of how it works:

Questionnaire: The CDP provides a set of questionnaires tailored to different sectors and entities (companies, cities, states & regions and public authorities). These questionnaires cover various aspects of environmental management, including greenhouse gas emissions, energy usage, water management, deforestation, supply chain and more.

Data Collection: Organizations collect and compile data on their environmental performance, policies, and strategies. This often involves gathering information from different departments and using established methodologies to calculate emissions and other environmental metrics.

Submission: The completed questionnaire, along with any supporting documentation, is submitted to the CDP through its online platform by a specified deadline.

Scoring: The CDP evaluates the responses and assigns scores based on the level of detail, transparency, and performance demonstrated in the disclosures. Scoring criteria are updated regularly to reflect evolving best practices and standards.

Feedback: Organizations receive feedback on their submissions, including scores and insights into areas for improvement. This feedback helps entities understand their environmental performance and identify opportunities for action.

Reporting: The CDP publishes reports and data sets based on the aggregated information from the disclosures. These reports are used by investors, policymakers, and other stakeholders to assess environmental risks, opportunities, and trends.

Benchmarking: Organizations can use their CDP scores and the broader data sets to benchmark their performance against peers and industry standards. This can inform strategic decision-making and help drive improvements in environmental management.

What is a CDP Score?

A CDP score is a rating assigned to reporting entities based on their environmental disclosure and performance. An entity’s score serves as a snapshot showing where they are on the road towards being in line with a 1.5-degree, deforestation-free and water-secure future. CDP’s scoring methodology is fully aligned with the  International Sustainability Standards Board (ISSB) and with other major environmental standards.

 

CDP scores are categorized as follows:

  • Disclosure (D-/D Score) – A “D score” is the starting level of scoring and indicates that a company has gone through the process of disclosing to start their environmental journey. Overall, it indicates that the entity has significant room for improvement in its environmental management and reporting. It suggests a need for a more proactive and comprehensive approach to addressing environmental issues and enhancing transparency in disclosure.
  • Awareness (C-/C Score) – A “C score” indicates a more moderate level of environmental awareness. It suggests that a reporting entity has taken some steps to address environmental issues. Overall, a “C score” indicates that the entity is aware of environmental issues and has begun to take action, but there is room for more substantial and systematic efforts to improve environmental management and performance.
  • Management (B-/B Score) – A “B score” indicates a good level of environmental management and disclosure. It reflects the entity’s efforts to address environmental issues, but with room for improvement in certain areas. Overall, a “B score” indicates that the entity is actively managing its environmental impacts and has a good level of transparency in its reporting.
  • Leadership (A-/A Score) – An “A score” is the highest rating that an entity can achieve for its environmental performance and disclosure. An “A score” indicates that the entity has demonstrated strong environmental leadership and management across the board in climate change, water security, and deforestation. Achieving an “A score” is a significant accomplishment that sets a benchmark for others in the industry or region to aspire to emulate.

CDP scores are publicly available on the CDP website; this is meant to encourage reporting entities to improve their score with each new annual report submission. Investors, policymakers, and other stakeholders to actively assess the environmental performance and risks of companies and governments. High scores can enhance an entity’s reputation, attract investment, drive competitive advantage and demonstrate commitment to sustainability while low scores highlight areas for improvement and potential risks.

Benefits of CDP Reporting

Reporting to the CDP offers many benefits.

Improved Transparency and Accountability
Disclosing environmental information through the CDP demonstrates an entity’s commitment to transparency and accountability, which can enhance its reputation and strengthen stakeholder trust.

Risk Management, Mitigation & Streamlining of Operations
By identifying and disclosing environmental risks, organizations can better prepare for, manage and mitigate the impacts of climate-related risks, reducing potential financial and operational impacts and protecting their economies and communities. The process of collecting and analyzing environmental data for CDP reporting can help companies identify opportunities to improve operational efficiency, reduce costs, and minimize environmental impacts.

Benchmarking
CDP reporting allows companies to benchmark their environmental performance against peers and industry standards, helping them identify areas for improvement, learn best practices and set more ambitious sustainability goals for improvements.

Regulatory Compliance
As environmental regulations become more stringent, CDP reporting can help entities stay ahead of compliance requirements and demonstrate their commitment to regulatory adherence and environmental stewardship.

Investor Attraction
Many investors use CDP data to assess environmental risks and opportunities when making investment decisions. Reporting to the CDP can make an entity more attractive to investors and funding organizations to increase access to capital.

Other reported benefits include:

  • Market Differentiation
  • Stakeholder Engagement
  • Strategic, Data-Driven Decision-Making
  • Enhanced Sustainability Planning
  • Reputation and Leadership
  • Improved Environmental Management

Overall, reporting to the CDP can provide companies with a framework for managing their environmental impacts, enhancing their sustainability performance, and creating long-term value.

How to Get Started with CDP Reporting

To get started with CDP reporting, follow these steps:

  1. Register with CDP: The first step is to register with the CDP by creating an account on their website. This will give the organization access to the CDP’s reporting platform and resources.
  2. Understand the Reporting Requirements: Review the CDP’s reporting guidance and questionnaires to understand the specific requirements for your sector and the type of information you need to disclose. The CDP provides sector-specific questionnaires for companies and separate questionnaires for cities, states and regions.
  3. Engage Stakeholders: Engage with internal and external stakeholders who can provide input and support for the reporting process. This may include employees from different departments, suppliers, partners, and external consultants.
  4. Collect Data: Start collecting the necessary data for the CDP questionnaire. This may include information on greenhouse gas emissions, energy use, water management, deforestation, and climate-related risks and opportunities. It’s important to use accurate and reliable methods for data collection and calculation.
  5. Complete the Questionnaire: Fill out the CDP questionnaire with the collected data and information within the reporting window. Be transparent and provide as much detail as possible to accurately reflect your organization’s environmental performance and management.
  6. Review and Submit: Before submitting the questionnaire, review your responses to ensure accuracy and completeness. Submit the completed questionnaire through the CDP’s online platform by the specified deadline.
  7. Analyze Feedback: After submission, the CDP will provide feedback on your organization’s disclosure, including a score and areas for improvement. Use this feedback to enhance your environmental management and reporting in the future.
  8. Plan for Continuous Improvement: Incorporate the insights gained from the CDP reporting process into your organization’s sustainability strategy. Set goals for improvement and develop action plans to address identified gaps and opportunities.
  9. Stay Informed: Keep up to date with the latest developments in CDP reporting requirements and best practices. Participate in CDP workshops, webinars, and other resources to enhance your reporting skills and knowledge. Be sure to look over CDP’s key changes for 2024 when forming your reporting strategy.

By following these steps, organizations can successfully initiate and complete the CDP reporting process, contributing to their overall sustainability efforts and transparency.

How SustainaBase Can Help With the CDP Reporting Process

Engaging in CDP reporting is a demanding process for most. It requires gathering extensive information from various sources, including different departments, offices, customers and suppliers. This is where a software partner like SustainaBase comes in.

SustinaBase is a complete greenhouse gas management platform, turning carbon data into powerful sustainability action. Our carbon accounting platform simplifies environmental data to help you collect, monitor and manage environmental data — carbon, water, and waste. Generate GHG Protocol compliant reports that make metrics reporting to the CDP, stakeholder and other frameworks simple. From middle markets to extensive global supply chains, we equip forward-thinking companies with robust, investor-grade, auditable carbon data that fuels sustainable impact.

To kickstart your CDP reporting journey on a solid footing, reach out to us today.

More Resources


For Companies
www.cdp.net/en/companies

For Investors
www.cdp.net/en/investor

For Cities
www.cdp.net/en/cities

For States & Regions
www.cdp.net/en/states-and-regions

 

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