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This is the first instalment in a series which looks at CDP and its interaction with nature and other reporting frameworks.
What is CDP and why does it matter?
Established in 2000, CDP is a global disclosure system that help companies, investors and the public sector to manage and report on their environmental impacts.
CDP matters because it is the world’s most broadly used sustainability reporting system, with over half of the world’s market capitalisation using it. In numbers this is 23,000 companies, $142tn in investor assets and $6.4tn in purchasing power. Its reach is vast.
How does CDP work?
Organisations are required to fill in a questionnaire with a range of sustainability-based questions. They are then scored on the quality of their response ranging from an F for no disclosure to A for a ‘leadership’ level response.
Filling in the questionnaire is a time-consuming exercise. To make the process easier, CDP has aligned with bodies like the Global Reporting Initiative (GRI) and the Taskforce for Climate-related Financial Disclosures (TCFD). Through this, the idea is that reporting against CDP allows companies to use one system to tick off multiple reporting requirements.
Why would companies use CDP in the first place?
Organisations choose to use CDP for a number of reasons including: reputational benefits, stakeholder communication, alignment with the market and better internal reporting. Two major drivers are pulled out below:
Preparing for future reporting expectations. As above, CDP is part of the drive for interoperability between multiple reporting frameworks and guidelines. As such, its aim is to align with frameworks like TCFD and The Taskforce for Nature-related Financial Disclosures (TNFD), meaning that reporting against CDP smooths the way for reporting in line with other frameworks.
Investor demand. CDP is commonly used as a data source for investors. With CDP reporters accounting for $142 trillion in investor assets, investors have clearly demonstrated their support for the initiative.
What has changed this year for CDP reporters?
CDP introduced a few changes for FY24 including increased alignment with other standards. Most significant, is the new integrated questionnaire which pulls together previous forms into one combined CDP questionnaire. The idea is that this will reduce repetition around cross cutting areas (e.g. governance) and streamline the reporting process.
The graphic below demonstrates how the volume of CDP disclosures has dramatically increased over the last 4 years and how areas like plastics and biodiversity are beginning to be integrated.
Graph taken from CDP 2023 disclosure data factsheet
How does CDP interact with nature?
Formerly known as the carbon disclosure project before a 2013 rebrand to CDP, this non-profit organisation was historically associated with climate and decarbonisation. However, CDP has also encouraged disclosures around water, and more recently forestry, over the last ten years.
In 2023, CDP added biodiversity-specific questions for the first time and has also announced that they will be aligning with the work of the TNFD..While companies will not be scored on their responses to the biodiversity questionnaire in 2024, this represents a clear direction of travel. Indeed, unlike Water and Forests, which organisations can opt out of, CDP would like all organisations to fill in the biodiversity questionnaire.
Want to find out more?
Biodiversity is a key part of CDP and next month, we will be releasing a specific nature and CDP deep dive blog. Follow our LinkedIn page to keep up to date.
To understand how you can report against the new biodiversity elements of CDP and how to do in a way that sets you up for future reporting requirements then reach out to our team.
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