Last year, 13,000+ companies with over 64% of global market capitalisation disclosed environmental data through CDP, making it one of the most internationally recognised and responded to sustainability reporting platforms. Following our recent CDP webinar, our CDP expert, Sarah McGaw answers your questions to help you with this year’s reporting.
1. What advice do you have for first time responders to CDP in 2022?
For all responders, but particularly those responding to CDP for the first time, we recommend that you start as early as possible and identify which stakeholders will provide key data ahead of CDP’s online reporting system (ORS) opening. To keep on track of the process, work backward from the deadline and set milestones for key steps such as data collection, drafting, and review. Remember to leave enough time to carefully enter your response into the ORS as mistakes here can impact your final score.
Ensure that you allocate sufficient time to draft qualitative sections as these can take some time to complete. Go through the questionnaire and identify the questions that require a case study and start on these early to make sure you address the STAR (Situation Task Action Result) criteria. If you are planning on having your data verified or calculated by a third party, then again make sure that this is arranged well in advance to avoid a rush in July.
In addition to planning well in advance, ensure you pay attention to the key words in the questions and scoring methodology. Additionally, utilise the reporting guidance as this provides greater detail on definitions and requirements.
Finally, always remember quality over quantity. If it is your first time responding to CDP, take the time to carefully consider what information is most relevant to the question and avoid putting ‘just in case’ for everything.
2. Can you explain the partnership between EcoAct and CDP?
EcoAct has been a CDP partner since 2015 and became a Gold Accredited CDP provider in 2018. As a Gold Accredited Provider, EcoAct is invited to give thoughts on any consultation released to CDP and is provided access to changes to the CDP questionnaire and scoring methodology. Throughout the CDP disclosure period, EcoAct has a direct channel to CDP and we are a point of escalation for our clients. EcoAct also has access to the 2021 CDP Climate database which contains all public responses in 2021. This is a valuable tool in helping our clients benchmark against their peers.
3. Why should large multinational corporations submit to CDP?
There are several reasons why multi-national corporations should look to disclose to CDP. Firstly, disclosing to CDP will allow your company to benchmark against peers and track performance or identify opportunities to lead. It will allow you to understand the risks and opportunities your business faces from climate change while contributing to a global movement towards tackling climate change.
Disclosing to CDP will allow you to keep ahead of regulatory and policy changes, as well as structure your information required for TCFD as it becomes mandatory for certain organisations. You will be better prepared for the transition to a net-zero economy by having an increased awareness of potential risks and be able avoid associated costs.
Finally, you will be able to demonstrate your commitment to your customers and clients which will help increase your reputation as a business, particularly as CDP disclosure is also increasingly being used to assess suppliers in procurement strategy and net-zero assessments.
4. How is CDP aligned to TCFD?
CDP has the largest TCFD-aligned environmental database in the world. The CDP climate questionnaire first aligned to the TCFD in 2018 and there are now more than 25 questions aligned to TCFD within the Governance, Risks & Opportunities, Strategy, Targets, and Emissions modules. The Water and Forests questionnaires have also been structured to align with the TCFD.
The CDP scoring methodology helps ensure that you are providing sufficient detail to align to the TCFD recommendations as there is currently no methodology provided by the TCFD. It allows gaps to be identified to highlight areas of improvement when wanting to align to the TCFD.
While TCFD and CDP are aligned, it is worth noting here that responding to CDP alone is not sufficient for TCFD reporting. The information must also be reported in financial filings. Where there are gaps, these should be explained and a roadmap laid out.
5. What tips do you have for improving a low score in the Risk Disclosure category?
Previously, companies had to report at least 3 risks to access full marks. However, in 2022 points are awarded “per cell in proportion to the number of rows disclosed”. Therefore, if you have not yet done a comprehensive assessment of climate risk, aim to complete at least one full row to maximise your response. You should also make sure all cells are completed, as missing a cell will prevent you scoring full marks.
Understand if there are any risks you can identify qualitatively. Do some research into the types of risks in your key geographies or think of any emerging regulations that could impact you. Use the drop down options in the question guide to help you with this.
If you are unable to put a financial value to the risks, then make sure that the other aspects of the question are well answered to maximise the points you can achieve. Finally, make sure the company-specific description is detailed enough. Outline what proportion of the business the affected areas account for and what the potential impact would be. If you have not yet undertaken a quantitative analysis, check if there are any metrics already in place to assess risk.
6. Why should my company complete the Water Security Questionnaire if it hasn’t before?
Completing the Water Security Questionnaire will allow your organisation to understand, identify and mitigate risks. There is an increase in frequency and severity of water-related disasters such as flood and drought. Lots of businesses have manufacturing sites in regions that are already water-stressed or likely to become so in the future. It is therefore important to be aware of availability and quality of water and how your business might be impacted to prevent unforeseen costs. CDP has found that the cost of inaction on water security can be 5 times the cost of action and only 30% of companies had a target to reduce water withdrawal in 2021, so there is an opportunity here to lead on this issue.
In the next few years CDP plan to combine the questionnaires into one which include all environmental aspects: climate, water, forests etc. It is therefore likely that you will need to complete the water security questionnaire soon anyway, so it is good practice to start now. If you already respond to the Climate Change Questionnaire, you will be familiar with the structure and type of content required. The Water Security Questionnaire follows a similar structure but is much shorter. Water-related disclosures are also increasing in number and so it is good to be aware of what peers are doing as you do not want to be left behind.
7. When filling in the questionnaires shall we include future plans?
Case studies and examples you include should refer to activities or targets in place during the reporting year. However, if relevant, it is worth including information on how your plans have developed since. There are questions that allow you to outline future plans and often these also have a box to explain your answer. You could then provide information on activities now in place or that are planned. While you might not be awarded any additional points, disclosing the most up to date information allows data users to see where you are now taking action, or how plans are progressing in 2022. For example, in the reporting year it might have been agreed that your company will set a science-based target (SBT) but it wasn’t yet submitted to the Science Based Target initiative (SBTi). If you are now in the position where you have submitted your target to the SBTi, you can explain that the decision to set one was made in the reporting year and it has subsequently been submitted and is under review.
8. What is the process for reporting on a SBT after it has been set and what happens if your organisation does not meet that target?
If your science-based target (SBT) is the first target disclosed by your organisation AND was set during the reporting year then complete Q4.1a/b. As long as the ‘year target was set’ is consistent with the target status then you will not be penalised for not yet having achieved a reduction in emissions. In year 2 (2023) you will then be able to update the ‘% of target achieved’ and target status columns.
If your organisation is disclosing a SBT this year but already has a pre-existing target, then you can report this by adding additional rows to your response. If you are replacing your pre-existing target, then change the ‘target status in reporting year’ to show it is being replaced and add your new target in a new row. If you are adding your SBT in addition to a pre-existing target then add a new row and add the new target.
Each year you can update the target to reflect progress made. If you have not achieved a reduction in emissions you won’t be able to score full points. However, there is now an option to include reduction initiatives and you can use this to explain how you are working towards achieving emissions reductions.
9. Who can respond to CDP and what is the process for disclosing if no supplier is requesting this?
All companies can respond to CDP questionnaires, however EcoAct predominantly work with larger companies. If a company hasn’t received a request to respond they can register as a self-selected company by completing the registration form found here. This form should be submitted to the CDP Help Centre as early as possible.
Self-selected company responses are not automatically made available by CDP to CDP’s supply chain members, banks and other stakeholders. However, if you choose to submit a public response, your response will be accessible via the CDP website.
10. My organisation was requested to disclose last year and would like to disclose again this year. Do we need to apply directly or use last year’s disclosure to apply?
Any organisation that has responded previously needs to confirm that they intend to disclose again by following the steps outlined on their account when they click on the ORS. Here they can confirm that they intend to share the response with their suppliers.
The 2021 response will have been automatically copied across into the 2022 format but they will need to go through and update their response with information applicable to the latest reporting year. When submitting, there are some tick boxes that confirm who to share the response with.