CDP - what’s new and what does it mean for you?
Off the back of the ‘Reimagining Disclosure’ consultation that CDP carried out in 2017, the finalised 2018 questionnaire content is now available . The questionnaires have changed quite significantly compared to the consultation so it’s important that companies start to think about CDP now, to ensure they respond well to the changes.
The ‘Reimagining Disclosure’ consultation was undertaken in order to develop and improve the disclosure process, further aligning with the information that investors want.
There are many questions flying around about the 2018 CDP Climate Change, Water and Forests Questionnaire. We thought we’d share some of our insights to the answers here.
The TCFD recommendations seem to be an area of focus for reporting this year. How do the new questionnaires align?
The biggest change to the questionnaire has been driven by the release of the Task Force on Climate-related Financial Disclosures’ (TCFD) recommendations. These recommendations were created as a framework to help companies understand what information financial markets want, to better measure and respond to the climate change risks they are exposed to, ultimately encouraging firms to align their disclosures with investors’ needs.
The four areas of focus in the TCFD recommendations are Governance, Strategy, Risk Management and Metrics and Targets. CDP has incorporated the recommendations from each of these areas into the 2018 questionnaire. This means there is a lot more focus around risk assessment, planning and management across a range of specified areas as well as questions around how the identified risks have been built in to the financial planning process.
How has the question structure changed?
Due to the importance now placed on alignment with TCFD, the Governance, Risk & Opportunities and Business Strategy sections have been moved to the beginning of the questionnaire. There have also been new sections added including: Additional Metrics, Carbon Pricing and Land Management. Additional metrics and Carbon pricing were areas included in 2017 but this year they form a stand-alone section.
How does the CDP reporting align with other reporting frameworks?
With companies having to report to so many different ESG frameworks as well as their own corporate disclosures, its vital that the CDP does not become over burdensome. CDP reviewed this as part of the consultation on ‘Reimaging Disclosure’, and they aim to incorporate elements of a number of other frameworks such as DJSI, SASB, GRI and even the SDGs into the questionnaire.
What about sector specific information?
In previous years, sector specific questions have been published but they have been voluntary and were published as stand-alone questionnaires. In 2018, these questions have now been integrated into the main climate change questionnaire and the questions are now mandatory. There is talk of providing some leeway for first time responders but this will not be confirmed until the scoring methodology is released.
CDP will let you know if you are required to answer a sector specific questionnaire.
Anything else I should be aware of?
CDP is likely to take more time and internal resource this year as a significant amount of additional information is required.
The alignment to the TCFD is a key change in 2018. There have been 27 new questions added which focus on carbon pricing, climate scenario analysis and risk assessment integration including assessment, impact and integration in to financial planning processes. To prepare, companies should think about an in-depth assessment of last year’s response against the current criteria. This will allow an identification of any gaps or issues.