There are a number of disclosure standards that allow a company to publish its environmental performance and report on the impact of its activities on the environment. The Carbon Disclosure Project (CDP) is one of the world's leading standards in this area.
What is the Carbon Disclosure Project (CDP)?
The Carbon Disclosure Project (CDP) is a global non-profit organization based in the United Kingdom that manages one of the largest environmental databases. It encourages investors, large companies, communities and governments around the world to measure the environmental impact of their activities in order to take concrete action to reduce it. CDP Global is comprised of three entities (CDP Worldwide Group, CDP North America, Inc. and CDP Europe AISBL) and has partners in 50 countries around the world. The CDP's scope of work currently includes three areas: climate, water resources and deforestation. However, since its creation, the organization has made several changes to its surveys and assessment methods:
In 2003, CDP first began with annual campaigns to collect data on corporate greenhouse gas (GHG) emissions.
In 2010, it expanded its measurements to include water management and added an oil & gas module to its GHG survey.
In 2013, a third focus emerged when the CDP expanded its questionnaires to include a survey about companies' impact on deforestation.
In 2016, the CDP changed its assessment methodology from the Climate Performance Band and Climate Disclosure Score to the Level of Engagement Score.
The Carbon Disclosure Project encourages companies and communities to disclose their data and assigns them a score based on their own methodology.
What is the Carbon Disclosure Project's scoring methodology?
Companies are scored on a scale of 0-100 based on how fully they have answered the questions in the questionnaire, and how transparently they have reported their environmental data. The score assesses the completeness and quality of a company's environmental disclosures, such as its greenhouse gas emissions, energy use, and water management practices. The CDP score is an important metric that investors, customers, and other stakeholders can use to evaluate a company's environmental performance and transparency.
CDP evaluates each company and assigns them a "Level of Engagement Score".
The Level of Engagement Score is a rating system with four levels: A (Leadership), B (Management), C (Awareness) and D (Disclosure). An F rating is also provided for companies whose impact and commitment the CDP was unable to assess due to insufficient data.
D: Disclosure
Companies ranked as D do not integrate environmental issues into their development strategy. Level D corresponds to companies that only provide CDP reporting: they meet the transparency requirements, but not the criteria of commitment or awareness.
C: Awareness
Companies rated C and C- show an awareness of the importance of environmental issues, but do not take these issues into account in their strategy. Although they are aware of these issues, they do not place them at the heart of their values or their business model. These are companies that are not committed to a CSR approach.
B: Management
According to the CDP ranking, a grade of B or B- is awarded to companies that demonstrate management of resources and the consequences of their activities on the climate. Companies ranked as B and B- take into account the pillars of sustainable development in their strategy, but could revise their goals upwards.
A: Leadership
The A rating distinguishes the highest level of engagement from a company or organization. It corresponds to knowledge of environmental issues, a complete awareness of its impact, and the implementation of concrete actions to reduce it, such as the implementation of a climate transition plan or science-based targets.
In 2022, around 15,000 companies responded to Carbon Disclosure Project questionnaires and among them, about 330 received the A Leadership rating, or 2.2%.
How to effectively respond to the Carbon Disclosure Project questionnaire?
To effectively respond to the Carbon Disclosure Project questionnaire, it is important to be able to provide comprehensive data, but also to demonstrate your level of awareness and commitment to reducing your environmental impact.
Conducting a carbon footprint for your company is an advantage for the CDP on several levels: it demonstrates awareness and commitment, and also makes available many of the data required for CDP reporting.
Associating your company to the SBTI (Science-based target initiative) is also a good thing: born from the collaboration between the CDP, the UNGC (United Nations Global Compact) and the WRI (World Resource Institute), it aims to meet the objectives set at the COP21. This initiative encourages companies to set GHG emission reduction targets in line with the latest scientific knowledge. By committing to the SBTI, a company demonstrates its level of awareness of environmental issues. It is therefore likely to be ranked higher on the CDP.
What are the benefits of the Carbon Disclosure Project for my company?
Reporting initiatives from economic actors are essential levers for the ecological transition, upon which action strategies can be built. Far from being just another label, the Carbon Disclosure Project is a reference organization that allows you to go beyond mandatory reporting on environmental issues and provides a reliable roadmap to meet the challenge of net-zero by 2050. The CDP website provides companies with many resources, including recommendations and best practices from other reporting frameworks such as the TCFD (Task Force on Climate-Related Financial Disclosure) or the GHG Protocol.
Anticipating regulations
Certaines entreprises sont déjà soumises à l’obligation de reporting extra-financier, et la réglementation se resserre progressivement autour de la nécessité de transparence et d’engagement écologique, notamment en Europe avec la mise en place progressive de la directive CSRD. Le Carbon Disclosure Project prépare les entreprises et organismes de tous secteurs aux évolutions légales : il leur permet de ne pas prendre de retard sur ces sujets, de se sensibiliser aux méthodologies de reporting et de mettre en place une stratégie d’actions cohérente avec les principes de développement durable.
Earning the trust of investors, partners, talent and clients.
Financial actors are becoming increasingly attentive to the destination of the funds they invest. They expect more transparency and are increasingly questioning the CDP ranking of companies before committing. The trend is the same among stakeholders and customers of organizations. For a company, the CDP rating is a lever for improving its brand image, enabling it to retain its employees and satisfy a customer base that is increasingly sensitive to environmental issues.
In conclusion
Depending on the company's level of awareness, the Carbon Disclosure Project can be a starting point for a commitment to impact reduction or an effective lever for progress. In all cases, it is a transparency initiative that rewards the company with an improved brand image and greater attractiveness.