In our latest webinar, our own VP of Sustainability Corinne Hanson and our partner Andrew ‘Riz’ Rizkallah from MorganFranklin shared insights on the latest changes to CDP reporting and best practices for companies navigating this evolving landscape. As CDP continues to be a crucial framework for environmental disclosure, understanding these updates is essential for businesses. We recognize it can be a complex reporting framework, so we’re breaking it down for you.
The evolution of CDP reporting
CDP, formerly known as the Carbon Disclosure Project, has grown exponentially since its inception in 2002. As of 2022, companies representing half of the global market cap disclosed through CDP, with about 24,000 organizations participating in 2023.
So what’s changed? The most significant change for 2024 is the introduction of a new, integrated questionnaire. This overhaul combines previously separate questionnaires for climate, water, forests, and plastics into a single, comprehensive format. The new structure aims to reduce redundancy and provide a more holistic view of a company’s environmental impact.
Key updates include:
- Enhanced visibility and transparency in emissions reporting
- More detailed breakdowns for Scope 1 and 2 emissions
- Improved alignment with 1.5°C targets and transition planning
- Expanded questions on carbon credits and offsetting
- A modernized portal with real-time collaboration features
Navigating the new CDP landscape
For companies new to CDP reporting or adapting to the latest changes, here are some key considerations:
Understanding your company’s position
When starting your CDP reporting journey, it’s crucial to articulate your business operations, strategy, and where you fit in the broader sustainability landscape. Be honest about your current state – it’s okay if climate-related risks haven’t yet impacted your strategy or financial decisions. The goal is to use the CDP framework as a roadmap for future improvements.
Data collection and methodology
The new CDP questionnaire requires more detailed information about data collection methods and methodologies. Companies should be prepared to:
- Provide breakdowns of emissions by geography, facility, and customer
- Explain assumptions and calculation steps for each emissions category
- Specify details such as whether high or low heating values were used for fuel consumption
- While this level of detail may seem daunting, it’s designed to improve the quality and comparability of reported data. And don’t worry, Greenplaces can help you like we’ve done with hundreds of customers.
Addressing new areas of focus
CDP has expanded its focus beyond carbon emissions to include more comprehensive environmental impacts. Companies should be prepared to address:
- Water security, even for office-based businesses
- Biodiversity impacts
- Circular economy initiatives
- More detailed questions on carbon credits and offsetting strategies
For areas that may not seem immediately relevant to your business, it’s important to consider potential indirect impacts through your supply chain or end-user products.
Best practices for successful CDP reporting
- Start early and plan ahead: Begin your CDP reporting process well in advance of the submission deadline. Use the questionnaire as a guide to identify data gaps and collect information throughout the year. This year’s scoring deadline is October 2, so many of you may still be working to submit. You’re in good company!
- Leverage existing resources: Utilize CDP’s guidance tools and external resources. The CDP portal provides helpful tooltips and links to supplementary guidance for many questions.
- Avoid leaving questions unanswered: If you don’t have certain data or haven’t implemented specific processes, answer anyway. Explain your current situation and plans for improvement. CDP values transparency and progress over perfection.
- Think holistically: Consider how environmental factors interconnect with your business strategy, risk management, and financial planning. This holistic approach will not only improve your CDP score but also drive meaningful sustainability improvements.
- Stay informed on regulatory changes: Keep abreast of evolving regulations, such as the SEC’s proposed climate disclosure rules or California’s climate-related reporting requirements. CDP is likely to align with these developments, so anticipating changes can help you stay ahead.
- Continuous improvement: Use your CDP report as a tool for continuous improvement. Identify areas where you scored lower or couldn’t provide data, and create action plans to address these gaps for future reporting cycles.
By embracing these best practices and staying informed about the latest CDP reporting requirements, companies can not only improve their disclosure scores but also drive meaningful sustainability improvements within their organizations. As the business world continues to recognize the importance of environmental stewardship, robust CDP reporting will become an increasingly valuable tool for demonstrating leadership and commitment to a sustainable future.
Remember, the journey towards comprehensive sustainability reporting is ongoing. Each reporting cycle is an opportunity to refine your processes, gather more accurate data, and deepen your understanding of your company’s environmental impact. By doing so, you’ll be better positioned to make informed decisions that benefit both your business and the planet.
