CDP (formerly the Carbon Disclosure Project)

CDP is a not-for-profit charity founded in 2000 that runs a global disclosure system supporting companies, cities, states, and regions in measuring and managing environmental risks and opportunities, including those related to climate change, water security, forestry management, and other issues.

Companies may decide to disclose on their own accord or in response to a request from investors and/or customers. Companies do not have to respond to requests for disclosure or may decide to answer partly. However, if they refuse to respond, the requesting authorities will be notified and this may be communicated to investors, customers and other stakeholders through CDP reports, digital platforms and data products (including the report with companies’ scores).

Each year, CDP collects data through an annual survey and then scores companies and cities on a report-card-like scale ranging from A to F on the basis of the information they submit, where it measures the quality of disclosure, awareness and management of environmental risks and best practices of environmental leadership. An A represents environmental leadership, a D- represents low environmental awareness, and an F indicates a failure to report sufficient information. Due to its broad uptake, the survey functions as a de facto disclosure standard for environmental information.

Investors may become CDP signatories to gain access to the CDP disclosure database, which may inform their investment decisions. This also publicly signals an investor’s engagement with environmental issues and is a way to support CDP’s disclosure requests.

CDP questionnaires and indicators

Companies may disclose information under three questionnaires, namely on (1) climate change, (2) forests/deforestation, and (3) water security. CDP’s climate change questionnaire is fully aligned with TCFD recommendations. Companies in sectors that are classified by CDP to have a significant environmental impact are also asked to respond to questions specific to that sector. These sectors are: Agricultural commodities, Capital goods, Cement, Chemicals, Coal, Construction, Electric utilities, Financial services, Food/beverage/tobacco, Metals & mining, Oil & gas, Paper & forestry, Real estate, Steel, Transport original equipment manufacturers (OEMs), and Transport services.

Climate change

The climate change questionnaire looks at the following indicators:

1. Governance

2. Climate-related risks and opportunities

3. Business strategy (e.g., transition plans)

4. Targets and performance (e.g., emissions and low-carbon energy targets)

5. Emissions methodology

6. Emissions data (Scope 1 to 3, emissions intensity)

7. Emissions breakdown

8. Energy (e.g., energy spend)

9. Additional climate metrics

10. Verification

11. Carbon pricing (including carbon accounting and carbon credits)

12. Engagement on climate

13. Biodiversity

Forests/Deforestation

The forests questionnaire looks at the following indicators:

1. Type of commodities (e.g., timber, palm oil, soy)

2. Current state (association of business model with forests-related resources and issues)

3. Procedures to manage issues and risks

4. Forest-related risks and opportunities

5. Governance with regard to forest-related issues (including commitment to reduce deforestation or forest degradation)

6. Business strategy on forests-related issues

7. Implementation of policies and commitments (e.g., targets, traceability of commodities, third-party certification, control system for non-compliance, compliance with the Brazilian Forest Code, legal compliance, engagement, ecosystem restoration)

8. Verification of reported data

9. Barriers and challenges in the process of removing deforestation from their value chains.

Water security

The water security questionnaire looks at the following indicators:

1. Current state (dependency on fresh water sources, accounting on interactions with water resources, water intensity, value chain engagement)

2. Business impacts (water-related detrimental impacts on the organisation, compliance impact from fines and enforcement orders)

3. Procedures to manage risks and water pollutants

4. Risks and opportunities related to water

5. Facility-level water accounting

6. Governance (e.g., approach to water-related issues at the board level and management level, employee incentives, policy that includes water-related issues, engagement that may influence water-related public policy and inclusion of water-related risks in financial reporting)

7. Business strategy (e.g., water-related capital expenditure (CAPEX) and operating expenditure (OPEX), use of scenario analysis, setting of internal water price, impact of products and services on water)

8. Water-related quantitative targets and qualitative goals

9. Verification status of reported data

There are specific modules under each questionnaire for companies responding at the request of one or more customers who are members of CDP’s supply chain programme.

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