Regulatory Compliance

CDP and reporting

By collecting and distributing high-quality information, the CDP - formerly known as the Carbon Disclosure Project - encourages investors, companies, and cities to take action towards building a truly sustainable economy by mitigating and adapting to the challenges of environmental risks. It’s becoming a high priority for organzaitions across the globe to report into organizations such as the CDP, in a move toward a more sustainable future.

What is the Carbon Disclosure Project?

The CDP (or Carbon Disclosure Project as it was called until 2013) is a non-profit organization that runs a global disclosure system for investors, companies, cities, states, and regions to manage their environmental impacts. Founded in 2000, CDP aims to encourage companies and governments to measure, disclose, manage, and share vital environmental information. The data collected by CDP is used by investors, companies, and policy makers for making informed decisions, identifying and addressing risks, and capitalizing on opportunities.

Learn more about the CDP.

What is a CDP report?

A CDP report is a document that an organization submits to the CDP, detailing its environmental impact, particularly in terms of carbon emissions, as well as its strategies for managing climate change risks and opportunities. The key components of a CDP report typically include:

  • Emission data - Detailed information on the company’s greenhouse gas emissions. This includes direct emissions from owned or controlled sources (Scope 1), indirect emissions from the generation of purchased electricity (Scope 2), and, in some cases, all other indirect emissions that occur in the company's value chain (Scope 3).
  • Climate risks and opportunities - Analysis of the risks and opportunities posed by climate change to the organization. This covers both short-term and long-term impacts and may include physical risks (like extreme weather events) and transitional risks (such as policy changes).
  • Environmental strategy and governance - Information on the company’s governance around climate-related issues, including the role of the board and management in overseeing climate-related issues, and the overall strategy for addressing environmental impact.
  • Targets and performance - Goals for reducing emissions and improving environmental performance, along with progress towards these targets.

How does CDP reporting work?

CDP reporting works as a comprehensive process where companies, cities, states, and regions voluntarily disclose information about their environmental impacts, strategies, and performance. The process is designed to encourage transparency and accountability in environmental management. Here's an overview of how CDP reporting works:

Step 1: Questionnaire distribution

Each year, CDP sends out questionnaires to entities across the globe. These questionnaires are tailored to different sectors and regions, ensuring relevance and specificity. They cover various aspects of environmental impact, including greenhouse gas emissions, water usage, and deforestation.

Step 2: Data collection

Companies and governments respond to these questionnaires by providing detailed data on their environmental strategies, risks, opportunities, and performance. This often involves gathering data from various departments and sometimes across the entire supply chain.

Step 3: Data submission

The completed questionnaires are submitted back to CDP. The deadline for submission is typically set by them, and is usually the same for all participants in a given year. In previous years, there has been a concern over the emissions disclosure gap, whereby the completeness and accuracy of responses to the questionnaire needed improvement. The more data it has to work with, the better the outcome. 

Step 4: Data analysis and scoring

CDP analysts review the submissions and score them based on a range of criteria, including the comprehensiveness of the disclosure, awareness and management of environmental risks, demonstration of best practices, and the level of environmental performance. The scoring methodology is transparent and is updated regularly to reflect evolving best practices and standards.

Step 5: Feedback

CDP provides feedback to participating entities, offering insights into their environmental performance and areas for improvement. This feedback can be instrumental in helping organizations develop more effective environmental strategies and practices.

Step 6: Disclosure and reporting

The results of the CDP reporting are made publicly available. This transparency allows investors, customers, and other stakeholders to access and assess the environmental performance and risks of the reporting entities. Effectively accounting for carbon emissions is crucial to enable transparency and accountability between organisations and its stakeholders.

Step 7: Benchmarking and analysis

The data collected allows for benchmarking and in-depth analysis. Companies and governments can compare their performance against peers and use this information to guide their environmental strategies and policies.

Another key part of CDP reporting is ensuring continuous improvements. Organizations are encouraged to use the insights gained from CDP reporting to improve their environmental management practices. Over time, this can lead to significant improvements in their environmental performance.

How does CDP align with other reporting initiatives

The CDP aligns with other reporting initiatives through a collaborative approach that aims to standardize and simplify the environmental reporting process. This alignment is crucial for companies and organizations, as it helps them navigate the complex landscape of sustainability reporting. Here's how CDP aligns with other reporting initiatives:

Global Reporting Initiative (GRI)

CDP and GRI have historically been two of the most prominent frameworks for corporate sustainability reporting. Both organizations work towards harmonization of their frameworks to reduce the reporting burden on companies and increase the usability of the reported data. GRI focuses on a broad range of sustainability issues, while CDP is more focused on environmental aspects, particularly climate change, water security, and deforestation.

Task Force on Climate-related Financial Disclosure (TCFD)

CDP supports the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and has integrated them into its climate change questionnaire. This integration helps companies to disclose transparent and consistent information about the risks and opportunities presented by climate change, which is beneficial for investors, lenders, and insurance underwriters.

Learn more about Task Force on Climate-related Financial Disclosures (TCFD)

Science Based Targets Initiative (SBTi)

CDP works in collaboration with the SBTi to drive corporate action on climate change. Companies that disclose through CDP and commit to the SBTi are recognized for their efforts in setting science-based emissions reduction targets.

Learn more about the Science-based Targets Initiative (SBTi)

Sustainable Accounting Standards Board (SASB)

While SASB provides industry-specific standards for sustainability disclosure, CDP’s questionnaires complement these by offering a platform for detailed environmental reporting. The upholding of SASB standards now sits with the International Sustainability Standards Board (ISSB), and are charged with maintaining and enhancing them. Their collaboration with CDP aims to bring greater coherence to the field of sustainability reporting. 

United Nations Sustainable Development Goals (SDGs)

CDP’s data collection and reporting framework also supports the tracking of progress towards the SDGs. By providing detailed environmental data, CDP helps organizations align their strategies with the broader goals of sustainable development.

Learn more about the UN Sustainable Development Goals (SDGs)

Overall, CDP's alignment with other reporting initiatives facilitates a more streamlined approach to environmental and sustainability reporting. It helps reduce redundancy and reporting fatigue for companies while enhancing the quality and comparability of data available to stakeholders.

Why disclosure to CDP matters

The CDP encourages companies and governments to measure and disclose their environmental impacts, particularly carbon emissions. This transparency is vital for understanding and addressing climate change. Investors, customers, and the public are increasingly conscious of environmental issues. 

Companies that report to the CDP demonstrate their commitment to environmental stewardship, which can build trust and enhance their reputation. There are also a number of other reasons that organizations should disclose their emissions data with the CDP, such as:

Risk management

Disclosure to the CDP helps organizations identify and manage risks associated with carbon output, such as regulatory changes, physical impacts of climate change, and shifts in market demands.

Performance benchmarking

CDP data allows organizations to benchmark their environmental performance against peers, which can drive competition and improvement in environmental practices.

Investment decisions

Many investors use CDP data to make informed decisions about where to allocate their funds. Companies that perform well in CDP assessments may be more attractive to investors.

Operational efficiency

The process of gathering and reporting data for CDP can help organizations identify inefficiencies in their operations, leading to cost savings and reduced environmental impact.

Strategic planning

Engaging with the CDP can inform long-term business strategy, helping organizations to integrate sustainability into their core business model.

Another key reason that organizations should consider engaging with CDP guidance is for regulatory compliance. Participation in the CDP can help organizations stay ahead of regulatory changes related to carbon emissions and climate change, as regulations are constantly evolving and becoming increasingly stringent. By not complying, organizations risk huge sanctions and penalties that can be especially detrimental to operations. 

To be able to effectively report into the CDP, organizations must understand their own emissions data so that they’re able to answer the CDP questionnaire thoroughly. To do so, organizations must invest in a data platform that helps them to track their scoped emissions.

How Minimum can help

Minimum can help organizations to understand their existing carbon output, and create plans to mitigate climate related risks in the future.  Our Emissions Data Platform seamlessly collects and processes emissions data from every corner of your organization and supply chain - no matter the format. Making it the ideal platform for emissions audits and all-round business intelligence. 

Learn more about how Minimum's Emission Data Platform can help to power you all the way to Net Zero today.