CDP: How to report well

When it comes to CDP reporting, early preparation is crucial. With the response platform opening in April, now is the time to start thinking about this year’s submission as the focus on sustainability from investors, customers and employees continues to grow.

CDP is key to the E in ESG reporting that provides a means for your business to tell stakeholders about its non-financial achievements. As publicising information about your activities can be a risk as well as an opportunity, it’s important to get it right. If you don’t, it can have a detrimental impact on your company’s reputation.

Reporting and disclosure of non-financial information is a vital ingredient of a company's sustainability journey. It allows businesses to get ahead of policy changes, identify and tackle emerging risks, and discover new opportunities for action. It also allows society and investors to keep track of a company's contribution towards meeting internationally agreed sustainability targets.

Investor expectations

Investors increasingly expect organisations to report on sustainability, so meeting the changing requirements of shareholders, investors and wider business stakeholders is a vital consideration for businesses.

CDP is the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts. Company CDP scores are now accessible via Bloomberg Terminals and other investor platforms, making a clear statement about your organisation’s commitment to reducing its carbon footprint. When combined with other initiatives such as RE100, where businesses commit to 100% renewable energy supply, the message to the market about your organisation’s environmental credentials is clear.

Every year, the CDP reporting cycle seems to come around quickly. The advice for 2022 CDP reporting has already been released, and the response platform will be available in early April. It's best practice for reporting organisations to begin the process of compiling data and supporting material as soon as possible, in order to be prepared for reporting requirements.

Be prepared – get started now

Key dates and deadlines:

• 10 January, 2022: Questionnaire (2022) became available on the CDP guidance page
• 11 April, 2022: Online Response System (ORS) opens
• 27 July, 2022: Companies must submit their response using the ORS to be eligible for scoring and inclusion in reports

The 27 July submission deadline is set in stone. Do not wait until the last minute.

Top tips to improve your score

Preparation is key

As you can see above, the questionnaire is published three months prior to the opening of the submission portal. This gives you and your company ample time to begin gathering data and preparing your responses.

It is important that you put the same effort into all the sections in the submission.

At first glance, some sections may seem more important than others but, in reality, all the sections are interconnected and can have a big impact on your overall score. Make time to explore this interconnectedness and, if possible, relate it back to your company in your responses.

Be sure to leave time for review at the end of your CDP submission timeline. If possible, work with a corporate sustainability partner in the review stage, who will be able to help showcase your company in the best light possible and be able to offer expertise and suggestions to maximise your score.

Include the correct information

Carbon emissions

The emissions management section of the CDP submission accounts for almost half of a company’s overall score, so it is crucial to execute this section to the highest possible standard. Reporting emissions is important, but this section looks at much more than that.

To score well, your company should aim to include evidence of the systems you have in place to track and report your Scope 1 & 2 emissions. The stronger these systems are, the better. CDP scores will also reflect the extent to which you can report the breakdown of your emissions by category. Be as specific as possible.

CDP reporting requires reporting on only Scope 1 & 2 emissions, but voluntarily reporting on your Scope 3 emissions will likely benefit your score. In some cases, not including information on your Scope 3 emissions could negatively impact your score, so it makes sense to include any Scope 3 data your company can provide.

Plans and integration

Some companies focus their time and effort on building a narrative around their carbon emissions and neglect the inclusion of information on their improvement plans. Do not let your company fall into this category. Remember, all the CDP sections are interconnected. Explaining your plans and policies is an excellent way to showcase your company’s understanding of this concept.

Be sure to include baseline data on topics of emissions, energy, resource use and any other areas for which your company has goals or targets. Explain your short- and long-term goals in these areas. CDP scores reward companies that show tangible sustainability goals with the distinct steps they plan to take.

Recently, there has been a trend of companies aligning their sustainability goals and plans with the Science-Based Targets initiative (SBTi), which is an excellent way to create credible sustainability strategies. If you do go down this route, be sure to specify with which scenario your strategy is aligned (e.g. 1.5°or 2° warming).

Risks and opportunities

The risks and opportunities section of the CDP submission can have a big impact on your score, so it is important to give the section the time it deserves. Start by reading through some well-scored responses from the previous year; your corporate sustainability partner can help you access and understand these documents.

It is important that you demonstrate a superior understanding of the risks and opportunities connected to your company. Be as specific as possible. Be sure to include risks and opportunities emerging from the regulatory transition as well as from the physical climate. In addition to acknowledging these risks and opportunities, be sure to showcase your understanding of why they exist in the first place.

Go beyond acknowledging and understanding risks and opportunities: What is your company planning to do about them? Go into detail about your company’s plans and policies. Showcase your innovative solutions and how they will benefit your company. Show that you are being proactive.

Engage with your stakeholders

CDP scores will benefit those companies that take a stand against climate change and share this information publicly and/or with their stakeholders.

Demonstrate how your company is engaging external stakeholders and employees in your sustainability strategy. How does this improve company sustainability culture and promote sustainability awareness?

Show how your company engages with suppliers that contribute to your Scope 3 emissions. Do your research and determine which suppliers are contributing the most to your Scope 3 emissions and focus your efforts on engaging with them to reduce carbon emissions. Your corporate sustainability partner can advise you on the best way to do this or can complete this research for you.

Overall, remember that sustainability requires teamwork through the entire supply chain. CDP scores will reflect well on companies who understand this and actively engage with their stakeholders on sustainability issues.

Want to start reporting or improve your CDP score?

The CDP scoring methodology is quite complicated, but partnering with someone who understands your business, as well as the ins and outs of the process, can make sure your company gets every possible point it can while setting you apart as a leader in sustainability.

Ricardo works with a number of high-profile clients to maximise their CDP performance, which in turn helps to satisfy investors or secure new investment, prepare for regulatory changes and to build resilience by identifying future risks.

Reporting frameworks continue to expand and evolve and we can work with you to make sure that you are aligned to the latest standards by:

• Carrying out gap analyses to identify the key areas for future focus.
• Carrying out competitor reviews to help your company understand how similar organisations are responding and performing.
• Developing robust reporting strategies to ensure that you can clearly communicate the actions that need to be taken.

Every year we help businesses become more sustainable and report their activities well to stakeholders, from developing a reporting strategy, preparing data and writing reports, developing engaging material such as infographics, through to providing independent assurance of information that you have prepared in-house.

To find out how Ricardo’s sustainability experts could support your organisation, get in touch.