Getting your CDP 2018 disclosure right

Getting your CDP 2018 disclosure right
04 April 2018

Getting your CDP 2018 disclosure right: Climate change is expected to be deeper ingrained in the business strategy

When launching its “Reimagining Disclosure” consultation last year, CDP has announced that alignment with TCFD and sectorisation will be the main trends of this year’s CDP update. Whist the questionnaires published last month are aligned with these two overarching topics, the final versions significantly differ from those offered during the consultation.

Overall, compared to 2017, about 18% of questions listed this year are new and will bring in an array of new topics and add requests for more detailed information in various areas requiring businesses to start thinking about their disclosures as soon as possible.

With so many differences any company responding will need to map its current activities and identify gaps in current activities. So, what does it mean, here are some of the key areas where you will see changes.

Alignment with TCFD & other reporting frameworks

The Task Force on Climate-related Financial Disclosures’ (TCFD) has caused the largest impact on this year’s CDP update. These changes aimed to bring CDP responses closer to the investors’ needs and affected both the information requested in the questionnaire as well as its structure.

TCFD inspired the question focus on a number of topics such on scenario analysis and forward-looking metrics such as science-based targets and carbon pricing among a number of others, but the general message drawn from this year’s changes is that now it is expected that climate change is better aligned with the business strategy and treated more seriously as an economic risk/opportunity factor.  This once again brings to light the need of a consistent review of the sustianbility and business strategy making it clear that climate change can no longer be treated as a standalone topic and needs to gain further attention in the boardroom.

And in addition, the 2018 CDP questionnaire continues to align with other reporting frameworks such as DJSI, SASB and GRI to further facilitate sustainability disclosure for companies reporting through various frameworks.

Sectorisation  

Another major topic dominating CDP update this year is the focus on sector specific questions further tailoring the questionnaire to accommodate various businesses. Sector specific questions are no longer be presented as an appendix to the main questionnaire and are incorporated within it. The new climate change questionnaire offers sector specific disclosures to 12 sectors in 4 clusters, namely Energy, Transport, Materials and Agriculture. Companies outside of these sectors are invited to complete the general questionnaire.

It is not yet clear how significant the effect of the newly requested information will be for those sectors which were not considered separately before, but the scoring methodology which is due to be published this month will shed light on this.

So what can you do now?

Even though the deadline for the CDP disclosure (31 July) may appear to be far away, the amount of new information requested this time makes it clear that this year’s response will require more effort and consideration than before. Here are a few steps to get you started:

  1. Review the sectorisation list: has your sector been added?
  2. Analyse new disclosure questions: is this information available and where to source it? This will include a number of questions primarily grouped within climate change governance (e.g. oversight, board level involvement, etc), risks & opportunities (risk & opportunity identification process, their time horizons, etc.) and management modules (scenario analysis, low carbon transition plan, etc.). Additional metrics and carbon pricing, which are now presented in separate modules, will also need to be considered as part of this exercise.
  3. Review changes to existing questions: will the data collection process require additional requests this year?

These three steps should set you on course to get what you need for the CDP 2018 response. The risk being that a failure to act will see your scoring slip against previous years. Therefore, whilst information collection and response drafting are certainly crucial for achieving a good score, you should also be reviewing your climate change strategy in parallel. To this end, CDP can be treated as a check list of the climate change management best practices – however, this is a topic for another blog post.

If you would like to know more about what you will need to prepare a successful CDP response this year, review your overall strategy or how to improve your score, contact christine.stjohncox@ricardo.com