Over the past decade, a growing number of businesses have voluntarily reported their climate information through the global nonprofit CDP. As the climate disclosure landscape rapidly evolves, the organization, which now collects data from more than 23,000 companies (representing two-thirds of global market capitalization), is making critical updates to its well-established questionnaire.
Earlier this month, CDP Founding Chair and Persefoni Sustainability Advisory Board Member Paul Dickinson joined Persefoni Climate Solutions Director Mike Galeski to discuss how CDP is adapting to the ever-changing world of climate disclosure — and what companies can expect when they report through CDP in 2024 and beyond.
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Below, we’ll share five important insights from their conversation.
The Evolution of CDP Reporting: 5 Takeaways
1. Climate disclosure has become a business imperative.
Market and regulatory trends are driving demand for trustworthy and credible climate disclosures. Global regulations like the SEC Climate Disclosure Rule, California SB 253 and 261, and Europe’s CSRD have brought sustainability reporting into the world of financial reporting. Meanwhile, a growing number of stakeholders want to see detailed information about how companies are managing their greenhouse gas emissions and responding to climate risks and other sustainability issues. “The private equity community wants to evaluate creditworthiness,” Dickinson explained. “Investors want to know who are going to be the winners and losers in the future. Purchasers want to know about their supply chain.” In response to these tectonic shifts, CDP has updated its approach to collecting sustainability information with a new questionnaire and an improved version of its disclosure portal.
2. CDP is aligning with the globally recognized ISSB framework.
In recent years, previously fragmented global climate disclosure regulations have started to converge around a common set of principles. Most recently, governments around the world have embraced the International Sustainability Standards Board (ISSB)’s IFRS S1 and S2 standards, which now underpin many disclosure regulations. In response, CDP has adapted its questionnaire. From 2024 onward, CDP’s data collection will align with IFRS S2, the ISSB’s climate change standard. This means that companies reporting through CDP will very likely be able to use the same data reported to meet regulatory requirements in many different jurisdictions.
3.Disclosures will now integrate different sustainability issues, answering the need for a holistic approach.
Historically, companies reporting to the CDP have filled out separate questionnaires for issues like climate, water security, and forests. However, these issues frequently overlap, and focusing on climate change in isolation can leave companies exposed to other environmental risks. To address the interconnected nature of sustainability impacts, CDP has now integrated climate, water, forests, biodiversity, and plastics into a single questionnaire. The organization has also created a new questionnaire and enhanced guidance specifically for Small and Medium Enterprises (SMEs) with the goal of easing their reporting burden.
4. Climate transition plans are becoming more important.
As sustainability reporting becomes more commonplace, the focus is beginning to shift from transparency to taking action. Regulations like Europe’s Corporate Sustainability Due Diligence Directive (CSDDD) go a step further than asking companies to report on their environmental impacts — businesses must show what steps they’re taking to mitigate harm. Against this backdrop, climate transition plans — and reliable emissions data — will become critical. “The world is moving from disclosure to action,” Dickinson said. “We need solid data points to achieve the outcomes we want.”
5. Supply chain engagement is driving climate disclosure.
More and more companies are now reporting on scope 3 emissions from their value chains. Managing supply chain emissions is critical for strategic decision-making and credible transition planning, and organizations are increasingly looking for reliable GHG information from their suppliers. In fact, according to Dickinson, much of the staggering growth in companies disclosing through the CDP has come from suppliers reporting to customers. Today, 75% of companies disclosing to CDP are using the information to report to customers with purchasing authority.
“How companies and investors show up in the policy realm will be increasingly important. What policies do you need to get to net zero? What policies are stopping you from getting to net zero?” - Paul Dickinson, CDP
Preparing for CDP Reporting
Companies planning to report to the CDP can prepare by taking three simple steps:
1. Start now: The 2024 CDP questionnaire was published on June 4, and the submission deadline is October 2. If you haven’t started reviewing the questions and gathering data, now is the time to start. Companies should also note that CDP has made changes to its portal for a more intuitive and streamlined user experience.
2. Get to know the questionnaire: Before you gather data, you need to understand the questions you’ll be answering — not just about emissions, but about water, forests, biodiversity, and plastics. Most importantly, you should understand the ISSB framework, since it has shaped the CDP’s latest questionnaire — and will likely influence your regulated disclosures as well.
3. Adopt the right technology. The key to climate reporting is reliable emissions data. Technology is essential here. A solid carbon accounting platform will streamline your reporting, ensure consistency, and build confidence in your disclosures. It will also allow you to build up your in-house skills and reduce auditing costs. Dickinson noted, “I’ve never seen a situation so in need of technological support… It’s all in service of the capability to deliver verified data to an audience that wants to know if you’re credibly managing the biggest issue in human history."
Paving the Path for Future Climate Action
2024 is an exciting year for voluntary climate disclosure. The changes to CDP’s process and questionnaire aim to streamline reporting for companies and provide more decision-useful data to stakeholders. CDP’s changes will also fuel consistency in climate reporting and shape future climate action — by the end of the year, CDP expects to deliver the first ISSB S2-aligned dataset in the world. Companies that follow CDP’s updated reporting process will be in a strong position to meet coming regulatory requirements and answer the growing market demand for trustworthy sustainability information.
Ready to report to CDP? Find out how Persefoni can help.
