Disclosure is a critical first step to tackling today’s environmental challenges, and the global non-profit CDP has become the gold standard. Looking to boost your CDP score in 2022 or reporting for the first time? CDP released their new climate, forest, and water security questionnaires just last week, and there are a few notable updates to be aware of. Read on to learn about these changes and see where CDP is headed overall.
Alignment with Science-Based Targets and 1.5°
One of the biggest changes to this year’s CDP questionnaire is the increased alignment with the Science-Based Targets Initiative (SBTi).
Last year, SBTi elevated the rigor of their emissions reduction pathways, announcing that companies must set targets in alignment with a 1.5° world. Developed in partnership with SBTi, CDP is also advancing its tracking and scoring in conjunction with SBTi’s focus on 1.5°.
As a result, users should expect new questions on how they are preparing and actively engaging in the 1.5° climate transition. For example:
- Does your organization’s strategy include a transition plan that aligns with 1.5°C?
- Have you identified spending that is aligned with your organization’s transition to 1.5°C?
- What percentage of spending is aligned with your organization’s transition to 1.5°C?
While having SBTs for your organization was seen as leadership in 2021, it has become increasingly apparent that this is table stakes for 2022.
Importance of Climate Scenario Analysis
CDP is also asking for more details on climate scenario analysis efforts, and how companies are integrating those findings into their corporate strategies. In this way, climate-related scenario analysis is more of a core requirement for 2022.
Last year, CDP asked organizations to simply select from a list of climate-related scenarios and models, providing details only if relevant. This year, not only has CDP expanded the list, breaking them out into transition and physical risks, but they are also asking companies to share:
- Coverage of scenario analysis efforts (company-wide, product-level, etc.)
- Temperature alignment of each scenario (1.5°, 2°, etc.)
- All parameters, assumptions, and explanations of choices
- Focal questions for scenario analysis
- A summary of results with respect to those questions
Providing this kind of detail not only gives insight into why your organization is using scenario analysis and how the results have impacted your strategy, but it also helps you better craft your company’s climate narrative.
Overall, CDP is markedly tightening its alignment with both SASB and TCFD's climate scenario analysis recommendations, paving the way for greater industry standardization and corporate progress. In fact, this year's questionnaire features 25+ TCFD-inspired questions.
Other Noteworthy New Questions
New questions around the 1.5° ambition and climate scenario analysis aren’t the only changes for 2022. Here’s what else you need to know:
Biodiversity: This year’s questionnaire features a brand-new section on biodiversity. While still in its infancy, these questions will lay the foundation for understanding what commitments companies have made and how they’re acting on them. We may not see a huge change in scoring, but these six new questions suggest that CDP views biodiversity and nature as a gap in the current market of corporate environmental disclosure.
Governance: In an ever-evolving effort to mainstream transparency, all three CDP questionnaires are requesting information about board-level competency on their respective issues - climate, forests, and water security. Board-level competency is a great indicator of a company’s commitment to understanding risks and impacts—CDP has capitalized on this in their latest disclosure guidance.
We can expect more changes in depth and scope in the coming years, especially as CDP addresses additional earth systems and enhances its social and governance metrics.
Key Takeaways and Next Steps
Altogether, the changes to the 2022 questionnaire signal a shift in disclosure from “are you doing this?” to “how are you doing this?” Each questionnaire, whether for climate, forests, or water security, is asking for more detail and accountability than ever before.
Bottom line? The era of surface-level disclosure is over. It’s time to connect aspiration to implementation, and CDP is showing businesses the way.
Updated scoring methodology will be available in early April, and the company reporting window will be open from April 11th to July 27th. This may seem like a long time from now, but be sure to start the process early so you can consider the updates and strategize your response.
Visit the CDP website for more information on the changes we discussed in this year's climate, forest, and water security questionnaires. If you need help filling out your CDP questionnaire or have other ESG reporting needs, our door is always open. Get in touch with our team here!
