"Life is like underwear, change is good."
CDP released its newest Climate Change questionnaire this reporting period with a bevy of changes including new questions, revised scoring methodology and a new disclosure platform. If you’re not familiar, the CDP provides a platform for organizations to disclose how they measure and manage their environmental impacts to a large network of investors and purchasers, representing over $100 trillion.
Due to these updates, the deadline has been extended so companies have until July 31, 2018 to submit responses via their online system. So what are the changes? Let’s dive in.
Sector-Specific Approach: Low-Carbon Strategies
Amongst these changes, some structural updates were made with the intent to streamline the process and the biggest update, the introduction of a Sector-based approach that will affect responders in high impact industries including Agriculture, Energy, Materials and Transport. These industries will now need to disclose sector-specific information, in addition to the Climate Change questionnaire.
This is a direct response to the market and gives a nod to the Paris agreements by asking about “low-carbon opportunities” and what companies are doing to support this new economy. A key driver for this is to enable investors to better compare performance and gain deeper insights within each industry, you know, the whole apples to apples thing.
|Transport Services Sector Example Question|
Provide tracking metrics for the implementation of low-carbon transport technology over the reporting year
In order to form greater alignment with the concerns of the investment world, CDP revised its questions to map with the Task Force on Climate-related Financial Disclosures’ (TCFD) recommendations, an organization backed by Bloomberg to help tie what financial markets want from disclosures and how to align climate change action with investors’ needs.
- 50% of questions have no change or minor changes
- 32% of questions are modified
- 18% are new
The biggest takeaway from the CDP2018 updates is increased emphasis on how companies integrate climate into business strategy and planning. More specifically, asking questions focused on the following strategic elements:
- Integration of Climate Scenario analysesinto resiliency strategies (ex. 2°C scenario, business as usual (greater than 2°C) scenarios, physical climate risk scenarios, etc)
- Forward-looking data points beyond historic trends but long-term strategies
- Risks and Opportunities that have impacted financial planning decisions
These changes, though they will require some attention to implement, will push disclosure across your industry and help you to uncover insights and drive action within your company. This next level of disclosure is encouraging industry-wide disruption and innovation towards the real global change that we need – and now you’re ready to take part.