Carbon Disclosure Project (CDP)

Written By Claire Siegrist

Carbon Disclosure Project (CDP), is a non-profit that gathers voluntary data from companies and cities on their environmental impacts and strategies. The objective is to provide transparency and accountability for investors and other stakeholders. Today, over 590 institutional investors use the data for ESG analysis.

What is the Carbon Disclosure Project (CDP)?

Carbon Disclosure Project (CDP) is a non-profit organization that gathers data on the environmental impact of companies, cities, states, and regions.

Organizations voluntarily disclose information on three areas: Climate Change, Forest Management, and Water Security. CDP then gives each organization a grade from A to F for its performance.

Investors use this data for ESG analysis, assessing which companies are most viable given climate risk. Other stakeholders gain insight into the maturity of an organization’s environmental action plans, such as a buyer checking whether a supplier is in line with its responsible sourcing strategy.

In 2010, Harvard Business Review called CDP “the most powerful green NGO you’ve never heard of.” Today, you would be hard-pressed to find a publicly-traded company that doesn’t report to CDP. Over 10,000 companies, cities, states and regions respond to CDP’s request for disclosure.

Why is CDP reporting so important?

At the global launch of CDP, UN Climate Secretary Christiana Figueres said, “CDP is to the future of business what the x-ray was to the then-future of medicine — without it, we would never have seen the insides of the patient’s health.”

Data shows us where environmental impacts are occurring and where action is needed. Disclosing this data provides transparency and accountability.

Governments have agreed to keep global warming well below 2 degrees. With CDP, organizations are encouraged to track climate strategies and provide data on their performance. This helps with accountability and the pursuit of these goals.

Benefits to participating organizations include:

Access to capital – over 590 investors worth US$100 trillion use CDP data for their ESG analysis.
Reputation – transparency builds trust and responds to growing public concerns.
Regulatory preparedness – CDP is guided by the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD) , which the G7 agreed to mandate for reporting purposes.
Using data to identify environmental risks and opportunities
Benchmarking with peers and providing constructive feedback on climate action plans

What does CDP do?

CDP asks organizations to respond to sector-specific questionnaires on climate change, forest management, and water security.

Examples of questions include:

“What are your emission reduction targets and progress made against those?”
For your disclosed commodities, do you have a system to control, monitor, or verify compliance with no conversion and/or no deforestation commitments?
“Has your organization experienced any detrimental water related impacts?”

CDP then scores each organization: A (leadership), B (management), C (awareness), D (disclosure), or F (lack of disclosure). The grades represent progress on environmental responsibility, completeness of responses and management practices. Grades are accompanied by feedback for improvement.

Since its founding in 2000, CDP has continued to launch new initiatives and adapt to the evolving climate conversations. In 2021, it announced plans to expand data collection per the planetary boundaries framework, including oceans, land use, biodiversity, food production, and waste.