What is CDP?

CDP, formerly known as the Carbon Disclosure Project, is a non-profit global organization that runs the world's leading environmental disclosure system for companies, cities, states, and regions.  

Here's a breakdown of what CDP is and what it does:

Core Function:

• Environmental Disclosure Platform: CDP provides a platform for these entities to disclose their environmental impact. This includes areas like climate change, water security, forests, and most recently, plastics and biodiversity.  
   
• Data Collection and Analysis: It collects self-reported environmental data through annual questionnaires. This data is then analyzed and made available to investors, companies, policymakers, and the public. CDP claims to hold the world's most comprehensive collection of this type of data.  
   
• Driving Action: By making environmental reporting a business norm, CDP aims to drive disclosure, insight, and action towards a sustainable economy, helping to mitigate climate change, protect water resources, and prevent deforestation.  
   

Key Aspects of CDP:

• Voluntary Disclosure (Largely): While reporting to CDP is voluntary for many organizations, it is increasingly being requested by investors (representing trillions in assets) and large corporate buyers in supply chains who need this information for their own ESG assessments and to drive decarbonization. Upcoming regulations may also mandate certain disclosures aligned with CDP frameworks.  
   
• Annual Questionnaires: CDP offers different questionnaires for companies (including a specific SME questionnaire), cities, states, and regions, focusing on various environmental themes. These questionnaires are updated annually to reflect the latest climate science and policy developments. In 2024, CDP integrated its climate change, forests, and water security questionnaires into a single multi-environmental issue format for the full corporate questionnaire.
• Scoring and Ratings: CDP scores the responses to its questionnaires using a standardized methodology, ranging from D- to A (with an F for failure to submit). These scores help organizations benchmark their performance, identify areas for improvement, and demonstrate their environmental leadership to stakeholders.  
   
• Alignment with Other Frameworks: CDP aligns its questionnaires with other key ESG reporting frameworks and standards, such as the Task Force on Climate-related Financial Disclosures (TCFD) and the Global Reporting Initiative (GRI), aiming to streamline reporting for organizations.  
   
• Global Reach: CDP works with organizations across over 90 countries and has become a widely recognized and influential voice in environmental transparency.  
   

Why is CDP Important?

• Transparency: It promotes transparency in environmental reporting, allowing stakeholders to understand and compare the environmental impacts of different entities.  
   
• Accountability: By disclosing their data, organizations become more accountable for their environmental performance.
• Risk Management: The disclosure process helps organizations identify and manage environmental risks and opportunities.  
   
• Investor Information: Investors rely on CDP data to make informed decisions about sustainable investments and to assess the environmental risks within their portfolios.  
   
• Supply Chain Engagement: Companies use CDP to engage with their suppliers and encourage them to disclose and improve their environmental performance.  
   
• Policy Development: Governments and policymakers use CDP data to inform the development of environmental regulations and policies.

In summary, CDP plays a crucial role in driving environmental transparency and action globally by providing a standardized system for organizations to disclose their environmental impacts, which in turn informs decision-making by a wide range of stakeholders.