CDP Reporting

At its core, CDP reporting is a standard process for organizations to disclose their environmental data visible through the CDP platform. Formerly called Carbon Disclosure Project, CDP is a non-profit organization that runs one of the most respected sustainability reporting frameworks worldwide.

Participants reply annually to detailed questionnaires about their greenhouse gas emissions (scope 1, 2, and 3), climate risks and opportunities, governance structures, reduction targets, and environmental strategies. These questionnaires, like the CDP climate change questionnaire, offer consistent data formats that permit investors, policymakers, and other stakeholders to benchmark companies and track progress.

CDP reporting helps companies not only comply with regulations but also engage investors who are increasingly focused on climate risks and net-zero targets. It boosts transparency, supports better decision-making, and motivates organizations towards minimizing their carbon footprint.

The Importance of CDP Reporting in today’s Business Landscape 

In today’s world, environmental responsibility has become an important factor in how businesses function and succeed. CDP reporting plays a critical role in helping organizations fulfill those expectations and stay ahead in a competitive market focused on sustainability.

• Transparency and Trust: Transparency builds trust. When organizations share verified environmental data by the CDP, they determine a true commitment to sustainability. This openness attracts investors and consumers who care about climate action and helps avoid accusations of “greenwashing.”
• Investor Engagement: Modern investors use environmental, social, and governance (ESG) factors to evaluate risks and opportunities. CDP scores often guide investment decisions. Those companies that demonstrate good performance in CDP reporting receive more capital and enjoy better stakeholder relationships.
• Regulatory Compliance: Governments around the world are tightening regulations related to environmental disclosure. Regulations such as the EU’s Corporate Sustainability Reporting Directive (CSRD) and the SEC’s climate disclosure rules closely align with the CDP’s framework. Reporting to the CDP offers a robust foundation to fulfill these developing requirements.
• Driving Continuous Improvement: Since CDP reporting occurs annually, organizations receive feedback and scoring spotlight strengths and gaps. This cycle helps them enhance sustainability measures, reduce emissions, and improve climate strategies over time.
• Competitive Advantage: Companies leading in CDP reporting often gain reputational benefits and better risk management. They can publicly highlight their achievements, distinguish themselves from competitors, and build strong brands.

A core part of the CDP reporting process includes demonstrating how an organization impacts, and is affected by, climate change. The most important aspect of this disclosure is the accurate measurement and classification of greenhouse gas (GHG) emissions. The CDP needs companies to report emissions in three specified areas to ensure transparency and accountability across the entire value chain.

Understanding these scopes is vital for identifying emissions hotspots, setting reduction targets, and communicating environmental impact to stakeholders.

Greenhouse Gas Emissions (Scope 1, 2, and 3)

• Scope 1: Direct Emissions: These are emissions from sources that are owned or controlled by the company. Examples comprise fuel combustion in company vehicles or manufacturing processes in proprietary facilities.
• Scope 2: Indirect Emissions from Energy: Scope 2 covers GHG emissions indirectly from the production of purchased electricity, steam, heating or cooling consumed by the reporting organisation. Although these emissions occur off-site, they are a direct result of the company’s energy consumption.
• Scope 3: Other Indirect Emissions: Scope 3 includes all other indirect emissions that occur in the company’s value chain. This can range from supplier emissions, employee travel, and business travel to product distribution, waste disposal, and utilization of sold products. Scope 3 is often the largest part of a company’s carbon footprint and also the most complex to measure.

The CDP needs companies to highlight physical risks (such as extreme weather) and transitional risks (such as changes in policy or market fluctuations). Organizations can also specify opportunities such as energy efficiency, new low-carbon products, or renewable investments.

• Governance and Strategy: Detail how climate risks and sustainability targets are controlled at board or executive level, and how this strategy is linked to business operations.
• Targets and Goals: Setting measurable targets, such as net-zero targets or science-based emissions reduction targets, is crucial. CDP values clear, ambitious, and achievable goals.
• Actions and Initiatives: Explain projects, initiatives, or investments made to minimize emissions or enhance sustainability, such as energy-efficient upgrades or supply chain engagement.

CDP reporting provides more than just compliance. It offers a strategic benefit that enhances growth and sustainability going forward. By participating, organizations can unlock numerous benefits that strengthen their operations and stakeholder relationships.

• Better Investor Relations: High-quality CDP reporting signals to investors that your organization is efficiently managing its sustainability risks and opportunities. This transparency can attract more investment and build long-term trust.
• Improved Regulatory Readiness: The Data collected for CDP reporting often conforms to emerging regulatory requirements worldwide. It prepares your organization to fulfill current and future disclosure standards with ease.
• Increased Operational Efficiency: Through CDP reporting, companies can identify emission hot spots and inadequacies. Addressing those areas leads to better processes, less waste, and lower operating costs.
• Enhanced Reputation: Being transparent about environmental impacts promotes trust among consumers, stakeholders and the public. This reputation for responsibility can set your organization apart in a competitive market.
• Clear Roadmap for Improvement: CDP scoring and impressions offer actionable insights. Organizations can use them to continuously enhance their sustainability performance year after year.

Real World Examples of CDP Reporting Success

To understand the real impact of CDP reporting, it helps to look at how organizations across different sectors have used the framework to drive meaningful change. Following are two examples that highlight the benefits and tangible results of effective CDP reporting.

• Example 1: A Manufacturing Company By mapping its greenhouse gas emissions and setting a science-based target to minimize emissions 30% by 2030, this company improved its CDP score from B to A within two years. Initiatives included switching to renewable energy and enhancing supply chain transparency.
• Example 2: A City Government: Reporting on climate risks and resilience, the city used CDP insights to secure green bonds for sustainability projects, demonstrating leadership and boosting investor engagement.

CDP reporting is a standardized process that permits companies to demonstrate their environmental impact and climate-related strategies. This process helps organizations measure, manage and mitigate their emissions while aligning with stakeholder and investor expectations.

• Step 1: Registration and Selecting Questionnaires: Organizations begin by registering on the CDP platform and selecting relevant questionnaires, such as climate change, water security, or forests. The focus is typically on climate change for most corporations.
• Step 2: Data Collection and Questionnaire Completion: The CDP climate change questionnaire includes detailed questions on emissions (scope 1: direct, scope 2: indirect from purchased energy, and scope 3: value chain
• emissions), climate risks, governance, targets, and actions. Gathering accurate data requires collaboration across departments like sustainability, operations, and finance.
• Step 3: Submission and Verification: After compiling data and narratives, organizations submit responses through the platform. Many companies use third-party verification to ensure accuracy and credibility.
• Step 4: Scoring and Feedback: CDP scores submissions from A to F based on completeness, transparency, and how well the organization manages climate risks and opportunities. Scores provide insights for improvement.
• Step 5: Using CDP Insights: Organizations use CDP results to benchmark performance, inform stakeholders, and integrate findings into broader sustainability reports or investor communications.

The future of CDP reporting is poised to be more seamless and impactful. Advancement in digital tools should make it easier for organizations to collect and manage complex environmental data, particularly around Scope 3 emissions, which cover indirect emissions in the supply chain. Moreover, the CDP will continue to align with global sustainability standards, making reporting more consistent and meaningful worldwide.

In addition to environmental metrics, stakeholders are increasingly expecting companies to disclose information on social and governance issues as part of the full ESG picture. This means that CDP reporting would potentially broaden its scope, incentivizing businesses to offer a more holistic view of their overall sustainability and responsibility efforts.

The alignment of the CDP with frameworks such as the TCFD and EU CSRD makes it an important resource for companies developing stringent climate reporting rules. The SEC’s emerging climate disclosure requirements also echo CDP’s focus areas, highlighting its significance for regulatory compliance.

Tips to Improve Your CDP Score

• Complete all relevant sections thoroughly.
• Set clear, ambitious, and measurable net zero targets.
• Use verified and accurate data for credibility.
• Link governance to climate strategy and risk management.
• Engage your supply chain in reporting efforts.
• Review CDP feedback to continually refine your disclosures.

Corpseed is a leading consulting firm specializing in helping organizations navigate the complexities of sustainability reporting, including CDP reporting. We provide end-to-end support to ensure your company accurately measures, reports, and improves its environmental performance, aligning with global standards and investor expectations.

• Expert Guidance: Our sustainability consultants guide you through the entire CDP reporting process, from data collection to submission, ensuring compliance with all CDP requirements and industry best practices.
• Customized Reporting Solutions: We tailor reporting strategies to fit your company’s unique operations and sustainability goals, making complex disclosures clear, accurate, and impactful.
• Regulatory and Compliance Support: We keep you updated on evolving climate regulations and ensures your CDP reporting meets all legal and compliance standards, reducing risks.
• Stakeholder Communication: We help craft transparent and compelling disclosures that enhance your reputation and strengthen relationships with investors, customers, and partners.
• Continuous Improvement and Follow-up: Beyond submission, we assist with analyzing CDP feedback, improving scores year after year, and embedding sustainability into your long-term business strategy.