Keeping pace with the rising bar of CDP
5 MINUTE READ | BY KATE JONES AND JAMES HABANANANDA | 22 APRIL 2024
CDP has been evolving for a number of years to reflect the growing focus on environmental topics beyond emissions in part accelerated by the broadening and strengthening ESG regulatory focus.
As part of this, CDP is a partner to various ESG framework bodies including the Taskforce on Nature-related Financial Disclosures (TNFD), the Transition plan Taskforce (TPT) and the European Financial Reporting Advisory Group (EFRAG)*.
As responding businesses seek to at least maintain their CDP score, increasing alignment with these standards means that even if businesses have improved their internal environmental governance, activities and reporting, their CDP score may decrease regardless. With that in mind, let’s have a look at some of the key things to know for 2024.
CDP 2024 timelines:
30th April – questionnaires are available. Get familiar with the updated integrated questionnaire structure to make your preparation as focussed as possible.
14th May – CDP portal opens. The integrated questionnaire will be submitted via a streamlined Online Response System (ORS) as in 2023.
4th June – Response window opens. Meaning disclosers can go in, activate and start completing their questionnaire.
18th September – Scoring Deadline. Moved later this year, the scoring deadline is the deadline for submitting the CDP questionnaire and be eligible for a score. It’s been pushed back this year to allow disclosers more time to get used to the new questionnaire.
2nd October – Reporting window closes. Any questionnaires submitted ahead of this deadline but after 18th September will not receive a score.
Based on timelines from previous years, we expect the scores to be released in December 2024 or early 2025.
“Even if a business has improved their internal environmental governance, activities and reporting, without careful attention to the changing scoring systems, their CDP score may decrease regardless.”
Here are five quick tips on changes you will see this year
1. Integrated questionnaire
This year CDP are introducing the integrated questionnaire. This means ‘cross-thematic content’ previously repeated across Climate Change, Water and Forests questionnaires, e.g. on governance, will now be combined into integrated modules. CDP hope that eliminating duplication of some topics previously repeated across the questionnaires will create efficiencies when completing the questionnaire this year.
2. Theme specific content
Within the integrated questionnaire, separate modules will remain for ‘theme specific’ content in: Climate Change, Forests, Water Security, Plastics and Biodiversity. This allows environmental data, targets and actions to be submitted by topic.
3. Mandatory vs non-mandatory questions
All large companies must respond to the Climate Change, Plastic and Biodiversity data points.
Questions in the Forests and Water Security modules will continue to be presented based on how relevant the issues are to the business sector and the company activities.
Forest and/or Water security questions will appear if: a) you have self-assessed related dependencies, impacts, risks or opportunities (DIROs) b) a request to complete the module has been received from a requesting body e.g. a customer c) you have opted in d) they are deemed to be relevant to your businesses through the CDP Activity Classification System (ACS) methodology (this has been used by CDP for years). If you have answered questions on Forests and Water Security before then you will almost certainly answer them again in 2024.
4. Scoring methodology
Plastics and Biodiversity modules will not be scored in 2024. However, the addition of these modules is designed to broaden the scope of priority environmental issues as defined by CDP. We expect in future years that these will form part of the scoring criteria, therefore building maturity in these areas now will help future proof both your business and your CDP responses.
At present, we don’t expect material changes to the scoring criteria.
5. Regulatory alignment
CDP is seeking to increase alignment with ESG reporting frameworks – in 2024 it will be fully aligned with the International Financial Reporting Standards (IFRS) S2 Climate-related Disclosures and partially aligned with TNFD and CSRD. Aligning with these frameworks is part of CDP’s ambition to serve as a ‘one-stop shop’ for ESG disclosures.
CDP has been evolving to align with ESG regulation and wider ESG trends for a number of years
If you look at the policy collaboration page on the CDP website, you’ll see a long list of frameworks, standards and organisations that CDP feeds into and supports. But how do we expect this to be reflected in the CDP 2024 questionnaire - and what can we learn from the changes we saw in 2023?
A shift to Impacts and Dependencies
CDP has been fully aligned to TCFD for some time, and this year, for the first time is fully aligned to IFRS S2. The TCFD framework, and therefore IFRS S2 which builds on from the TCFD, requires disclosing companies to undertake climate scenario analysis to identify, analyse and disclose their climate-related risks and opportunities. Climate scenario analysis enables companies to identify their climate-related risks and opportunities using hypothetical climate scenarios. CDP already includes a focus on climate scenario analysis and how it is used to input into company strategies, directly pulling from the TCFD and ISSB requirements.
However, disclosers may notice a trend towards language around ‘impacts and dependencies’ as well as ‘risks and opportunities’ as CDP seeks to increasingly align with the environmental ESRSs- building on their ‘partial alignment’ in 2024. CDP are currently assessing their alignment so more significant updates driven by the introduction of the ESRSs may be seen in future years.
The rise of climate transition plans
The momentum behind climate transition plans is increasing - starting with the release of the Glasgow Financial Alliance for Net Zero (GFANZ) framework in 2022 for financial institutions. This has since been followed by the Transition Plan Taskforce (TPT) framework in 2023 for the private sector, and the increasing number of mentions in regulatory requirements such as TCFD, CSRD and IFRS. CDP is part of the taskforce and the introduction of questions on transition plans in 2022 reflected their ongoing alignment with the TPT framework.
Financial institutions responding to CDP this year will be able to demonstrate progress against the voluntary GFANZ transition plan recommendations and guidance. This is an area we expect to attract greater focus in future years across financial services and corporates – particularly after the publishing of the first wave of CSRD disclosures and with established frameworks like TPT become more widely adopted.
Even if you don’t have a fully-fledged transition plan yet, including narrative on your wider action plans can make your CDP response more complete and take you a step further to collating that action and building your Transition Plan. This could be activities relating to climate-related lobbying, industry partnerships, funding of low carbon technology, R&D into new low carbon products and services, engagement with suppliers.
See our blog for more information on climate transition planning and the Transition Plan Taskforce.
The importance of knowing your boundaries
As part of CDP’s mission to align with the latest ESG regulations, it will begin to mirror the focus on being able to demonstrate deep knowledge control boundaries and value chain.
More transparency here will mean discussion of impacts, dependencies, risks and opportunities can be mapped more accurately and completely. For example, after the announcement last year by CDP of its intention to align with The Taskforce for Nature-related Financial Disclosures (TNFD) – disclosers may be asked to specify specific locations as part of their responses on forests, water and biodiversity.
Biodiversity, ecosystems, and nature move to the centre
Last year, new questions were added to the CDP questionnaire requesting the quantification of biodiversity impacts of responding businesses. This is a good example of the existing partial alignment, for the 2024 questionnaire, with the TNFD framework’s structure that mirrors TCFD’s - particularly around governance, strategy and risk & opportunities. As a TNFD partner, CDP will be aiming to quickly align with the full framework to accelerate adoption.
We may see that climate and nature are increasingly entwined within the CDP questionnaire, reflecting the common understanding – articulated by CDP in this article - that climate change is a symptom of an unbalanced wider nature ecosystem in which biodiversity metrics help to measure the ecosystem health and balance. The integrated questionnaire is, to an extent, a step towards responding on climate change, nature and biodiversity simultaneously – a trend we may see continue in future years.
How SB+CO can help
SB+CO is expertly positioned to support your organisation with Climate Change, Forests, Water, Biodiversity, and Plastics CDP disclosures. We can help with everything from preparing, drafting and submitting your CDP responses. And if needed, we can support you with the analysis and crafting of the rationale in CDP appeals.
We see CDP as a broader exercise to identify your priorities and build a roadmap of activity not just for your next CDP report, but across your ESG strategy, based on existing and incoming regulatory requirements, your sustainability and commercial ambitions and risk appetite.
SB+CO are also here to support your organisation beyond CDP, including on TCFD and scenario analysis, regulatory alignment, and on Climate Transition Planning - with our Climate Strategy Lead, Kate Jones, having worked directly with the TPT to develop sector specific guidance.
Drop us a line at info@sbandco.com.
Notes
*A private sector association which guided the development of the European Sustainability Reporting Standards (ESRS) to support the implementation of the EU Corporate Sustainability Reporting Directive (CSRD).
Kate Jones
Sustainability Strategy Director
James Habanananda
Senior Analyst
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