CDP: What it is, how it works and how software can help
What is CDP?
CDP is a popular voluntary reporting framework that companies use to disclose environmental information to their stakeholders (investors, employees and customers). Reporting is completed on an annual basis, with the portal opening in April every year and submissions due in July.
CDP maintains this data in an open database and proclaims to hold the world’s most comprehensive collection of self-reported environmental data.
How does CDP work?
For companies, CDP currently offers three questionnaires (Climate Change, Water Security and Forests). Each of these is scored using different methodologies. The questionnaires include general questions alongside sector-specific questions aimed at high-impact sectors. The scoring of CDP questionnaires is conducted by accredited scoring partners trained by CDP.
The information captured by CDP can be used by both investors and by the reporting organizations themselves. Investors can use CDP to make informed decisions around sustainability performance, and companies can drive action on climate change, water resources and other critical areas.
Who is using CDP?
Back in 2003, CDP reporters numbered in the low hundreds. Since then, reporting numbers have grown significantly, if not exponentially. In 2020, CDP reported record disclosures as over 9,600 reported to the CDP—up 14% from the previous year and 70% since the Paris Agreement was signed in 2015.
What are the challenges associated with CDP reporting?
CDP consists of a long list of questions for organizations to answer. In 2021 this took the form of an 88-page document with over 200 questions. Gathering the required data and responding to a CDP questionnaire is no small undertaking. In a 2021 report, “Smart Innovators: Corporate ESG & Sustainability Software,” Verdantix (an independent analyst firm) estimated that “responding appropriately to a CDP questionnaire…can take a team of 30 employees more than 40 workdays’ effort.”
How does ESG+ sustainability software support CDP reporting?
The CDP Climate Change questionnaire includes a combination of qualitative and quantitative questions. Sustainability reporting software is particularly well-suited to supporting answers to the questions that require quantitative data. Software can simplify emission calculations, particularly in calculating Scope 2 emissions using the required market-based method. In addition, it can be useful for maintaining a library of emissions factors used to calculate emission intensity and absolute emissions (Scope 1, Scope 2 location-based, Scope 2 market based and Scope 3), and can separate emissions by country/region, group, facility and activity.
How does Envizi support reporting to the CDP climate questionnaire?
Envizi’s suite of ESG reporting solutions captures data from different sources into a single platform that automatically calculates emissions, energy consumption, building ratings and key ESG indicators. This data is then available through various visual dashboards and reports which are exportable to different formats, so organizations can use the insights across ESG reporting frameworks or for internal compliance requirements.