Learn: Regulation & reporting

The Carbon Disclosure Project - What is it and how does it work?

In the realm of environmental sustainability, one name stands tall: CDP. Formerly known as the Carbon Disclosure Project, it is the world’s most widely used database on organizational environmental impact, encompassing global greenhouse gas emissions and beyond.

What is the Carbon Disclosure Project?

The Carbon Disclosure Project, often referred to as CDP, is a globally recognized initiative that empowers companies to measure, manage, and disclose their environmental impacts. Launched in 2000, CDP has evolved into a comprehensive platform that drives accountability and transparency by collecting and publishing data on an organisations impact across climate change, water security, and deforestation.

Operating as a nonprofit global disclosure system in approximately 90 countries, CDP releases an annual survey for participating organisations regarding their greenhouse gas emissions, how they evaluate climate change risks, protect natural resources, their impact on deforestation and water resource use.

The aim of the Carbon Disclosure Project is to improve environmental impact data transparency and support sustainable business by helping companies measure, track, and reduce damage to the environment.

How does the Carbon Disclosure Project Work?

CDP operates as a powerful disclosure platform that encourages companies to voluntarily report their environmental data. The process involves a series of steps including:

  • Request for Information (RFI): CDP sends out an annual questionnaire to companies, asking for detailed information about their environmental practices, emissions, and risks.
  • Data Collection: Participating companies gather and compile data regarding their carbon emissions, water management, and deforestation activities.
  • Reporting and Scoring: Companies submit their responses to CDP, which then evaluates and scores their performance based on disclosed data.
  • Public Reporting: The collected data is made public through CDP's database, providing investors, consumers, and stakeholders with valuable insights into a company's environmental performance.

What information has to be disclosed in the Carbon Disclosure Project?

CDP's reporting framework covers:

  • Climate Change: Companies are required to report their greenhouse gas emissions, reduction targets, and climate risk assessments.
  • Water Security: Disclosure encompasses water usage, management strategies, and risks associated with water scarcity.
  • Deforestation: Companies involved in industries linked to deforestation, such as agriculture and forestry, must disclose their efforts to combat deforestation.

Why your company should report to the Carbon Disclosure Project

Now, the million-dollar question: Why should your company actively engage with CDP? Some of the benefits include:

  • Enhancing Sustainability: Reporting to CDP allows your company to gain a comprehensive understanding of its environmental impact, paving the way for more effective sustainability strategies.
  • Investor Attraction: Investors are increasingly considering environmental performance when making investment decisions. CDP disclosure demonstrates your commitment to sustainability, attracting environmentally conscious investors.
  • Risk Mitigation: Identifying and addressing environmental risks helps your company build resilience against future challenges, reducing the potential for costly environmental liabilities.
  • Stakeholder Trust: CDP disclosure enhances transparency and builds trust among consumers, employees, and other stakeholders who prioritize sustainability.
  • Regulatory Compliance: As governments worldwide implement stricter environmental regulations, CDP reporting can assist your company in staying ahead of compliance requirements.

How can Trace help?

Trace is built to comply with the Carbon Disclosure Project and empower companies to report on the key climate change metrics included in the yearly CDP survey. 

We also have a team of sustainability experts who can guide you through the broader CDP process. Check out this article on producing your CDP score card

> Get in touch with the team at Trace to find out more. 

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