Climate and carbon disclosure reporting: getting from B to A

To engage corporations on environmental issues, in 2003 a London-based charity – then known as Carbon Disclosure Project – started sending paper surveys to the top FTSE companies. Today, not-for-profit CDP runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts.

Over 8,400 companies responded to CDP in 2019. More organisations are striving to improve their standing on climate change issues. Grading also changes yearly so businesses must do even better to get an A. But as Martin Sedgwick, EcoAct’s Director, said during a recent webinar: “The A list is not an exclusive club; it’s where we all need to be.”

Disclosure shows how much climate action an organisation is taking and can prove commitment to sustainability and transparency. Showcasing this to customers, employees and investors can help secure investment and provide a competitive advantage.

Separate from the score, completing a CDP report can identify gaps in environmental management and provide a roadmap for an organisation to implement best practices. This helps prepare the company for climate challenges ahead and additional reporting requirements that may be introduced as part of net zero targets.

SSE’s CDP Climate Change score increased to A- in 2018 (from B in 2017) which we maintained for our 2019 submission. We recognise there’s more to do, which is why we’re working towards a better world of energy through our 2030 goals. These include halving the carbon intensity of electricity generated, trebling renewable energy output and helping accommodate 10 million electric vehicles.

Joined up reporting

The CDP methodology changes each year, to make it easier to complete the questionnaire, although achieving the highest score may become more difficult. Expect tweaks rather than transformation. The biggest recent changes in 2018 aligned the survey to Science Based Targets and Task Force on Climate-related Financial Disclosures criteria.

For 2020, CDP has launched a further four sectors. A sector-based approach allows better benchmarking and a more meaningful assessment of environmental stewardship. The new sectors are:

• Real estate – owners and developers, hotels and lodging, Real Estate Investment Trusts (REIT); including buildings management
• Construction – building sub-contractors, residential and non-residential construction and major renovation; assessing buildings’ life cycle emissions and investment in low carbon tech
• Financial services – banking, insurance, asset ownership and management; considering portfolio exposure to climate-related risks and Scope 3 emissions
• Capital goods – products used in the production of other products, such as construction and mining equipment, industrial machinery or process plant equipment

Large companies can repurpose information gathered for mandatory disclosures such as Streamlined Energy and Carbon Reporting (SECR). To produce an emissions report, you’ll need access to your data. We advise making use of tools such as SSE Clarity – our online energy management and reporting platform that’s free for customers.

Looking long term and beyond your business

Emissions disclosure is only the first step. Doing well at CDP means going beyond submission enhancement, to drive forward progress.

Organisations must integrate climate change readiness, and C-suite executives or board-level directors must buy in. This could include monetary incentives for the leadership team, long term science-based targets, considering climate risks in financial planning, and procuring renewable energy to power operations – which we can help with.

It’s essential to keep demonstrating improvement year-on-year, and goals must go further than incremental one-year targets. Think about where your business might be over the next 10-20 years, bearing in mind what physical transition could be required in a warming world.

Sustainability is also about the value chain; not just a company’s own operations, but the supply chain and investment portfolios. When considering how to tackle areas that lie beyond your immediate control, it’s vital to engage and collaborate with partners, peers and customers. You need information from other companies you use, and could align KPIs with the CDP questionnaire.

A great example is telecoms provider O2, part of Telefónica who’ve made the A list for a sixth consecutive year. They’ve worked with us to offer their suppliers SSE Green renewable electricity at a preferential rate.

How to get an A

Organisations must achieve highly through disclosure, awareness, management and leadership criteria before they can progress to a high CDP score. EcoAct advises conducting a gap analysis every year to make sure you’re on track.

By itself, public disclosure in addition to CDP submission would not improve a C grade. You’d need to check the criteria, develop your company’s awareness and establish a climate management strategy.

It’s possible to raise a CDP score from F to A, having never disclosed, but that’s a long way to go in a year. Achieving this within two or three years is more realistic. Science-based targets usually take time to go through.

Here are some tips to maximise points from David Grant, Consultant & CDP Technical Lead at EcoAct:

• Answer fully according to the question wording. For questions requiring a free text response, check the scoring criteria. Don’t simply put “not evaluated” – state why the topic is relevant or not to your business.
• Check answers are consistent with each other.
• Include case studies specific to your company, not just sector.
• State opportunities, as well as risks, to win awareness points so you can progress to gain management points. For example, you may have a product that could set your company ahead.

Once an organisation reaches the A list, there’s still room for improvement. Grade A businesses are considered leaders, so CDP is likely to look at you for future direction – giving you the opportunity to steer on what’s not in the criteria but should be.

You can listen to EcoAct’s best practice CDP reporting webinar at eco-act.com/event/webinar-2020-cdp-reporting.

You can see CDP’s questionnaires and guidance at cdp.net/en/guidance.