Performing well on CDP demonstrates to investors, customers and employees that organisations are taking environmental issues seriously and are paving the way to a more sustainable future. CDP is the world’s largest environmental disclosure system, each year supporting thousands of companies, cities, states and regions to measure and manage their environmental risks and opportunities.
As companies begin gearing up to complete this year’s CDP response, it’s important to consider how changes to the scoring methodology might affect responses during this disclosure cycle.
Read on to find out what you can expect from this year’s scoring, including updated category weightings and changes to specific categories of the questionnaire.
Categories are subgroups of the 2020 questionnaire modules which highlight interconnected environmental themes throughout each questionnaire. They also allow for a more detailed breakdown of an organisations score. To reflect the ever-changing nature of environmental management and CDP’s emphasis on continual improvement, the 2020 categories have changed slightly. For example, several questions from the emissions breakdown have been reallocated into the Scope 1 & 2 (including verification) and Scope 3 (including verification) categories.
A weighting is applied to each category, reflecting the importance of certain topics within each questionnaire. For example, the ‘Opportunity disclosure’ (C2.4, C2.4a, C2.4b) is of growing importance, therefore this category weighting has been increased. As always, newly introduced questions have a lower weighting.
Each sector has a different category weighting, these are now available on the CDP website.
GAP ANALYSIS EXAMPLE
The CDP team at Carbon Intelligence have been busy analysing companies’ 2019 CDP disclosure, scoring these responses against the updated 2020 scoring methodology and category weightings. In many instances, due to the new questions that have been introduced, we are seeing company scores drop by two levels where Disclosure and Awareness points have not been awarded.
The graph below provides a real-life example of how a company scored in 2019, achieving a B, compared to how they would score if the same response were to be submitted against the updated 2020 scoring methodology, achieving a D.
This gap analysis exercise helps to focus efforts, clearly demonstrating where points would be lost if company were to submit the same response in this years’ disclosure cycle.
CHANGES TO SCORING
To avoid your CDP score dropping you need to be aware of not only the new questions but also the changes to the scoring of existing questions. We have outlined such changes below:
Elements that were previously score at Leadership level have been moved to Management, demonstrating an emphasis on continual improvement championed by CDP. An example of this is C1.1a in the Governance section, which now offers fewer points at Leadership level.
Risk management processes
New question C2.1b asks for a definition of substantive financial or strategic impact on businesses.
Modified question C2.2a no longer asks how a known risk is included in the risk assessment. Instead, the question asks for an example of the risk type.
Risks disclosure & Opportunities disclosure
The methodology used to calculate risks and opportunities with substantive financial impact on your business (C2.3a, C2.4a) must now be consistent with the guidance methodology.
Business strategy and financial planning
Modified question C3.1d (C2.4/C2.5 in 2019) no longer asks for the magnitude of the impact, instead companies are asked where and how climate-related risks and opportunities have influenced your strategy
Modified question C3.1e (C2.6 in 2019) again, no longer asks for magnitude. Instead, the question focuses on the time horizon covered by financial planning. This is to incentivise companies to have a full understanding of the impact of climate change over a short-, medium- and long-term horizon.
Targets to increase low-carbon energy consumption or production are now scored and there is a new question (C4.2a) on low-carbon energy target.
Scope 1 & 2 emissions
There is now a cross check of the responses in this category with the response from emissions reduction initiative category.
C8.2d on heat, steam and cooling is now also scored at Leadership level. Full Leadership points are awarded if >50% is generated from renewable sources.
Value chain engagement
C12.1a & C12.1b provide an additional request for a company specific description of the impact of their supplier engagement according to measure of success chosen.
DEADLINE EXTENSION & OTHER KEY DATES
In recognition of the challenges many companies are facing regarding COVID-19, CDP announced a 1-month extension of the original deadline to Wednesday 26th August 2020. On this date, all companies responding the CDP must submit their response via the Online Response System (ORS).
Despite the extension, we advise that businesses stick as close to the original deadline of Wednesday 29th July, where possible. If you would like to learn more about how to maximise your CDP score for 2020, get in touch with the CDP team at email@example.com.