Aligning CDP Reporting with Sustainability Goals and Targets

In the rapidly evolving landscape of corporate sustainability and climate action, few initiatives have gained as much traction and influence as CDP (formerly the Carbon Disclosure Project). What started as a small non-profit organization encouraging companies to disclose their environmental data has grown into a global movement, with over 18,700 companies worth over 60% of global market capitalization reporting through CDP in 2022.

But CDP reporting is about much more than just transparency and disclosure. When done right, it can serve as a powerful tool for aligning a company's sustainability efforts with its broader business strategy, driving meaningful emissions reductions and environmental impact, and unlocking new sources of value and competitive advantage.

The key lies in using CDP as a framework for setting ambitious, science-based goals and targets, and then leveraging the reporting process to measure progress, identify gaps and opportunities, and drive continuous improvement across the entire value chain.

Here's a closer look at how companies can align their CDP reporting with their sustainability goals and targets, and why doing so is essential for building credibility, enhancing performance, and capturing the full value potential of sustainability.

Setting the Foundation: Science-Based Targets and Value Chain Accountability

The first step in aligning CDP reporting with sustainability goals is to ensure that those goals are ambitious, credible, and aligned with the latest climate science. This is where initiatives like the Science Based Targets initiative (SBTi) come into play.

By setting science-based emissions reduction targets that are consistent with the goals of the Paris Agreement (limiting global warming to well below 2°C above pre-industrial levels), companies can demonstrate their commitment to tackling climate change and their willingness to be held accountable for their performance.

Critically, these targets must cover not just a company's direct (Scope 1 and 2) emissions, but also its indirect (Scope 3) emissions from across the value chain. As the blogs in this series have highlighted, the majority of most companies' carbon footprints lie in their supply chains – from the raw materials and energy inputs they source, to the transportation and distribution of their products, to the use and disposal of those products by customers.

By setting science-based targets that encompass these Scope 3 emissions sources, companies can ensure that their sustainability efforts are truly comprehensive and aligned with the scale and urgency of the climate challenge.

Leveraging CDP for Goal-Setting, Measurement, and Accountability

With a robust foundation of science-based, value chain-focused sustainability goals in place, companies can then leverage the CDP reporting framework to drive progress, accountability, and continuous improvement towards those goals.

The CDP questionnaires, which cover a range of environmental topics including climate change, forests, and water security, provide a structured and standardized approach for companies to disclose their emissions data, reduction targets, risk management strategies, and specific initiatives and programs across their operations and value chains.

By participating in CDP reporting annually, companies can not only enhance their transparency and credibility with investors, customers, and other stakeholders, but also track their progress against their goals, benchmark their performance against industry peers and best practices, and identify areas for improvement or acceleration.

For example, through the CDP Climate Change questionnaire, companies can disclose their Scope 1, 2, and 3 emissions inventories, their science-based emissions reduction targets (including those validated by the SBTi), and the specific initiatives and strategies they are implementing to achieve those targets, such as energy efficiency projects, renewable energy procurement, sustainable transportation and logistics programs, and supplier engagement efforts.

This data can then be analyzed and scored by CDP, providing companies with valuable insights into their relative performance and areas for improvement. Companies that demonstrate robust emissions measurement, ambitious science-based targets, and credible strategies for achieving those targets can earn higher scores and recognition from CDP, signaling their leadership and credibility on climate action to investors and other stakeholders.

But perhaps more importantly, the CDP reporting process itself can serve as a powerful internal driver for continuous improvement and goal alignment. By regularly collecting and analyzing emissions and sustainability data from across the value chain, companies can identify hotspots and prioritize their reduction efforts accordingly. They can engage suppliers, customers, and other partners in their decarbonization strategies, fostering collaboration and shared accountability. And they can use the insights and benchmarking data from CDP to course-correct, set more ambitious targets, and explore new innovations and solutions for achieving those targets.

In this way, CDP reporting becomes not just a compliance exercise, but a strategic tool for driving real, measurable progress towards a company's sustainability goals and targets.

Unlocking Value Through Alignment

Of course, the benefits of aligning CDP reporting with sustainability goals and targets extend far beyond simply enhancing transparency and credibility (though those are certainly important). When done effectively, this alignment can unlock significant value for a company and its stakeholders, across multiple dimensions.

For example, by setting ambitious, science-based emissions reduction targets and demonstrating credible progress through CDP reporting, companies can enhance their access to sustainable finance and ESG investment. With sustainable investing assets on track to exceed $53 trillion by 2025, according to Bloomberg, companies that can demonstrate leadership and alignment with the goals of the Paris Agreement can better attract and retain sustainability-focused investors and capital.

Additionally, strong CDP performance and alignment with sustainability goals can help companies build brand reputation and customer loyalty, as consumers increasingly seek out sustainable products and services aligned with their values. It can drive innovation and growth opportunities, as companies explore new low-carbon business models, products, and solutions to meet their decarbonization targets. And it can increase operational efficiency and cost savings, as companies optimize energy use, transportation, and resource consumption across their value chains.

But perhaps most importantly, aligning CDP reporting with ambitious, science-based sustainability goals can help companies future-proof their businesses and build long-term resilience in the face of mounting climate risks and disruptions. By taking decisive action to reduce their environmental footprints and align with a net-zero future, companies can mitigate their exposure to climate-related risks, enhance their ability to adapt and respond to changing market conditions and regulations, and position themselves as leaders in the low-carbon economy of tomorrow.

The Road Ahead

To be clear, the journey of aligning CDP reporting with sustainability goals and targets is not an easy one. It requires significant investment, cross-functional collaboration, and a willingness to challenge traditional business models and ways of thinking. It demands robust data collection and measurement systems, transparent reporting and accountability mechanisms, and a culture of continuous improvement and innovation.

But for companies that are serious about tackling climate change and driving meaningful environmental impact, this alignment is not just a nice-to-have – it's an imperative. As the physical and economic impacts of climate change intensify, and as investors, customers, and regulators ratchet up their expectations and demands for credible climate action, companies that fail to align their sustainability efforts and reporting with science-based goals and targets risk being left behind.

The road ahead is long and challenging, but the destination is clear: a thriving, resilient, and sustainable global economy that works for people and planet alike. By aligning their CDP reporting with ambitious, science-based sustainability goals and targets, companies can not only enhance their credibility and impact, but also unlock new sources of value, innovation, and competitive advantage in the low-carbon future.

The time for incremental change is over. The time for bold, ambitious, and aligned action is now. Let's seize this moment and build the sustainable businesses and economies of tomorrow, together.

About Newtral

Newtral AI Platform- Enterprise ESG Platform for Corporates and Supply Chain

We help organizations automate their ESG metric measurements, tracking and reporting across company as well as their supply chain. Our platform solves for all corporate sustainability reporting and carbon accounting needs.

Schedule Exclusive Demo

Learn how Newtral helps sustainability teams. The only tool sustainability teams need to measure, track, and improve ESG metrics, ensuring global compliances within budget.

Book a demo