Companies across the globe are in the thick of the 2022 CDP reporting season, and ADEC ESG Solutions is on top of the methodology’s most recent changes.
In this month’s webinar, “Prepping for Your CDP and ESG Success in 2022: Methodology and More,” we reviewed the latest methodology updates, CDP timeline, and ESG trends. We also took a deep dive into many changes to the CDP Climate Change Methodology and more rigorous scoring for financial organizations.
Want more than just the highlights? Watch the full webinar on-demand for an in-depth look at the changes, as well as CDP’s updates for the finance sector, a timeline for this year’s submissions, and a broader look at current ESG trends.
New A List criteria: Scope 3 verification
This year’s Climate Change questionnaire introduces a new criterion to qualify for CDP’s A List. Companies are now required to verify at least 70% of scope 3 emissions. In previous years, only scope 1 and 2 verification was required for the A List, indicating that CDP is raising the bar for its A List companies, a trend that we continue to see across the ESG space as disclosure becomes mandatory and high performers take center stage.
New A List criteria: Scope 3 verification
CDP introduced new questions on biodiversity in this year’s questionnaire, as it aims for higher standards for reporting companies and moves toward a more holistic approach to environmental reporting.
This new module applies to all sectors and the General questionnaire; however it is not scored for 2022. Questions within this module concern topics such as:
- Board-level oversight and executive management
- Public commitments and endorsements
- The impact of your company’s value chain on biodiversity
- Performance monitoring and biodiversity indicators
- Disclosure and reporting on biodiversity outside of CDP
Check out the full webinar for more details on each of these topics.
Risks and opportunities: Streamlined and rigorous
CDP has streamlined several of its risks and opportunities requirements this year—with the caveat that some criteria are now more difficult to meet. For example, while only the best row for risks (C2.3a) and opportunities (C2.4a) are now scored, and case studies are no longer required for physical and transitional climate-related risks in question C2.2, you must now include all risk types in your risk assessment process (C2.2a) in order to qualify for Leadership points.
The weighting on risks and opportunities questions has also decreased significantly this year. Fewer points are available overall in this section, particularly at Management and Leadership levels, indicating that CDP is shifting its focus from identifying and assessing risk to action. Namely, what is your company doing to achieve your targets and implement your low-carbon transition plan?
Targets and emissions: Tougher criteria and increased scrutiny
In comparison, more emphasis is being placed on targets and emissions this year, with stricter penalties for having no target, a push towards SBTi approval for targets, and a greater emphasis on setting a net-zero target across all scoring levels.
Emissions calculations themselves are also facing greater scrutiny, as CDP encourages companies to be as clear as possible on how emissions are calculated and how baselines are set. This includes setting a base year for scope 3 emissions, more detail on calculation methodology for scope 3, requirements to calculate scope 3 for certain categories, and a push for companies to achieve absolute reductions overall.
These changes mirror CDP’s new A List criteria on scope 3 verification, signaling overall more rigorous standards for top-performing companies.
Low-carbon transition plans and scenario analysis
Low-carbon transition plans also receive considerably more emphasis this year, with questions asking for greater detail and more points available in this section. Companies are being asked to disclose whether or not transition plans align with a 1.5⁰C world, and how spending and revenue align with transition plans.
Questions concerning scenario analysis also involve more detail and more points in this year’s updates. Reporting companies must choose from a list of specific transition scenarios and physical climate scenarios.
Scenario analysis questions also address specific details of analyses, such as coverage, temperature alignment, parameters, assumptions, analytical choices, and focal questions your company seeks to address using your analyses.
Raising the bar on supplier engagement
Supplier engagement has been a hot topic in recent years—and for good reason, as supply chain emissions are on average 11.4 times higher than those from operations. CDP has responded by toughening questions on supplier engagement. The question, “How are you engaging with suppliers?” no longer offers compliance and onboarding as options, encouraging companies to implement higher levels of engagement involving information collection, innovation, and collaboration.
The questionnaire also introduces a new question regarding whether or not climate-related requirements are a part of your company’s purchasing process and how those requirements are implemented. Do you ask suppliers to disclose to frameworks like CDP? Do you require suppliers to purchase renewable energy or set targets themselves? What mechanisms do you have in place to monitor compliance, and how do you respond to non-compliance with those climate-related requirements?
CDP’s questionnaires change almost every year, shifting to align with climate science and ensure that reporting companies are held to a reasonably high standard. As a CDP Silver Climate Change consultancy partner, ADEC ESG Solutions is ready to support your ESG programs and help your organization achieve Leadership for years to come.
Want more than the highlights? Watch the full webinar on-demand here to get all the details from our experts and view the live Q&A.
ADEC ESG Solutions is a CDP Silver Climate Change consultancy partner and has been working with organizations to improve their CDP performance for more than ten years. Browse select CDP services in our online store, or click here for a more comprehensive list of how we can help.