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Government relations newsletter | Q2


Policies push corporate environmental reporting

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CDP's quarterly update on policy development and events

Sustainability climbs the political agenda as governments push corporate environmental reporting ... but will investors gain maximum benefit from the new measures?

Jurisdictions around the world are taking bold steps to grow the number of organizations reporting their environmental impacts to investors and other stakeholders. The intention is to enable informed decision making that will power a transition to economies that are sustainable. CDP has worked hard to move these developments forward and is in an ideal position to advise the best next steps.

European reporting directive could impact 18,000 large companies

The European Commission (EC) has made a significant move to better value finite natural resources by improving corporate environmental transparency and accountability. A new directive from the EC proposes an amendment to existing accounting legislation to mandate the reporting of social and environmental information in the annual reports of up to 18,000 large European companies. It is imperative that this legislation is now progressed without being weakened. Further, it should be strengthened to foster consistency of environmental information for investors. This is a view held by the Climate Disclosure Standards Board (CDSB), a CDP special project.

Nigel Sleigh-Johnson, head of the Institute of Chartered Accountants in England and Wales' financial reporting faculty, says: "Disclosures in corporate annual reports should be aimed squarely at the needs of investors… If the information is not bespoke and of relevance to investors, it will just lead to clutter and boilerplate."

Aviva Investors expanded on this point, recommending that the EC go further to promote full integration of non-financial information in annual reports, include a reference to a form of oversight by the markets – at the AGM via an investor vote, for example – and reference CDP guidance and CDSB.

CDP and CDSB are members of the Aviva-led Corporate Sustainability Reporting Coalition, comprised of investors with assets under management of approximately US$2 trillion, financial institutions, professional bodies, NGOs and other relevant stakeholders. The Coalition calls on European policy-makers to work toward an agreement on sustainability reporting so that companies can be part of the solution towards a sustainable future.

CDSB already supports companies to integrate their financial and non-financial reports (integrated reporting). Created by CDSB and freely available to download, the Climate Change Reporting Framework enables companies to comply with proposed regulation. Further, having been developed in close partnership with accountancy, business, standard setting and regulation professionals, this framework ensures that companies elicit maximum value from their climate change reporting, by guiding them to publish carbon and climate change information that meets their shareholder needs. Companies that would like to read more on this subject may benefit from Climate Change: your journey to integrated reporting, a new report from CDSB in partnership with Promethium Carbon. The publication provides CEOs, CFOs, reporting committees and internal auditors with a practical reference tool about the relationship between integrated and climate change reporting.

Landmark UK regulation

Meanwhile in the UK, the Government has deemed companies’ greenhouse gas (GHG) emissions data relevant alongside their financial information. Parliament is next month expected to pass the relevant amendment to the Companies Act, making this the first year to see first British companies legally obliged to include GHG data in their annual report and accounts, or explain why not. CDP has played a central role in helping the UK Government to arrive at this decision, a much-needed response to market needs and an important early step towards improving the valuation of environmental risk.

Progress in Germany…

CDP has been granted funding from the German federal Ministry of Environment (BMU) for a joint research project with WWF on the harmonization of corporate environmental reporting. This project will draw on CDP’s expertise on using disclosure to drive sustainable action to address Germany’s need for defined standards to capture comparable, verifiable and quantifiable data. Drawing on existing standards to reduce any reporting burden, it will advise on how to establish harmonized carbon reporting in Germany to meet the country’s substantial greenhouse gas emissions reductions plans; 80-95% by 2050 (20% by 2020) compared to 1990 levels.

… and across the Commonwealth

CDP and CDSB are continuing to work closely with the Foreign and Commonwealth Office (FCO) to promote the business case for carbon management. A policy attaché event organized recently by the FCO in London saw CDSB present on emerging carbon management trends, analyzing the correlations between corporations with a good carbon disclosure and their business performance over time.


All these are measures to be applauded. They will accelerate a greater and more effective sense of environmental stewardship from companies and countries, more positive action and better decision making to protect our natural capital. They will see thousands of companies adopting new approaches to reporting. But the scale of the challenge we face today as a result of over consumption are unprecedented, and the crisis we face is potentially devastating.

Over 4,100 companies around the world already use CDP to measure, manage and reduce their impacts on carbon, energy, climate change, water and forests. These are leaders forging an advantage over those that are slow to respond market calls for environmental data. Further, they are contributing to CDP’s library of corporate environmental data, the most comprehensive in the world. The unique insights from this data have helped to inform existing environmental policy and will play a vital role as CDP continues to work to support governments and jurisdictions in the world to achieve policy that benefits the economic and the physical climate.

If you would like to find out how CDP can support your policy-related project, please contact Ben Watson by emailing ben.watson@cdp.net, CDP’s Head of Government Relations.

The increasing relevance of natural capital

Risk in the global supply chain

Seventy percent of companies believe that climate change has the potential to affect their revenue significantly, a risk which is intensified by a chasm between the sustainable business practices of multinational corporations and their suppliers, according to new CDP and Accenture research. “Reducing risk and driving business value” is based on information from 2,415 companies, including 2,363 suppliers and 52 major purchasing organizations who are members of CDP’s program for managing supply chains sustainably. These members include Dell, L’Oreal and Walmart and represent a combined spending power of c. US$1 trillion. The research marks CDP’s most comprehensive annual update on the impact of climate change on corporate supply chains.

Investors hungry for environmental data

As market forces are increasingly confronted with the impacts of climate change, a greater number of companies and investors use CDP to manage their environmental risks, opportunities and drive strategic changes for positive environmental action. 722 investors representing US$87 trillion, that’s more than half the world’s invested capital, are this year requesting corporate climate data through CDP, with over 5,000 organizations being asked to disclose.

Changes at CDP

It is over ten years ago that CDP first pioneered a global system for companies to report their environmental impacts and strategies to investors. In that time CDP has evolved significantly and has expanded to cover and protect a wider spectrum of the earth's natural capital, specifically water and forests, alongside carbon, energy sources and the climate. CDP has accelerated climate change and natural resource issues to the boardroom and has moved beyond the corporate world to engage with cities and governments. To reflect CDP’s broader offering, the action that the CDP system drives and the scale of the challenges that lie ahead of us, CDP has rebranded, introduced a new visual identity and changed name from the Carbon Disclosure Project to CDP.

Catalyzing action to reduce deforestation

Deforestation accounts for approximately 15% of the world’s greenhouse gas emissions, the equivalent of the entire transport sector, which emphasizes the importance of CDP’s forest program as a vital new addition. This program was formerly known as the Forest Footprint Disclosure Project, an initiative pioneered by the Global Canopy Programme. CDP began managing FFD’s operations in February 2013 as part of a two year strategic merger which will provide companies and investors with a single source of information for the interrelated issues of the climate, water and forests. From February 2014 the program will be fully integrated with CDP, and the Global Canopy Programme will remain a principal advisor to CDP on forests and forest risk commodities.

CDP recently convened 45 high level participants from government, the private sector and NGOs to discuss the drivers of deforestation, at a workshop co-hosted with the Global Canopy Programme, the National Wildlife Federation, the Zoological Society of London, the Prince’s Charities International Sustainability Unit, the Union of Concerned Scientists, and the Environmental Defence Fund.

The links between the trade of commodities (including biofuels, beef and leather, palm oil, soy and wood and paper) and deforestation is a growing concern to the public and private sectors. The workshop provided a unique opportunity for companies and investors to meet with global policymakers in producing and consuming markets. Among the public sector attendees were REDD negotiators from Norway, the UK, Australia, Indonesia, the US, Ghana, Republic of Congo, the Philippines and Switzerland, as well as representatives of other government agencies. The workshop aimed to explore:

{ The range of measures that governments are taking to tackle “forest risk commodities”;
{ What this means for the “regulatory risk” posed to companies;
{ How companies and investors can reduce regulatory risk; and
{ Are certification systems the best solution?

Efforts to reduce the threat to forests posed by commodity production will be most effective if the suite of interventions being taken by the public and private sectors could work cooperatively, but how can this be achieved?

The stakeholders defined the challenges of producing enough food to feed the world appropriately while protecting forests and reducing emissions from land use change and agriculture. Potential solutions, including options for increasing productivity, use of private and public sector policies and financial tools as well as innovative alternative approaches, were also discussed. A full report on the workshop’s findings will be published later this year. Please contact katie.mccoy@cdp.net at CDP for more information.

To educate audiences on CDP’s forest offering and to develop a common understanding of forest risk commodities as a critical business consideration, CDP’s Chief executive Officer, Paul Simpson, was invited to speak at the recent Economist World Forest Summit. Paul sat on a panel that debated new economic drivers, what’s next for carbon markets, which economic instruments will work best to tackle deforestation, what kind of government-backed carbon schemes will deliver economic and environmental successes, the outlook for cap-and-trade markets in carbon, assessing investor sentiment, regulatory moves and the long-term potential for growth were also put under discussion.

Finding future leaders

CDP Chief Executive Officer Paul Simpson has been called upon again by The Guardian, who has invited him to the judging panel for the Guardian Sustainable Business Awards. Now in its third year, the Awards reward innovation and positive impact in sustainable business. Other judges this year include, David Nussbaum, chief executive, WWF-UK, Dr Camilla Toulmin, director, International Institute for Environment and Development, and Will Andrews Tipper, head of sustainable business, Green Alliance. Winners of the Award will be announced in May.

On our event radar

B4E Climate Summit 2013: Net Zero, Climate Positive, 28th - 29th May 2013, London
Responding to climate change has driven innovation and profitable new business opportunities across a range of industry sectors. This event will focus on the opportunities and hurdles arising from the climate challenge in order to reframe the sustainability debate. Speakers, including CDP’s Chief Executive Officer, Paul Simpson, will discuss strategies that strive for zero environmental impacts or aim for ‘net positive’ results, where companies generate benefits for society and the planet. Delegates will learn how companies can impact watersheds positively, create more forests than they use, generate more renewable energy than energy consumed and pursue new business models and services that deliver vast customer carbon savings. High-level working groups of business, government and NGO leaders will work to commit to the collective action within sectors and define the policy changes needed to enable industry-wide transformation. Visit the B4E website for further information.

Exploring corporate engagement on climate change, 20th June 2013 and 25th July 2013, global webinars
CDP has started work on a project to explore corporate engagement on climate change policy with Caring for Climate, a United Nations Global Compact (UNGC) initiative aimed at advancing the role of business in addressing climate change. Other organizations participating are the World Resources Institute, WWF and Ceres. The group aims to reveal its findings at the 19th Conference of the Parties to the UNFCCC to be held in November 2013 in Warsaw, Poland. This study seeks to help companies evaluate, improve and demonstrate responsible influence on climate change policy, as well as to develop guidance material and recommendations for companies to become responsible corporate climate stewards. Responsible business engagement on climate change policy can help steer more action and commitments from both businesses and policy-makers in support of the climate agenda. Two webinars will be conducted to gather input from Caring for Climate signatories on:
20th June 2013, 9-10.30 EDT
25th July 2013, 9-10.30 EDT
To register for the upcoming webinars, please send an email to caring4climate@un.org.

Convergence Paris, a VERGE® Event, 26th – 27th June 2013, Paris
Convergence Paris will bring together business innovators, entrepreneurs, and leading public officials to illuminate the business opportunities for radical efficiencies created through technology advancements in energy, IT, buildings, and transportation. Conference tracks include: M2M/Internet of Things, Data, New Energy Systems, Smarter Supply Chains, Future Cities, Intelligent Transportation and Next-Gen Buildings. It’s a great opportunity to get out of your silo and see what happens when innovative people, technologies, and ideas converge. Use our discount code CP13CDP for 25% off when you register here.