- Wide gaps persist between disclosures on climate and nature – only 38% of companies are disclosing information beyond climate. Transparency across all nature-related impacts, risks and opportunities is imperative.
- 50-75% of climate, forest and water disclosers reported environmental opportunities – cost to manage climate, forest and water-related risks are lower than the potential financial impact of risks occurring.
- Only 10% of all disclosers have set targets for renewable energy consumption, two-thirds of which disclosed objectives to achieve 90-100% renewable energy consumption.
- Of the 575 disclosing financial institutions, 50% report an estimated US$9 trillion in exposure to fossil fuels – an amount equivalent to the combined GDP of Japan and Germany.
- Corporate ambition to phase out fossil fuel is lacking – financial institutions must lead directing capital toward renewable energy to increase portfolio and economic resilience.
(London, 4 December 2023): As finance takes centre stage today at COP28, CDP publishes its first-of-its-kind data factsheet with new insight showcasing the status of environmental performance and progress disclosed by more than 24,000 organizations through the platform in 2023. CDP’s new data illustrates the scale of the financial risks and opportunities and spotlights trends in renewable energy consumption and portfolio exposure to fossil fuels. With the first Global Stocktake set to conclude at the summit in Dubai, these insights from CDP highlight areas for action for negotiators and reinforce the call for greater accountability and more holistic global environmental ambition.
Disclosures by 23,000+ unique companies, worth two-thirds of global market capitalization, marked a 24% surge from the previous year and most importantly highlights that many companies are recognizing the necessity of environmental disclosure. Although this signals progress, there remains a stark gap between disclosure rates for climate and nature. Disclosure and action must centre on tackling climate and nature holistically.
Sue Armstrong-Brown, Director of Thought Leadership, Impact at CDP, commented, "We commend companies that are taking the crucial step to voluntarily disclose through CDP. The rise in disclosure demonstrates increasing accountability, as companies boost their preparedness for incoming mandatory disclosure regulations. However, to truly address the environmental challenges, organizations must rapidly embrace a more comprehensive approach to environmental disclosure. This includes going beyond only climate to robust disclosure on nature. With the launch of the TNFD recommendations and more regulation expanding to include nature-related disclosure, companies not preparing are set to lose out.”
CDP’s data highlights that companies are increasingly aware that addressing environmental risks and opportunities can be financially advantageous. Most companies disclosing on these factors report greater opportunities than risks. This year, 63% of Climate disclosers, 73% of forest disclosers, and 50% of water disclosers reported environmental opportunities with the potential for substantive financial or strategic impact on their business. Moreover, disclosing companies report that the cost of managing their risks is lower than the potential financial impact of these risks materializing (across all three themes). At COP28, CDP is calling for the Global Stocktake to end with a comprehensive and data-informed actionable roadmap for companies and cities, as well as governments, to urgently scale meaningful environmental action. Their inclusion and action is essential.
One of the major barriers to addressing the planetary crisis is the financing of fossil fuels, and financial institutions (FI) provide a significant portion of the capital. Of the 575 FIs that disclosed through CDP in 2023, a staggering 50% report an estimated US$9 trillion in exposure to fossil fuels across their portfolios—an amount equivalent to the combined GDP of Japan and Germany. FIs must lead by example by directing capital toward renewable energy, enhancing portfolio resilience, and future-proofing operations and the economy.
A global commitment to transition to 100% renewable energy by 2035 is a prerequisite for a net-zero future. However, 31% of companies, did not disclose using any renewable energy consumption, and further, only 10% of companies have a renewable energy target. Any commitment must be paired with transparency and accountability. Companies must continue disclosing annually to demonstrate ambition alongside progress.
Armstrong-Brown emphasizes the need for commitments to intentional actions on transitioning to renewable energy: “CDP's latest insights underscore an upward trend in companies reporting on their energy use, however, with 44% still not reporting and only 10% of all disclosers setting targets for renewable energy consumption, corporate ambition to phase out fossil fuel continues to fall short. But COP28 is a new opportunity to accelerate the shift to renewable energy consumption. We need to see the G20's call for a tripling of renewable energy capacity reflected in demand-side targets for transition to renewables in order to support the phase-out of fossil fuel use.”
The global community faces unprecedented environmental challenges. Equipped with comprehensive and cohesive data, investors and the finance community will be well-positioned to make informed decisions that fuel the transition to a low-carbon economy. CDP remains committed to leveraging its data-driven insights to continue driving ambitious action toward building a sustainable and resilient future.
Notes to editor
For more information, or exclusive interviews, please contact:
- Toyosi Adebayo | Senior Communications Manager, Capital Markets, CDP | [email protected]
Key insights from the CDP 2023 disclosures:
- Disclosure numbers increased in 2023 by 24% - marking a 140%+ increase on disclosures in 2020 – ~ 8,000 companies started their journey by disclosing for the first time in 2023.
- Over the last nine years, reported reductions in water withdrawal volumes have decreased among roughly half of the 223 companies that have disclosed consistently on water during this time.
- This year, 63% of Climate disclosers, 73% of forest disclosers, and 50% of water disclosers reported environmental opportunities with the potential for substantive financial or strategic impact on their business – cost to manage risks reported as lower than the potential financial impact of risks materializing.
- 2023 disclosure from 575 financial institutions (FIs) revealed that an increasing number of FIs are beginning to measure their portfolio impacts across themes – the number of FIs that disclosed measuring their portfolio impact on climate rose from 66% in 2022 to 72% in 2023.
- 50% of financial institutions report an estimated US$9 trillion in exposure to fossil fuels.
- 56% (13,000+) of the 23,000+ disclosers in 2023 disclosed on their energy consumption.
- 31% (4,030 companies) of these disclose no energy consumption sourced from renewable energy.
- Only 10% (2, 229) of all disclosing organizations have set renewable energy consumption targets.
- About two-thirds of these organizations disclosed that they aim for 90-100% renewable energy consumption. Of these, 70% have a target date of 2030 or earlier.
- In 2023, 637 companies across the sectors critical to the energy transition – power generation, fossil fuels and metallic mineral mining – were requested to disclose their water risks, impacts and opportunities. Of these, 180 companies disclosed.
- At 21%, the response rate for companies operating in the fossil fuel sector was staggeringly low, despite the critical impact this sector has on water availability and quantity.
- Pressures on water availability need to be carefully managed if the world wants to reach zero emissions and adapt to the impacts of extreme weather events.
- For more details, read the CDP 2023 disclosure data factsheet.
CDP is a global non-profit that runs the world’s environmental disclosure system for companies, cities, states and regions. Founded in 2000 and working with more than 740 financial institutions with over $136 trillion in assets, CDP pioneered using capital markets and corporate procurement to motivate companies to disclose their environmental impacts, and to reduce greenhouse gas emissions, safeguard water resources and protect forests. Over 24,000 organizations around the world disclosed data through CDP in 2023, with more than 23,000 companies – including listed companies worth two thirds global market capitalization - and over 1,100 cities, states and regions. Fully TCFD aligned, CDP holds the largest environmental database in the world, and CDP scores are widely used to drive investment and procurement decisions towards a zero carbon, sustainable and resilient economy. CDP is a founding member of the Science Based Targets initiative, We Mean Business Coalition, The Investor Agenda and the Net Zero Asset Managers initiative. Visit cdp.net or follow us @CDP to find out more.