Around the world companies are recognising the value of sustainability, and the power of the private sector in spearheading the low carbon transition. But you can’t manage what you don’t measure. Find out about the benefits disclosure offers to companies taking their first steps towards a sustainable future.
Stanley Black & Decker is one of the world’s most recognized manufacturers of industrial tools and security solutions. Headquartered in Connecticut, the company has disclosed to CDP for close to a decade, is a Reporter Services and Supply Chain member, and in 2018 was awarded a place on the CDP A List for Climate Change, Water, and Supplier Engagement. As Deb Geyer, Stanley Black & Decker’s Corporate Responsibility Officer, tells us, disclosing to CDP has helped guide the company’s sustainability strategy in to one of the most ambitious in the sector.
Initially, Geyer explains, the company took a short-term approach to sustainability planning. “We focused on achieving year-over-year, incremental changes on energy conservation, reducing our carbon footprint, waste minimization, and water conservation.”
According to Geyer, CDP’s questionnaire played a role in moving Stanley Black & Decker towards more strategic, long-term goals. “It was as though CDP was giving us the answers to the test. Their questions on climate change and water security were very thoughtful, forward looking and clearly based on critical feedback from analysts, investors and other stakeholders. It provided us with a strategic outlook on the sustainability landscape.”
This focus on long-term planning is reflected in Stanley Black & Decker’s sector-leading emissions targets; the company recently published its new Corporate Social Responsibility strategy, including a goal of reducing its Scope 1 and 2 carbon emissions 100% and moving towards carbon positivity by 2030, verified by the Science Based Targets initiative.
To achieve carbon positivity the company is seeking to invest in carbon capture technology, using carbon capture to take more CO2 out of the atmosphere than it emits. It has also set targets to reduce its supply chain emissions by 35% by 2030 and is working towards mapping its water risks and setting context-based targets to reduce water insecurity throughout its operations.
As Geyer highlights, CDP disclosure has also helped increase the transparency of their sustainability efforts. “Every year when we report to CDP, we share the results with our senior leadership team through an internal quarterly review of our environmental impact and sustainability progress, resulting in a platform to formally share our results across the global organization.”
For Geyer, Stanley Black & Decker’s sustainability efforts are not a nice-to-have; they’re a key part of the company’s identity. “We use the word differentiator. To survive today, a company needs to do more than perform financially, it also needs to align with its employee base and deliver impactfully on material issues.”
As an example, Geyer highlights how CDP has allowed Stanley Black & Decker to respond to their customers who are increasingly concerned with addressing environmental impacts in their own supply chains. “We know that customers are driving sustainability and the results of those efforts are trickling down to us as a supplier. We have at least ten direct customers that use CDP to ask us very specific questions about the emissions generated through the production of our products and goods sold, our risks and opportunities, and our next steps to improve as it applies to the products they buy.”
For Stanley Black & Decker, disclosure has been a key part of the process which has taken them from sustainability novices to the ambition they are currently displaying.
WPP describes itself as a creative transformation company that builds better futures for its people, clients and communities. It provides its clients with an integrated offer of communications, experience, commerce and technology services through its network of leading agency brands. As a long-time discloser to CDP, the process helps the company advance its sustainability strategy and “keeps us on our toes” by constantly raising the bar, says Jess Hawes, WPP’s Sustainability Program Manager.
“One of the things we like about reporting to CDP is that it really pushes us,” says Jess Hawes.
For example, WPP’s renewable energy sourcing program is an area where CDP’s guidance and scoring has influenced the company to go further on sustainability.
In 2015, WPP decided to radically expand its renewable energy sourcing in the US, committing to cover 100% of electricity purchased in the country from renewable sources by 2020.
“This had been a challenging market for us as many of our properties were landlord managed or did not have the option of a renewable energy contract” says Hawes. But when they assessed it holistically through the lens of the disclosure process it made sense as an investment despite these challenges.
Hawes explains: “we utilized the CDP questionnaire to benchmark the positive impact such a decision would have on our score, as well as to consider how we should approach things like quality control and reporting”.
Laying out industry best practice in a structured way is another key benefit for WPP: “By incorporating things like science-based targets and scenario analysis, CDP has really invested in developing the questionnaire as the consensus on corporate climate action” says Hawes, “But while it’s cutting edge, it’s spelled out in an easy to understand way with the guidance provided, so it’s accessible to businesses at all stages of their journey.”
The integration of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) into the CDP questionnaire in 2018 has been a major advantage for WPP.
“By bridging together two separate strands of work, we have been able to integrate the TCFD requirements into our CDP response and plan things in a more coordinated and efficient way across the business,” says Hawes.
She also notes that CDP’s scoring system has been particularly useful for WPP, which has seen its climate change score improve from D in 2011 to A- in 2018.
The journey laid out in CDP’s scoring methodology, through disclosure to awareness, management and leadership, “helps us to benchmark ourselves because it’s all spelled out, we know exactly where we are” notes Hawes.
This also makes it easy to present the company’s progress to an executive audience. Hawes comments: “when building our carbon strategy, CDP’s scoring methodology is very useful in helping us get buy-in from executive audiences”.
“They like the fact that if we’re scoring low on one aspect, we can break it down in a clear way to see where the opportunities for improvement lie. Then next year, when our score improves, they can see the tangible output of those actions”.
The renewable energy program shows how effective this can be, with WPP’s CDP climate change score rising from B in 2015 to A- in 2016.
The CDP disclosure process has also informed and reflected changes within the business more widely, which Hawes thinks has helped make the company more competitive.
“The opportunity assessment and scenario analysis within the CDP questionnaire plays a role in informing our approach to monitoring the perception of climate change over time. As we have seen the demand for critical action on the issue grow, it’s prompted the business to integrate it even further into our offerings to clients.”
The ever-growing interest in climate action has led to WPP and its companies working on projects such as the recent UN People’s Seat campaign for COP21, and Wunderman-Thompson Intelligence Group’s report The New Sustainability: Regeneration.
Crucially, Hawes notes that reporting through CDP – supported by detailed guidance and wider engagement with carbon experts and the investor community – helps WPP be more transparent with its key stakeholders.
“We know that if we pay a lot of attention to our CDP response it is going to provide the information our stakeholders want to see. CDP puts a lot of care into asking the right questions, having consulted with the investor community”, comments Hawes.
And it’s also clients that are asking to see WPP’s CDP disclosure: “We get a lot of requests for our CDP score and 10-15 of our major clients send requests through CDP’s Supply Chain program” says Hawes, “They have a very clear understanding of what it means to have an A- relative to a C, B or A which allows them to target their engagement”.
Signify NV, the Dutch world leader in lighting, formerly part of Royal Philips, is a long-time discloser to CDP and a Reporter Services and Supply Chain member. As Robbert Slooten, Global Sustainability Program Manager explains, this is because CDP disclosure and scoring helps Signify cement its reputation as a sustainability leader, which in turn gives it a competitive edge in the market.
Signify has sustainability at the core of its purpose. For them it’s not only about playing their part on the environment; it’s about securing an edge in a competitive marketplace.
Signify earned a place on the CDP A List for climate change in 2018. That same year the company gained approval for its climate target from the Science Based Targets initiative, meaning it is future-proofing growth by reducing emissions in line with climate science. As well as disclosing its own environmental performance, the company is demanding that same transparency from its suppliers.
Robbert Slooten explains: “I consider there to be three key aspects to competitiveness: resilience, sales and investment.”
“Firstly, there’s resilience. That’s why Signify invests so much in sustainability, it’s about the future resilience of the business. CDP provides a very useful framework.”
“Secondly, in terms of sales, the environment is increasingly a topic of relevance in tenders, so having third-party evidence of our sustainability credentials via CDP is really valuable.”
“Thirdly, in terms of investment,” says Slooten, “one of our biggest shareholders explicitly told us and our CEO that they invest in our company because of our sustainability performance.”
For corporate sustainability actions to have real weight, companies need to be transparent and accountable to their stakeholders. Slooten says using the CDP disclosure framework makes the right information accessible to the right people.
“CDP has developed a very comprehensive questionnaire that covers all the key environmental topics. People looking for that information will know to find this data through CDP, rather than going through individual company reports.”
Signify’s high CDP score helps cement its reputation as a sustainable company and therefore boosts its standing among both investors and customers, says Slooten.
“CDP provides not only a disclosure platform but also a well-established rating mechanism. Being able to say we are on the A List is well-recognised. It shows we have a complete and well performing sustainability program, so we use our CDP score in external communications and investor presentations, and we get recognition for that.”
Investors are a key audience for Signify’s annual disclosure, but they’re not the only ones using the data. Slooten uses CDP’s benchmarking service and downloads full responses to keep an eye on what competitors and peers are disclosing.
“I use the CDP disclosures of other companies as a way of assessing best practice. For example, when I’m working on an area like TCFD, renewable energy or supply chain engagement, I look at what competitors or companies on the A List write in their CDP response, checking those specific questions,” explains Slooten.
“We have used this to engage with our own suppliers. And it’s also useful for driving best practice in climate risk management, to ensure Signify has covered all potential risks.”
Lastly, CDP disclosure helps Signify track its sustainability progress.
“Disclosure helps us highlight the potential gaps in our own programs”, says Slooten. “CDP provides good insights into what the relevant topics are; this provides a kind of checklist, along with the scoring methodology which indicates best practice.”
For example, in the renewable energy section of the CDP climate change questionnaire, leadership points are awarded on share of renewable energy overall, not just electricity.
Slooten says, “Procurement of renewable electricity is light years ahead of other energy, but CDP is holding us accountable for our whole energy footprint. We consume quite a bit of gas but it’s not renewable, so we have to consider how we will address that.”
Another area is financial impacts, adds Slooten. “We always used to define the risks and opportunities we face from climate change qualitatively, but we hadn’t quantified it in financial terms until the CDP questionnaire.”
“Putting a euro number on it gets it on the leadership radar. If we can say something is a €100 million sales opportunity that’s going to get the attention of senior leaders in the business.”
It’s clear that for Signify, environmental action and transparency helps the company stand out as a market leader.