Tips About CDP Reporting

As the July 31st deadline for reporting greenhouse gas emissions to the Carbon Disclosure Project (CDP) rapidly approaches, many companies are looking for how best to complete their annual response.  Reporting to the CDP provides a host of benefits to firms and explains why the percentage of companies responding in the Global 500 grew to 81% last year.  The CDP rates companies’ responses based upon two criteria: how well they are addressing the challenges of sustainability, and how transparent they are with these efforts.  In this blog, we will provide tips on how companies can improve the quality of their responses and out-compete their industry peers when reporting.

The Professional Services team here at Renewable Choice conducts greenhouse gas inventories and assists clients with reporting to the CDP.  Our experiences have exposed us to how many companies are failing to receive the performance scores and disclosure scores that they deserve.  The four common areas that often have the most potential for improvement include: addressing the Risks and Opportunities section holistically; following the correct protocol for the Emissions section; discussing their organization’s sustainability management structure; and formatting answers to that of the guidance document.

Addressing the Risks (and Opportunities) Section

Sections five and six of the CDP’s Supply Chain and Investor questionnaire ask companies to identify risks and opportunities posed by climate change, evaluate their company’s exposure, and describe their efforts to address them.  Yet companies are often intimidated by the candor the questions require.  Consequently many companies avoid responding to these questions altogether or provide only minimal information in their answer.  However, chances are that if your company is subject to a risk (or opportunity), your competitors are as well.  Acknowledging risks is a chance for your company to distinguish itself through risk management.  Effective risk management is critical to business success, and in the long-term, can lead to greater profitability. Your active engagement on risk mitigation and management is likely a competitive advantage, and can be leveraged in the Opportunities section.

Carbon accounting and the Emissions section

Nearly half of the entire CDP questionnaire is the Emissions section.  The Carbon Disclosure Project strives to provide comparable greenhouse gas emissions across industries and firms, so it should come as no surprise that this section receives quite a bit of scrutiny.  Completing this section properly, however, is difficult, as companies struggle to set organizational boundaries for conducting inventories and adhere to carbon accounting protocols.  Unfortunately, these problems are often compounded as firms record information in Excel spreadsheets (a perilous endeavor), rather than a software program specifically designed for conducting a greenhouse gas inventory.   The best way to measure, report, and manage greenhouse gas emissions is through a comprehensive business carbon footprint software like Mosaic™. These software programs store the data points required for a business carbon footprint, compute the greenhouse gas emissions automatically, and generate reports that show all of the necessary calculations in a format that is compliant with the CDP’s standards. For more information about how to select a carbon accounting platform that fits your business model, download our brief: The Advantages of Carbon Accounting Software.

Provide complete answers!

The CDP evaluates each question much like Henry Ford once built the Model T, with each question being evaluated by one ‘grader.’  This not only improves efficiency but can create a problem when respondents reference answers in other sections or questions.  While some questions are admittedly redundant, providing the redundant information is necessary in order to inform the ‘grader’ who is evaluating that particular part of your response.  Following the guidance document is an excellent way to know what is required for a complete response and how to structure your responses.  Many of the qualitative questions have very particular formatting for the sub-sections of each question.   Do not underestimate the weight of formatting.  While there is no specific point allocation for properly formatted answers, it does ensure complete responses and makes life easier for the grader.

As carbon disclosure continues to become standard operating procedures for businesses across the globe, spurred by government action like the UK’s announcement to require all companies report data on their greenhouse gas emissions in 2013, investors and consumers will place greater importance on such corporate engagements.  Now is the time to distinguish your brand as a leader in the space and demonstrate awareness of the rapidly evolving operating environment of business.  To learn more about how Renewable Choice can conduct a greenhouse gas inventory and/or provide guidance through the disclosure process, click here or check out our 15-minute on-demand CDP Reporting Webinar.

Tanner Hayes is Sustainability Analyst for Renewable Choice.