CDP: Climate, Water, and Forest Disclosure

What It Is

CDP (formerly the Carbon Disclosure Project) is the world's largest environmental disclosure platform, running a global system for companies, cities, states, and regions to manage and disclose their environmental impacts. Founded in 2000, CDP collects self-reported data through annual questionnaires covering climate change, water security, and forests (deforestation), then scores responses and makes the data available to investors and purchasers.

CDP operates as an intermediary between companies and the investors and customers requesting environmental information. When an investor or purchasing organization signs onto CDP's platform, CDP sends disclosure request letters to companies on their behalf. Over 23,000 companies disclosed through CDP in 2023, representing more than half of global market capitalization.

CDP runs three questionnaires: Climate Change (the original and largest), Water Security, and Forests. Each is structured around TCFD's four pillars and collects detailed data on governance, risks and opportunities, strategy, targets, and performance metrics. CDP also collects data on supply chain emissions, SBTi targets, renewable energy, and verified emissions data.

CDP's scoring methodology evaluates responses across four levels: Disclosure (providing data), Awareness (demonstrating understanding of issues), Management (taking action), and Leadership (implementing best practices). Only companies that demonstrate comprehensive action across all areas achieve the A-list — approximately 2% of respondents.

Who Uses It

• Companies requested by investors — over 740 institutional investors with $136 trillion in assets use CDP data for investment decisions and engagement
• Supply chain participants — 330+ major purchasing organizations (Walmart, Apple, Microsoft, L'Oréal) use CDP Supply Chain to assess supplier environmental performance
• Companies benchmarking performance — CDP scores provide a widely recognized benchmark for environmental management maturity
• Companies reporting to multiple frameworks — CDP disclosure data can be leveraged for TCFD, ISSB, and other reporting requirements
• Cities and subnational governments — CDP runs a parallel platform for cities and states/regions

Key Requirements

The CDP Climate Change questionnaire covers:

1. Governance — Board oversight, management responsibility, incentives linked to climate targets
2. Risks and Opportunities — Identification of physical and transition risks, financial implications, management processes
3. Business Strategy — Climate scenario analysis, transition plans, low-carbon products and services
4. Targets and Performance — Emissions reduction targets (including SBTi status), progress tracking, renewable energy targets
5. Emissions Data — Scope 1, 2, and 3 emissions with methodology and verification status
6. Energy — Energy consumption data, renewable energy procurement, energy efficiency measures
7. Carbon Pricing — Internal carbon pricing, exposure to carbon taxes and ETS
8. Engagement — Supplier engagement on climate, customer engagement, policy engagement

Responses are scored against sector-specific scoring methodologies, with the highest scores requiring verified emissions data, science-based targets, and evidence of leadership practices.

How to Implement

Phase 1: Preparation (2-3 months before deadline) Register on the CDP platform. Review the questionnaire structure and scoring methodology. Identify data owners for each section. Assess gaps against prior year response or against the questionnaire if first-time.

Phase 2: Data Collection (1-2 months) Gather emissions data (Scope 1, 2, 3), energy data, water data (if responding to water security), governance information, risk assessments, targets, and verification documentation. Coordinate across departments — sustainability, finance, operations, procurement, legal.

Phase 3: Response Development (2-4 weeks) Draft responses section by section. Prioritize completeness (all questions answered), specificity (quantitative data over qualitative), and evidence (verification, third-party assessments, board minutes). Review scoring criteria while drafting to ensure responses address what the scoring methodology rewards.

Phase 4: Quality Review and Submission Internal review for accuracy and consistency. Cross-check emissions data against other public disclosures. Submit by the deadline (typically July for the annual cycle). Consider engaging a consultant or verifier to review before submission.

Relationship to Other Frameworks

CDP serves as a reporting platform that connects to multiple frameworks:

• TCFD: CDP questionnaires are TCFD-aligned — a strong CDP response constitutes TCFD disclosure
• GHG Protocol: CDP requires GHG Protocol-methodology emissions data
• SBTi: CDP captures and reports SBTi commitment and validation status; SBTi recommends annual reporting through CDP
• ISSB: CDP is aligning its questionnaire with ISSB Standards and announced plans to serve as a digital reporting platform for ISSB disclosure
• CSRD/ESRS: CDP is developing interoperability between its platform and ESRS requirements

Why It Matters

CDP matters because it creates accountability through transparency. By collecting standardized environmental data from thousands of companies and making it available to investors and purchasers, CDP has created market incentives for environmental management that regulation alone couldn't produce.

The platform's influence extends beyond disclosure. CDP scores are incorporated into ESG ratings, investment indices, and procurement decisions. Companies on the A-list gain reputational advantages in capital markets and supply chain relationships. Companies that refuse to disclose or score poorly face engagement pressure from investors and potential exclusion from procurement programs.

CDP's evolution toward becoming a digital reporting platform for multiple standards — ISSB, ESRS, and potentially others — positions it as the central infrastructure for sustainability disclosure, much as financial data platforms serve financial reporting.