Ahead of the CDP S&P 500 Report results launch next Tuesday at the NYSE in lower Manhattan, CDP is currently soliciting comments and feedback for a range of program, process and questionnaire changes and improvements for the upcoming 2015 reporting cycle. Did we just say that?! Yes, before we all know it, the leaves will have turned, holiday music will fill the ears at the mall and all of a sudden it will be time to take stock on the year that was 2014.
In line with year’s past, CDP continues to make excellent progress on driving companies to help disclose and then perform on key sustainability aspects such as carbon, water, forests. Further, CDP’s redefined strategic aim put these aspects and, as they hinted last year, a focus towards a sectoral approach both for engagement and for scoring, front and center for 2015.
For those interested in getting a Ciffs Notes version of some of the key proposed changes, look no further. And if your inclined to comment and help evolve the questionnaire scope and process, the comment period is open until September 21st and can be accessed here.
Climate Change Questionnaire – Major & Significant Proposed Changes for 2015
- Addition of a question on internal carbon pricing – however with no scoring implication in 2015
- Introduction of two questions on companies’ approach towards an international agreement on climate change – however with no scoring implication in 2015
Climate Change Questionnaire – Major & Significant Proposed Changes for 2016
- Better alignment with Scope 2 Renewable Energy Procurement guidance, and to enable target setting for Renewables
- Addition of science-based targets
Other items of interest related to the CC Questionnaire
CDP will continue to gradually introduce a sector approach over the next three years, initially through the focus of the investor request for information on climate
approach to cover additional environmental areas. The aim of the sector approach is to produce data that is more meaningful to investors, address concerns on reporting burden by amending reporting requirements for key sectors, and build a scoring methodology that incentivizes transparency and relevant sector-specific action. The priority sectors identified are the following:
1. Oil, gas and consumable fuels;
2. Sectors heavily dependent on agriculture commodities, such as food, beverage and tobacco;
3. Electric utilities;
4. Metals and mining;
5. Financial services;
CDP has already started working with the first two sectors. The work with the remaining sectors is planned for the longer term.
CDP is currently considering whether industry specific intensity benchmarks should be identified and used as an alternative criteria for informing CDP’s evaluation of climate leadership under CDP’s performance scoring methodology. Taking this approach would allow CDP to take into account companies’ historical emissions reductions, and allow companies to provide a meaningful picture of their emissions profile, even during times of organic growth and company restructuring resulting from mergers, acquisitions and divestments. However, CDP is only aware of several sector benchmarks that are internationally agreed, which makes it highly complex to identify and establish benchmarks for most sectors. Consequently, CDP proposes to introduce this work gradually and conduct research on the priority sectors as part of the sector approach outlined in this section.
Supplier Module Major & Significant Proposed Changes for 2015
- SM1.1 will ask for suppliers to indicate which Scope 3 category their allocated emissions should fall into for the requesting member. Its primary purpose is to distinguish between the different scope 1 and 2 emissions allocated to the SC member and assign them into the SC member appropriate scope 3 category, assisting the member in calculating their scope 3 inventory.
- There is a proposed supplier water module that CDP SC Members can send to their suppliers to ask them to disclose additional data points about water use within their operations as supply chain water members are eager to understand water use, risks and opportunities. This would be composed of: Identify facilities at risk to your customers; Collaborative Opportunities; Product Water Intensity
Water Prioritization – Sectoral Approach
In response to CDP’s new strategy for 2014-2016 they will begin to focus more on engaging sectors identified by CDP to a) have the greatest potential impact on water resources and b) are currently of most interest to investors. This is to fulfill their strategic objective to increase corporate transparency on environmental impact and drive improved performance in high impact sectors. The sectors identified as being most sensitive to the criteria presented are listed below:
- Electric utilities
- Oil, gas and consumable fuels
- Consumer Staples (Food, Beverage & Tobacco)
- Materials (excluding mining)
- Metals and mining
- Textiles, Apparel & Footwear
This prioritization will likely result in further scrutiny, analysis and engagement by CDP in each sector in its reports and scoring.
Water Questionnaire Major & Significant Proposed Changes for 2015
- There are quite a few proposed changes to question, new questions, re-introduction of previous questions and reorganization of the questions – likely requiring more edits and effort to update the 2014 response so suggest responders allocate extra time this coming reporting cycle.
- Water accounting will be required now regardless of risk exposure – last year only sites with self-declared water risk were required to be reported per 3.2a. This new water accounting section is being added to the current state module in order for data users to have confidence that a company’s risk assessment is comprehensive and based on granular, regularly monitored water accounting data. In addition, this new section will enable a company not exposed to substantive risk to demonstrate that they are able to provide granular accounting data, thus demonstrating good water management.
- Discharge quality question addition, increasing interest here – Consequently, to assist companies in the effective measurement and management of their water resources related to human rights, the revised CEO Water Mandate Guidelines for Disclosure (final version to be published September 1 2014) has proposed a metric to monitor access to WASH within companies’ sites/facilities. CDP is proposing to include this metric as a new water aspect for enterprise wide water accounting (row 8 in Q4 above) to capture companies’ progress towards fulfilling this expectation.
- Re-introduction to the trade-off/ linkage question – In response to the growing interest in the food-energy-water nexus and the role of business, we are considering re-introducing a former 2013 question on managing trade-offs between water and carbon emissions to allow companies to demonstrate their response strategies to this challenge. However, we are considering expanding on the former question to allow companies to report on other environmental themes like food or forest commodities.
- Sector specific questions and verification are likely in 2016.
*Highlights above are inclusive of proposed changes presented in each CDP focus area except CDP Forests.