CDP Basics and Updates for 2018
2018 CDP updates for real estate
CDP (formerly the Carbon Disclosure Project) is a non-profit organization based in London that supports industry-leading carbon disclosure in the public and private sectors. Since 2002, CDP has facilitated carbon discourse for a combined market value of $35 trillion USD. CDP’s detailed steps to disclosure lead to actionable insights that mitigate long-term business risks of negligence & inaction as we continue to move towards unprecedented global temp rise into the next century.
CDP programs represent diverse types of topical ESG reporting metrics. These include:
- Climate Change
- Supply Chain
Real estate entities most often report in the Climate Change core module. The Climate Change questionnaire consists of 5 modules:
- The Introduction Module asks that you enter basic information about your company and specify the parameters of your response (e.g. reporting year, currency, countries, etc.)
- The Management Module asks questions around governance, strategy, targets, and initiatives. This information is largely quantitative.
- The Risks & Opportunities Module asks companies to list and assess the risks and opportunities on their business presented by the changing climate and provide details on methods they are applying to mitigate risks and seize opportunities.
- The Emissions Module is the GHG (greenhouse gasses) accounting section of the questionnaire. The data collected here is largely quantitative and the module requests information on both direct and indirect emissions, energy, and trading activities.
- The Sign Off Module asks companies to identify the person that has approved their company’s response to the CDP Climate Change questionnaire.
Responses to the 5 modules of this questionnaire are given scores of A through F, and the score then places an organization into one of four categories:
- A- / A = Leadership: for companies that have introduced and adopted best practices related to environmental management
- B- / B = Management: policies, methodologies, and actions have been implemented to address these environmental issues and risks for these companies
- C- / C = Awareness: companies that showcase an understanding of the impact that environmental issues have on your business but haven’t quite begun acting on this knowledge
- D- / D = Disclosure: the level of detail and comprehensiveness of your response
- F: A score of F is reserved for organizations that don’t provide enough information to be evaluated by CDP
Included in the report detailing a company’s overall performance and score, there is a summary of their performance benchmarked against industry peers within their real estate sector, as well as a comparison to the overall performance of real estate entities that submitted. There is also a breakdown of performance within each scoring module, as well as a benchmark of the company’s scoring category compared to the average scores across all submissions by real estate companies. Along with these reports, CDP provides next steps for companies to implement and improve their performance moving forward.
2018 marks an important shift for CDP; they reassessed their questionnaires and added sector-specific approaches, aligning the policies with other ESG reporting organizational structures and industry-leading reporting metrics.
CDP is proven to be an important ESG benchmarking framework among industry peer groups. It is used to identify and measure environmental risk and enables your organization to mitigate negative long-term financial impacts that a changing environment causes. Remember, you can’t manage what you don’t measure; in order to understand and negate the risks, you need to measure them.
Understanding and applying this proactive approach proves to investors that your organization is aware of and prepared to adapt to the risks and opportunities that result from a changing climate.
Interested in learning more about the impact and benefits of sustainability reporting? Download our eBook “ESG in CRE: Making the Business Case for Sustainability”.