The sun blurred by smog coming from a coal burining plant next to hydro towers, representing the carbon issues addressed by ESG

CDP: The Carbon Disclosure Project

The Carbon Disclosure Project is an international non-profit organization based in the United States, Japan, China, Britain and India. Founded in 2000 by Mary Robinson, it aims to improve corporate management of greenhouse gas emissions. It is most famous for its “Global 500” list produced annually since 2001, featuring the largest companies based on revenues reported by the Global 500 Climate Change Report 2012.

Sustainability and Risk Management

It hopes to bring sustainability reporting and risk management as business norms in the future. Since 2002 approximately 8,400 companies have released environmental info through CDP. This helps organizations promote openness information and action for an economic environment. The Observatoire has operations offices in the US, United Kingdom as well as Japan and India.

CO2 Data Reports

The organization requests data from companies listed on stock exchanges in various countries and uses this data to determine what percentage of emissions the companies it surveys control. All the data that has been submitted is available online. By collecting information from thousands of companies, the Report aims to demonstrate both corporate and national leadership in carbon disclosure.

The Global 500

The Carbon Disclosure Project issues an annual list called The Global 500 – large cap companies ranked by their greenhouse gas emissions. The top 3 countries CO2 emissions for 2020 were:

  • China, with more than 10,065 million tons of CO2 released
  • United States, with 5,416 million tons of CO2
  • India, with 2,654 million tons of CO2
  • Russia, with 1,711 million tons of CO2
  • Japan, 1,162 million tons of CO2

The Carbon Disclosure Project also issues lists that rank the top 100 companies in different world regions by their greenhouse gas emissions. The top 10 carbon emitting groups by percentage worldwide are:

  1. China Coal 14.3 %
  2. Saudi Aramco 4.5 %
  3. Gazprom OAO 3.9 %
  4. National Iranian Oil Co 2.3 %
  5. ExxonMobil Corp 2.0 %
  6. Coal India 1.9 %
  7. PetrĂłleos Mexicanos 1.9 %
  8. Russia Coal 1.9 %
  9. Royal Dutch Shell PLC 1.7 %
  10. China National Petroleum Corp 1.6 %

How does the Carbon Disclosure Project work?

CDP programs are voluntary.  For companies, CDP program participation is generally measured by the number of responses they submit to an annual request for information which usually covers environmental impacts. If a company reports, then it may be listed as ‘disclosed’ in Carbon Disclosure Project or another standard report.

CDP guidance for companies

CDP has guidelines for how companies should disclose their information. CDP also offers guidance that companies can use when they are disclosing data through the Global 500 list. The Guidance is meant to help organizations in the collection, analysis and reporting of greenhouse gas emissions related to business activities by using a common standard so “companies can compare their performance to that of similar organizations within the same sector”.

Taking action on carbon reporting

The Guidance is a series of questions for each level of the organization, which is made up of a “Board or Directors”, a “Senior Management Team” and “Middle & Frontline Managers & Staff”.

Questions include:

  • Has senior management set targets to reduce greenhouse gas emissions?
  • Is the organization’s greenhouse gas emission reduction target linked to its operating strategy and business planning processes?
  • Does the organization have a policy for climate change risk disclosure?
  • What do you say in your annual report about energy use, greenhouse gas emissions and related risks, if anything?
  • Has senior management disclosed their personal carbon footprint – and encouraged staff to do so?

The CDP also provides advice on climate change adaptation (concept of preparing for the worst case scenario)

What is the importance of Carbon Disclosure Project?

Firstly, it provides transparency to users about greenhouse gas emissions and risks associated with climate change. Companies can also use it to benchmark their performance and efficiency when it comes to greenhouse gas emissions. The Carbon Disclosure Project has built a strong reputation within the business community, especially in the financial sector. It is described by some as “the gold standard for understanding how companies manage environmental information and what they report to stakeholders”.

Can small companies participate the CDP?

Yes. As long as the company is included on the Global 500 list of companies – there are more than 3,000 public companies that report to CDP – then they can participate. The Carbon Disclosure Project receives more than 700 responses every year from small businesses.

Caveats and Disclaimers

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