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CDP reporting record: Almost 10,000 companies disclose environmental data in 2020

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Khakimullin Aleksandr

Record numbers of companies, cities, states and regions have reported their climate change, water security and deforestation data to CDP in 2020, despite the disruption caused to the global economy by the coronavirus crisis, the environmental disclosure nonprofit revealed last week.

Over 9,600 companies, together worth more than half of global market capitalization, disclosed their environmental data to CDP this year, marking a 14 percent increase over 2019 and a 70 percent jump since 2015 when the Paris Agreement was first brokered, it said.

The disclosures were issued in response to requests for data on corporate climate, deforestation and water risk management from 515 investors with $106 trillion of assets under management, as well as over 150 major purchasing organizations with over $4 trillion in buying power, according to the nonprofit.

In addition to companies, hundreds of cities, states and regions also have disclosed their environmental data through CDP this year to date, while time still remains until the end of 2020 for others to submit data with the group, pushing the overall figure to over 10,000 disclosing organizations. Last year, 920 cities states and regions disclosed data via CDP.

CDP said the record surge in disclosure in 2020 — its most successful year since the organization's launch — heralded growing interest in tackling environmental threats to businesses and their supply chains, as awareness of the dangers posed by climate and habitat destruction intensifies.

We have a choice, and if every company, investor, city and government becomes aware of the risks and prioritizes taking action, we can create the sustainable future that we all want and need.

Corporate engagement with environmental reporting also has been driven by increasingly vocal demands from investor groups and regulators, who have signaled more robust environmental disclosure rules soon could be introduced. Just last week, for example, U.K. Chancellor Rishi Sunak announced that the U.K. would become the first country to introduce mandatory reporting in line for listed companies in line with the recommendations of the Taskforce of Climate-related Financial Disclosures (TCFD).

Paul Simpson, CEO of CDP, hailed the milestone as a testament to the growing importance of credible environmental data as a critical mechanism for managing performance and risk for corporations and investors alike. He added that the organization soon would expand its data disclosure remit to include land and ocean impacts, as well as other critical environmental themes.

"We have seen very strong momentum this year in corporate disclosure despite the extremely challenging year we have all had with COVID-19," he said. "However, as we look ahead to 2030, I am acutely aware of the urgency with which we need to act, and unfortunately, the climate and ecological emergency remains. We have a choice, and if every company, investor, city and government becomes aware of the risks and prioritizes taking action, we can create the sustainable future that we all want and need."

Despite growing disclosure and risk awareness, however, there is still significant concern over businesses' preparedness in the face of escalating climate impacts, with the Chartered Institute of Internal Auditors this month calling on businesses to urgently address the yawning gap between expectations and action on risk management, adaptation and resilience.

According to a survey of audit executives carried out by the professional body, the results of which were published in early November, two-thirds believe climate change was on their company's risk radar, with 58 percent convinced it would be a high-risk issue within the next three years.

But more than half of respondents said their business was doing very limited or no work to address climate risks, while a similar proportion of chief audit executives surveyed said they had not discussed climate change with their audit committee chair, suggesting it has not been fully embedded within their organization's risk management frameworks, the Chartered Institute said.

John Wood, chief executive of the professional body, urged companies to "get to grips with what is coming down the track" rather than waiting for the government to act, arguing that internal audit functions have a key role to play in supporting organizations in preparing for climate change.

"Climate change is already visibly causing damage to infrastructure and assets, threatening businesses' reputations and introducing a whole new level of regulatory and compliance risks that will increasingly test our resilience," he said. "Though many parallels have been drawn with the coronavirus crisis, the impacts of the pandemic are nothing compared to what climate change will bring if we don't act now."

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