- European Commission adopted the groundbreaking European Sustainability Reporting Standards (ESRS) today, marking the dawn of a new age of environmental responsibility in business and fiscal planning.
- With around 50,000 European companies required to report under ESRS, and non-EU-based companies with a large branch in the bloc, the standards have the potential to make high-quality environmental reporting a business norm.
- Most of the +18,700 companies disclosing to CDP are well placed to start reporting under ESRS, with the majority already disclosing on elements of cross-cutting topics: over 18,000 organisations report on board-level oversight and around half of companies already have a process in place to assess climate risks and opportunities.
- Data shows that companies who have invested in voluntary environmental disclosure are clearly seeing returns, as they are well prepared to meet new requirements.
July 31, 2023 (Berlin): The majority of companies reporting through CDP, the non-profit that runs the global environmental disclosure system for companies, are already in part prepared for the new mandatory European corporate reporting standards.
Today, the European Commission adopted the first set of European Sustainability Reporting Standards (ESRS), a watershed moment for companies inside and outside the EU which will now have to report their impact on climate change, pollution, water, oceans, and biodiversity, including forests and circular economy.
CDP data shows that companies are already stepping up and reporting on elements of the new mandatory rules. From the more than 18,700 companies around the world disclosing to CDP - including corporations representing around 75% of the European market capitalization - 18,000 organisations report on board-level oversight and around half of companies (55%) already have a process in place to assess climate risks and opportunities, a crucial step toward transparently disclosing climate and environmental information to stakeholders.
Companies disclosing voluntarily through CDP show preparedness on some of the critical information required under the ESRS (topics of governance, strategy, risks and opportunities, and metrics and targets). However, it remains to be seen how corporations, both inside and outside Europe, will generally fare once the ambitious new set of standards for environmental responsibility starts applying in 2024.
Mirjam Wolfrum, Policy Engagement Director for Europe at CDP, said: “The much anticipated adoption of the ESRS marks the dawn of a new age of environmental responsibility in business and financial planning. With approximately 50,000 companies now obligated to report on sustainability, these standards are a critical stepping stone towards making high quality environmental reporting a business norm.
However, compromises were made to ensure successful adoption: all disclosures, including climate related, are now subject to companies’ own materiality assessment. In addition, certain disclosures including scope 3 emissions and all of biodiversity related disclosures have been phased in. Understanding why companies disregard certain topics will be essential to ensure comparable and meaningful information for investors, auditors, and regulators.
Sue Armstrong-Brown, Environmental Standards & Thought Leadership Global Director at CDP, added: For the past 20 years, CDP has promoted best-practice corporate reporting and aimed to guide companies towards this new era of mandatory disclosure, shown by the level of preparedness of CDP-disclosing companies. However, net-zero and nature-positive financial accounting will become a reality only when all companies take into account the true value of nature. CDP will continue to support companies to do so and to navigate new standards, driving best practice disclosure and action.”
Europe is warming faster than any other continent, with rising temperatures fuelling heat waves, floods, and wildfires. But climate action cannot be localized - emissions anywhere means over-heating and extreme weather everywhere.
With the ESRS applying to more than 50,000 companies, with some required to also report under other standards and frameworks, CDP's global disclosure system will evolve to provide disclosure channels reflecting the environmental reporting requirements being developed by the ESRS, providing investors with standardized, comparable data produced across regions and regulatory requirements.
For the past 20 years, CDP has made best-practice corporate disclosure a norm. As part of its role to further accelerate the disclosure of impactful environmental data, CDP last year announced that it will incorporate the International Sustainability Standard Board’s (ISSB) climate standard (IFRS S2) from 2024. CDP has committed to adopt, align or integrate all impactful, high-quality global and jurisdictional-level standards.
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ESRS preparedness at a glance: CDP disclosing companies are already preparing for new European mandatory corporate rules
2. Strategy and business model
3. Risks and opportunities management
4. Metrics and targets
Source: CDP 2022 disclosures (of over 18,700 companies) mapped to ESRS 2 and ESRS E1 and CDP’s 2023 climate transition plans report. |
For more information, or interviews, please contact:
Rita Pinto Coelho, CDP: [email protected]
About CDP
CDP is a global non-profit that runs the world’s environmental disclosure system for companies, cities, states and regions. Founded in 2000 and working with more than 740 financial institutions with over $130 trillion in assets, CDP pioneered using capital markets and corporate procurement to motivate companies to disclose their environmental impacts, and to reduce greenhouse gas emissions, safeguard water resources and protect forests. Nearly 20,000 organizations around the world disclosed data through CDP in 2022, including more than 18,700 companies worth half of global market capitalization, and over 1,100 cities, states and regions. Fully TCFD aligned, CDP holds the largest environmental database in the world, and CDP scores are widely used to drive investment and procurement decisions towards a zero carbon, sustainable and resilient economy. CDP is a founding member of the Science Based Targets initiative, We Mean Business Coalition, The Investor Agenda and the Net Zero Asset Managers initiative. Visit cdp.net or follow us @CDP to find out more.
Note to the editor
1. Governance
2. Strategy and business model
3. Risks and opportunities management
