October 29 2021 (London): Commenting on the announcement by the UK Government of mandatory climate disclosures for the largest companies from 2022, CDP's Chief Impact Officer Nicolette Bartlett said: “On the eve of the G20 and ahead of COP26, CDP welcomes the UK Government’s historic announcement on introducing mandatory climate-related disclosure requirements. Disclosure is critical on the path to net-zero: for companies and investors alike. However, it’s important that any regulation is as robust as possible to drive the environmental action needed to achieve the goals of the Paris Agreement.
The regulation laid out in parliament includes the introduction of a qualitative scenario analysis requirement for companies, a critical tool to enable companies to better assess climate-related risks and opportunities. It also includes strengthened alignment with the recommendations of the Taskforce on Climate-related Financial Disclosure (TCFD). Both are very positive steps that could accelerate corporate climate action, as well as ensure greater international coherence.
However, the next steps for the government must be to consider quantitative scenario analysis, which will be critical to bring greater rigour to companies and financial institution’s assessment of the resilience of their strategies. Whilst we recognise that this is a resource-intensive exercise, it is also a necessary one and the government should look to introduce this requirement in future, once companies and financial institutions have had time to build the expertise needed.
Regulation that will truly drive the action needed to combat the climate crisis in the time we have left must include Scope 3 emission disclosure. Whilst we recognize the need for a long-term plan for these requirements, as suggested by the government, there is no time to waste. This must be developed and implemented as soon as possible. For some large companies, scope 3 emissions account for as much as 99% of their total emissions. Disclosure on these emissions will drive action in two ways: by informing better decisions by companies and their stakeholders; and by providing accountability which incentivises further action. It is also essential to track our progress and see whether targets are being met.There is no time to waste: action in the next five years is likely to determine whether net-zero by 2050 is possible.
CDP welcomes that the government is seeking more clarity on the connection between Streamlined Energy and Carbon Reporting (SECR) and the Task Force on Climate-Related Financial Disclosures (TCFD), but the detail on this process must be clearly set out. CDP looks forward to continuing its engagement with the UK government on this crucial issue."
ENDS
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 590 investors with over $110 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. Over 14,000 organizations around the world disclosed data through CDP in 2021, including more than 13,000 companies worth over 64% 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.