The world stands at a crossroads. The COVID-19 pandemic has thrown the vulnerabilities of the economy and society into sharp relief, and renewed calls for systemic change.
Our north star is a sustainable, resilient economy that works for people and planet; thriving within planetary boundaries. This means addressing the climate and ecological emergency head on - and meeting the Sustainable Development Goals. This is the historic challenge of our time. And businesses have a central role to play.
As we seek to regenerate our society and economies following the pandemic, we must have a Green Recovery that advances our journey towards this, rather than going back.
The science tells us that to limit climate change to 1.5C – which is essential to avoid the worst climate risks – we must halve emissions and eliminate deforestation by 2030 and reach net-zero emissions by mid-century. Water security is also crucial to our climate resilience and an urgent fundamental need of its own.
To get there will take what the IPCC called “rapid, far-reaching and unprecedented changes in all aspects of society”. There has been encouraging progress, but we’re not yet on track. We need all action to scale and accelerate – fast.
It gives us great hope to see that 1,300+ companies are committed to aligning their business models with climate science, and that many of the world’s largest economies now have net-zero targets.
We need all actors in the economy – business, capital markets, local and national governments – to work together on ambitious climate action. To this end, the COP26 climate conference in Glasgow later this year will be a pivotal moment.
The power of transparency
To encourage governments to raise their ambition to the highest level at COP26, it is crucial for the business world to demonstrate leadership and readiness for bolder policy in the run up to November. This means setting ambitious and credible net-zero targets, and seizing the power of transparency and disclosure.
Disclosure drives environmental action in two main ways:
Firstly, disclosure informs better decision-making by companies and their stakeholders. By going through the process of measuring and providing data on their environmental impacts, risks, opportunities and strategies, companies can more clearly see what most needs their attention and where the most effective levers of change lie.
For example, if a company finds that 93% of their total emissions lie in their supply chain, they will focus their finite resources on supplier engagement rather than upgrading their offices - achieving much greater impact.
And by disclosing climate targets publicly through CDP, companies can ensure they will be showcased on the UNFCCC's Global Climate Action Portal in time for COP26, where they will influence policymakers to take bold climate action.
Secondly, transparency provides the essential foundation of accountability. Only with transparent, consistent, and comparable disclosure can a company’s stakeholders see if they are acting in line with their public commitments and stated values.
This means that all companies are incentivized to perform better - as those that don’t can face pressure from regulators, investors, customers, end consumers, civil society, their own staff and even their staff’s children.
Disclosure is also essential to track our progress on a larger scale. Beyond individual companies – are whole markets delivering emissions cuts in line with a 1.5C pathway? Are they phasing out deforestation and enhancing water security? What are the barriers to further action and how can they be removed? These are fundamental questions we need to ask regularly. Only with widespread disclosure can we answer them.
The latest Science Based Targets initiative progress report – based on CDP data – found that since 2015 a cohort of 338 companies that had set science-based targets have indeed been reducing their emissions in line with what’s needed for 1.5C.
On the other hand, CDP’s recent Europe report found that, as a whole, European companies were only in line with a 2.7C pathway – which would miss the Paris Agreement goal and spell climate chaos.
Climate scientists measure the world’s emissions and climate impacts. But only with disclosure can we track corporate action and assess whether companies have the targets, strategies and governance mechanisms in place to deliver the required transformation.
Disclosure: the new normal
For these reasons and more, disclosure is increasingly demanded by capital markets and is now an expected business norm. In 2015, finance ministers and central bank governors, chaired by Mark Carney, convened an unprecedented Task Force on Climate-related Financial Disclosures (TCFD). Since then, CDP has fully aligned our investor-backed climate questionnaires with the TCFD recommendations, provided a reporting mechanism for companies and facilitated mass global uptake. We now hold the largest TCFD-aligned environmental database in the world.
In 2020, when CDP turned 20, we broke a new milestone when over 10,000 organizations disclosed through our platform. 9,600+ companies covering over 50% of global market cap and 812 cities representing over 810 million citizens disclosed in 2020, despite the upheaval of COVID-19.
The long road to zero
We’ve come a long way since CDP sent the first investor-request for climate disclosure to a few hundred companies back in 2002. But that phenomenal progress has been uneven and there’s still a long way to go.
Water insecurity and deforestation are urgent global challenges that are being overlooked. Every day, water shortages affect more than 3 billion people, and 10m hectares of precious forests have been destroyed every year since 2015.
There is a growing understanding that all environmental challenges – including climate change, deforestation, water insecurity and nature loss, are inextricably linked. In 2021, corporate climate leadership means acting on water stewardship and forests, too.
We’ve seen more companies disclosing on forests and water than ever before, but there are still too many who fail to disclose despite requests from their investors and customers. To truly meet our sustainability goals, we need all companies to step up.
This year, 590+ investors with over US$110 trillion in assets and 200+ corporate buyers with over US$5.5 trillion in purchasing spend are calling on thousands of the world’s most impactful businesses to disclose through CDP – on all relevant themes.
In 2021 disclosure is more important than ever, as we drive momentum ahead of COP26 and set the agenda for the post-COVID world. The world is uniting around the shared mission of the Race to Zero.
Disclosing demonstrates corporate commitment to environmental action and provides crucial data to inform policy decisions and make the case for a sustainable economy.
One year into the decade of environmental action, transparency is the key to supercharging the transition — and positioning your business as a leader.
Learn more about the business benefits of disclosure and how to start disclosing. The CDP platform is now open for 2021.
Global cities too, are building a sustainable economy by disclosing their climate and environmental data, and the CDP-ICLEI Unified Reporting System is open for 2021