Climate research provider and environmental disclosure platform CDP announced today the publication of a new report, assessing the state of corporate climate transition plans and related disclosure. The report indicated that significant gaps exist in the disclosure by companies of information regarding their climate strategies, with only slightly over a third of companies assessed as having credible emissions reduction targets, and less than 1% reporting on all of CDP’s key climate transition-focused indicators.
In its report, CDP defined a climate transition plan as:
“[A] time-bound action plan that clearly outlines how an organization will achieve its strategy to pivot its existing assets, operations and entire business model towards a trajectory that aligns with the latest and most ambitious climate science recommendations, i.e., halving greenhouse gas (GHG) emissions by 2030 and reaching net-zero by 2050 at the latest, thereby limiting global warming to 1.5°C.”
The report is based on the more than 13,000 organizations that disclosed to CDP in 2021. CDP announced the company scores across the key environmental categories of Climate Change, Forests, and Water Security from its 2021 survey in December.
Key elements of a credible climate transition plan, according to CDP, include one that supports a strategy for the transition with 5 – 10 year science-based targets (SBTs) and long-term SBTs, contains quantifiable and regularly tracked key performance indicators (KPIs) measuring climate transition progress, is integrated into an organization’s mainstream filings, guided by principles including accountability, time-bound and complete, and contain key governance, strategy, risk management and metrics & targets elements.
Of the more than 13,100 organizations disclosing to CDP, the report indicated that less than one third (4,002) reported developing a low-carbon transition plan. Additionally, while almost all of the organizations disclosed emissions reduction targets, CDP reported that only 35% are credible or validated by the Science Based Targets initiative (CDP is a founding SBTi organization). Only 1% of companies disclosed on all 24 of CDP’s climate transition plan indicators.
Other key findings from the CDP report include:
By industry, the highest rates of climate transition plan disclosure were in the financial services, power and fossil fuel sectors, with 5% reporting on all 24 indicators. Transportation and apparel industries had the lowest rates, at under 0.3%.
Approximately 4,800 companies reported on how climate-related risks and opportunities influenced their strategies, while only half of these reported that they have developed a low-carbon transition plan.
Of the primary climate transition plan disclosure elements, disclosure rates for targets were by far the lowest, with only 6% of organizations fully disclosing details of their net zero targets, including an absolute or intensity target. The strongest performing elements were disclosures related to financial planning and governance, each at over 70%, and policy, at over 90%.
In a discussion paper accompanying the release of the report, CDP Chief Impact Officer Nicolette Bartlett said:
“We recognize that transition plans are an emerging field in a rapidly evolving space, therefore the quality and completeness of these transition plans will need to be independently assessed. We expect that whilst first attempts are valuable, many of these plans will fall short of stakeholder expectations. The good news however is there is an emerging consensus about what some of the elements of a good transition would be and in the discussion paper we have sought to map the different elements against new and existing benchmarks, such as the CA100+ initiative and the Assessing the Low-Carbon Transition (ACT) frameworks.
“CDP believes that transition plans are a fundamental part of what is needed from corporate governance to align with a net-zero world and are therefore a key part of the evolution of our reporting mechanism going forwards. “
Click here to access the CDP report.