Climate research provider and environmental disclosure platform CDP announced today that more than 18,700 companies disclosed environmental data through CDP this year, marking an increase of more than 40% over the prior year.
CDP runs a global environmental disclosure system, enabling investors and other stakeholders to measure and track organization’s performance in key environmental sustainability areas including climate change, deforestation, and water security. The platform provides annual scores for companies – typically released each year in December – on each of the key categories, and the data is also used by information services providers such as Bloomberg, STOXX, Trucost, FTSE/Russell, MSCI and ISS ESG to power investment research, products, indices and ratings.
With this year’s record results, companies worth nearly $61 trillion – roughly half of global market cap – are now disclosing data on climate change, deforestation and water security through CDP.
Mercedes Tallo, Chief Stakeholder Officer at CDP, said:
“This is a landmark year for environmental disclosure. This is crucial because disclosure provides the impetus for action and the mechanism for accountability. There is unprecedented agreement among stakeholders that environmental disclosure is a necessity to measure and drive progress to show impact, and it clearly now sits at the top of boardroom agendas and government policy.”
The surge in reporting comes as companies globally are preparing to address the mandatory climate and sustainability disclosure requirements, already in place, or soon to be introduced by regulators in areas including Europe, the UK and the U.S., among others. Disclosure through CDP has been rising rapidly for the past several years, increasing 37% in 2021, and up 233% since the signing of the Paris Agreement in 2015.
While the number of reporting companies has increased, most do not yet report on all environmental data aspects. Last year, while nearly all (99.5%) of CDP reporting companies provided climate data, but only around a quarter disclosed on water security, and less than 10% reported on forests.
Additionally, CDP recently issued a report indicating 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.
Despite growing investor and regulatory demand for ESG data, however, CDP noted that more than 29,500 companies still fail to respond to the disclosure request.
CDP has stated that it aims to grow its data repository to cover 90% of the world’s highest-impact firms by 2025.
“With mandatory disclosure on the horizon, we’re calling on the near 30,000 non-disclosing companies to report and take action to prepare themselves for the future.”