Importance of disclosure in emissions reporting

Disclosure is the essential first step to drive environmental action. Without reliable data, companies cannot take the most effective and efficient actions. A company needs to do an emissions inventory before they can set a science-based target. Only with annual measurement can they see if emissions-cutting activities are working, and only with transparent reporting can their stakeholders see they are delivering.

Achieving zero-deforestation commitments requires transparency of complex supply chains and source locations. Disclosure allows companies to identify and address the gaps in their data and set and track progress against robust policies and targets. Target setting plays a vital role in water pollution management, leading to both cost and impact reductions, promoting innovation and reducing dependency.

By reporting their water impacts and risks, companies can make smarter decisions and track their progress to design out pollution from their products and services.

Measurement is the entry point for buyers that engage with suppliers to understand and quantify their environmental impact. The increase in responses through CDP is linked to companies facing growing pressure for more environmental transparency from their investors and other stakeholders. Increased awareness and accountability, demonstrated through accurate data and verification is the foundation for meaningful change, including for emissions reductions.

Companies advancing on the path of emissions disclosure and reduction have a positive company culture towards addressing environmental issues. They are companies that embrace change and embed sustainability into the way they do business.

CDP has seen progress when it comes to suppliers measuring and managing the environmental impacts of their direct operations. In 2021, 71% of companies reported their Scope 1 and 2 emissions, and suppliers reported reducing their emissions by 1.8 Billion tonnes of carbon dioxide equivalent, saving over $29 Billion.

Where we need to see progress from suppliers is in measuring and managing the indirect environmental impacts of their own supply chains. With only 38% of disclosing suppliers actively engaging their suppliers on climate change, this path is certainly not well-trodden.

As disclosure increasingly becomes a business norm, and as long as companies speed and scale up engagement with their entire supply chains on all environmental issues, we will continue to see successful and sustainable emissions reductions.

There is an ever-growing market demand for environmental disclosure and companies are increasingly disclosing data on climate change, deforestation and water security through CDP. In 2021, 590 investors with over $110 Trillion in assets and 200+ large purchasers with over $5.5 Trillion in procurement spend requested thousands of companies to disclose their environmental data through CDP.

There are tangible business benefits to be gained from responding to stakeholder’s requests for disclosure, including protecting and improving a company’s reputation, boosting their competitive advantage, getting ahead of regulation, uncovering risks and opportunities, and tracking and benchmarking their progress, to name a few.

In 2021, over 13,000 companies disclosed environmental data through CDP.  The data received from suppliers revealed that 75% of suppliers reported their Scope 1 and 2 emissions, while only 20% reported on emissions associated with products and goods they purchase, Scope 3.

Key takeaways

• 75% of suppliers reported their Scope 1 and 2 emissions, while only 20% reported on Scope 3.
• Companies advancing on the path of emissions disclosure and reduction have a positive company culture.
• As companies speed and scale up engagement with their supply chains we will continue to see sustainable emissions reductions.
• CDP has seen progress when it comes to suppliers measuring and managing the environmental impacts of their direct operations.
• 71% of companies reported their Scope 1 and 2 emissions, and suppliers reported reducing emissions by 1.8 Billion tonnes of carbon dioxide equivalent.

Measurement is the entry point for buyers engaging with suppliers to quantify their environmental impact with responses linked to growing pressure.