A new report from CDP, a charity that sets the ‘gold standards’ for global disclosure systems, found almost 30,000 companies, worth US$24.5 trillion, failed to respond to environmental disclosure requests from the organisation.
Other key takeaways from the report show:
- On CDP’s annual A Lists, more than 330 organisations are recognised as worldwide pioneers in environmental transparency and action, based on their Climate Change, Forests and Water Security disclosures.
- Only 12 companies requested to disclose against all 3 questionnaires were awarded a Triple A (1.3%)
- In 2022, 66% of D- to A- scoring companies did not improve their scores
High market demand speeding up slow/no reporting
There are 15,000 companies on CDP’s annual A list, of which 330 have been highlighted for their reporting and transparency achievements. This ‘A list’ collection makes up 2% of all the companies reporting their environmental disclosure.
The report calls for cohesive action on climate change, stating: “The science is clear: limiting warming to 1.5°C requires businesses to tackle all issues together.” Yet, findings fall short of their call to action. Only 12 companies, making up 1.3% of the 900 companies who disclosed against all three CDP questionnaires, received a Triple A rating for their transparency across the sectors. This number is down from 14 last year.
Furthermore, more than 29,500 companies did not respond at all to disclosure requests from investors, or did not provide sufficient information in their responses, resulting in a grade ‘F.’ Companies with failed grades include Tesla, Exxon Mobil, Chevron, and Aramco.
The call for corporate disclosure is more pressing than ever, with demand from over 680 investors representing US$130 trillion in assets and over 280 large purchases with US$6.4 trillion in buying power requesting companies to disclose through CDP in 2022. This resulted in a record-breaking 18,700 corporate disclosures in 2022, which is a 233% increase from 2015 and the signing of the Paris Agreement.
Positive findings include an increase in the number of companies that are integrating climate change into everyday aspects of business, with over 280 companies scoring an ‘A’ for their climate change disclosures. This is a 34% increase since 2021. While moving slowly, there is still a 4% increase in the number of Forests A Listers, which is 1 more company than last year.
Continuing to ‘raise the bar’
As the focus on climate change heightens and the time to 1.5°C shortens, the CDP continues to raise standards about what qualifies as environmental leadership. In 2022, this included stricter scoring with regard to criteria, climate transitioning planning, and verification of reports.
Dexter Galvin, Director of Corporations & Supply Chains at CDP, commented: “Companies must step up to the challenge as CDP continues to lift the bar for what qualifies as environmental leadership, and since there is no route to 1.5°C without nature, they must speed and scale up their progress in addressing deforestation and water impacts, dependencies and risks, too.”