Corporate climate disclosures becoming more common, but nature and water reporting lags

The disclosure platform has this week unveiled its latest annual corporate ‘A-Lists’, naming the businesses leading the way on disclosures related to emissions, forest impacts and water impacts.

A total of 346 companies made the climate change A-List, with CDP tracking a significant increase in both the quality and quantity of climate disclosures year-on-year.

On quality, it bears noting that CDP increased its climate A-List requirements this year. Firms must now provide full verification of the entirety of their Scope 1 (direct) and Scope 2 (power-related) emissions. Previously, verification was required for claims relating to 70% of Scope 1 and 2 emissions.

A comparatively small number of businesses made the Water Security A-List (101 firms) and fewer still the Forests A-List (30).

Only ten companies were included on all three lists – Beiersdorf, Danone, Kao Corporation, Kering, Klabin, Lenzing, L’Oreal, Mayr-Melnhof Karton Aktiengesellschaft, Philip Morris International (PMI) and Sekisui House. This cohort includes no British firms.

For inclusion on the Forests A-List, businesses must prove the traceability of their entire commodity supply chains globally for forest-risk products.

Water Security A-Listers are required to demonstrate comprehensive water accounting and provide evidence that all workers have access to water, sanitation and hygiene services (WASH). For context, the UN estimates that 3.5 billion people – almost half the global population – lack access to safely managed sanitation.

Quality and quantity

CDP has long tracked a discrepancy between the quantity of corporate climate disclosures compared to disclosures on forests and water.

In 2023, CDP tracked a 24% year-on-year increase in the number of companies disclosing on at least one of these three issues, to around 21,000. Most are only disclosing on climate.

CDP has also highlighted work ahead to improve disclosure quality. Most businesses, it said in a statement, are “still not reporting at the level needed for tracking progress, achieving targets and avoiding greenwashing”. The statement added: “Companies providing the highest quality environmental data remain a small minority.”

In an effort to close this disclosure gap, CDP has been convening investors to call on large businesses not yet providing disclosures to start this process. Those already disclosing have also increasingly faced pressure from these stakeholders, plus major buyers, to make their data more robust and comprehensive.

The number of companies requested to disclose against all environmental issues in 2023 almost tripled at 2022 levels. CDP has found that companies are  2.3 times more likely to respond when directly engaged by financial institutions compared to a control group.