Report: CDP unveils critical gaps in corporate climate and nature action
CDP has revealed significant deficiencies in corporate climate and nature action. Merely 10% of companies have established goals for renewable energy use, while 50% of financial institutions project an estimated $9trn in exposure to fossil fuels.
This is according to CDP’s recent data factsheet, which highlights the environmental performance and progress reported by more than 24,000 organisations on the platform in 2023.
According to the factsheet, the climate and nature disclosures witnessed a 24% surge from the previous year, with most companies reporting greater opportunities than risks.
This year, 63% of companies disclosing climate information, 73% disclosing forest-related data, and 50% disclosing water-related information identified environmental opportunities with potential financial or strategic impact on their business.
Nevertheless, 31% of companies did not disclose using any renewable energy consumption, despite the transition to 100% renewable energy by 2035 being a prerequisite for a net-zero future.
Concurrently, among the 575 financial institutions that disclosed through CDP last year, half of them reported an estimated exposure to fossil fuels across their portfolios that equals the combined GDP of Japan and Germany ($9trn).
CDP’s Impact director of thought leadership Sue Armstrong-Brown said: “CDP’s latest insights underscore an upward trend in companies reporting on their energy use, however, with 44% still not reporting and only 10% of all disclosers setting targets for renewable energy consumption, corporate ambition to phase out fossil fuel continues to fall short.
“But COP28 is a new opportunity to accelerate the shift to renewable energy consumption. We need to see the G20’s call for a tripling of renewable energy capacity reflected in demand-side targets for transition to renewables in order to support the phase-out of fossil fuel use.”
Last week, at the World Leaders Summit at COP28, more than 100 countries, excluding India and China, pledged to triple global renewable capacity and doubling energy efficiency by 2030.
Nature reporting trails climate disclosures in corporate reporting
The factsheet has also unveiled a considerable gap between disclosure rates for climate and nature, with only 38% of companies disclosing information beyond climate.
The Taskforce on Nature-related Financial Disclosures (TNFD) unveiled its finalised recommendations to improve nature-related disclosure earlier this year. While businesses are adopting the framework voluntarily as of now, there is a possibility that the Royal Society and other TNFD members will advocate for a mandate
Armstrong-Brown added: “The rise in disclosure demonstrates increasing accountability, as companies boost their preparedness for incoming mandatory disclosure regulations. However, to truly address the environmental challenges, organisations must rapidly embrace a more comprehensive approach to environmental disclosure.
“This includes going beyond only climate to robust disclosure on nature. With the launch of the TNFD recommendations and more regulation expanding to include nature-related disclosure, companies not preparing are set to lose out.”
CDP is urging COP28 to conclude the global stocktake by devising a comprehensive, data-driven roadmap to spur companies, cities and governments into urgently scaling up meaningful environmental action.