What actions should companies be taking to lead the decade of delivery?

CDP
July 8, 2024

At our recent Europe workshop, Leading the decade of deliverysustainability practitioners from across Europe came together to discuss key developments in environmental reporting and action this year.

From net-zero targets to the EU Taxonomy, new biodiversity reporting to climate transition planning, our workshop took participants through what’s needed to excel at CDP disclosure and lead the transition to a 1.5-degree, nature-positive economy. In case you missed it, all materials and recordings are here.

1. It’s not enough to focus on climate change

Water, forests, biodiversity and broader nature topics are often discussed as a series of risks, or as the next big thing after climate. But in our ‘Acting for nature’ panel, Beiersdorf’s Dorle Bahr argued that companies must understand and measure the full impact they’re having on the environment.

By looking these areas separately, companies risk an inefficient or even contradictory response, argued CDP’s Thomas Maddox. Companies must tackle their impacts in tandem, through a holistic sustainability strategy that understands climate and nature two sides of the same coin.

Engaging the value chain beyond climate, teaming up with peers, and joining cross-industry initiatives were discussed as practical steps to put this mindset into practiceIn particular, companies can now engage with Freshwater science-based targets, to align with Earth’s limits and meet sustainability goals for water quality and quantity.

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2. Companies must consider their impacts and strategy on biodiversity

Biodiversity is the basis for all human life, and the collapse of ecosystems will have unimaginable consequences for our people and planet.

As the COP15 process continues, from which we need to see a solid global biodiversity agreement like the Paris climate agreement, companies must start playing their full role. That means by reporting and acting on their global biodiversity impacts.

Biodiversity loss is massively relevant to businesses because business models and supply chains rely on healthy nature. Investors are asking companies to disclose what impacts they see. Biodiversity-linked losses may reach $10trillion by 2050 – so it’s essential for companies, who need our natural world to create value, to act.

Mainstreaming biodiversity awareness and action in business at all levels and into corporate reporting is the only way to respond to the rapid decline over the last decades. Our environmental emergency is more than 1.5ºC. It is about building a truly sustainable economy and society. A transition that is just, equitable, and inclusive. That’s why it's now for nature.

To support companies in 2022, CDP has integrated specific biodiversity questions in our climate change questionnaire, covering governance, commitments, value chain impacts, key actions and monitoring processes.

Engaging with these topics will set companies up for taking the actions they need to lead in this critical decade.

3. Ambitious corporate climate action must include the value chain

Nearly 90% of corporate emissions lie outside of direct operations, according to our most recent European analysis, while often companies’ biggest nature-related risks are embedded in supply chains.

Discussing the importance of Scope 3 with CDP supply chain members, we learned how they promote ambition among their suppliers to reduce their own impactsCarla De Luca shared how Cellnex targets a 21% reduction in value chain emissions by 2025. To get there, they conduct awareness campaigns for suppliers to increase disclosure, and have added contractual mandates on reporting emissions and setting transition plans for major suppliers.

As Electrolux’s Yolanda Romero put it, their value chain is an extension of the companyAs a result, sustainability standards applied to their direct operations also apply to their suppliers. In particularly, they see internal carbon pricing as a powerful enabler. It can incentivise suppliers to both offer lower carbon alternatives while maintaining a competitive price, and actively reduce their carbon footprint.

Companies looking to cascade environmental transparency in their supply chain can join CDP supply chain. Over 200 of our members, with over EUR 5 trillion in buying power, are using the program to get the data they need to act.

4. Having both science-based targets and transition plans in place is crucial

In our capital markets panel, we heard loud and clear that financial institutions are relying on companies stepping up to meet their own, fast-growing net-zero commitments.

Every business now needs to bring clear targets to the table, approved by the Science Based Targets initiative (SBTi), and back these up with clear transition plans and strategies, so investors can see a route to delivery.

Eric Tran shared that BNP Paribas supports its clients displaying genuine ambition to work towards net-zero. In practice, this means those disclosing comprehensively through CDP, setting SBTs, and showing ESG ambition throughout the value chain.

Another key takeaway was that robust climate transition plans are a crucial part of a company's journeyPlans must be time-bound, and clearly outline how an organization will pivot its existing assets, operations, and entire business model towards a trajectory that aligns with 1.5°C.

Much is to be done: our analysis suggests only 1% of global business currently disclose against all 24 of our recommended indicators.

CDP data shows that <span "="">around 50% of <span "="">reported <span "="">emissions aren’t yet covered by science-based targets in line with 1.5-degree pathways. Corporates are not moving fast enough to ensure what they do align with our planet’s limits. Those wanting to lead the path to a climate-safe future must step up.

5. Disclosing to CDP sets companies up for new regulatory reporting standards

European companies are increasing affected by ambitious EU legislation. From the EU taxonomy, which helps companies determine the sustainability of their operations, and the new EU deforestation law, which requires products sold in the EU to be deforestation-free.

CDP is also evolving to integrate the taxonomy and updated European mandatory reporting requirements in our disclosure system. In our workshop’s special snapshot on environmental policy, our experts shared how these key pillars of the European sustainability framework is developing. The message: businesses need to be ready, now, and disclosing through CDP enables companies to meet new regulatory rules and ensure your business is ready to lead.

As the latest reports from the IPCC have made crystal clear, real and immediate action from corporates through disclosure, target-setting and transition plans will be essential if we are to have any chance of avoiding catastrophic environmental impacts.

Companies have a responsibility and an opportunity to lead this decade of delivery, and ensure the impact of their entire business aligns with the natural limits of our planet.

This blog was originally posted on cdp.net