Thursday, October 1, 2009

CDP Continues to Grow

Last week, the Carbon Disclosure Project (CDP) announced continued growth for its global corporate GHG emissions registry. CDP has become the defacto global GHG emissions repository, with 66% of the S&P 500 now reporting. Notably, more firms are reporting Scope 3 emissions despite the difficulties and expense in gathering this data. The participation rate will continue to increase as large companies like HP, Bank of America, and, especially, Walmart push their suppliers to report to the CDP. Indeed, a soon-to-be-released research report from Greentech Media forecasts CDP participation rates at large firms will increase from 35% today to 80% in the next 18 months. Firms not reporting to CDP by the end of 2010 will look like laggards.

Data reported to CDP are not consistent in depth and are not verified (some firms report lots of data while others report very little). Look for this to change as investors demand data consistency across firms for comparability. We would encourage CDP to mandate that reporting companies disclose Scope 1 and 2 emissions for their operations and the percentage of their top suppliers (i.e., suppliers who account for 80% of their spend) that publicly report their Scope 1 and 2 GHG emissions. We agree with Walmart and others that supply chain transparency is critical, and public disclosure of scope 1 and 2 GHG emissions from corporate operations and from top suppliers is a cost-justified first step for all involved.

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