CDP to align reporting platform with European Sustainability Reporting Standards

Climate research provider and environmental disclosure platform CDP and the European Financial Reporting Advisory Group (EFRAG) announced the launch of a new agreement that would see CDP maximise the alignment of its disclosure system with the EU’s recently adopted European Sustainability Reporting Standards (ESRS).

CDP runs a global environmental disclosure system, enabling investors and other stakeholders to measure and track an organisation’s performance in key environmental sustainability areas such as climate change, deforestation and water security. The platform provides annual scores for companies – typically released each year in December – on each of the key categories; the data is also used by information services providers such as Bloomberg, STOXX, Trucost, FTSE/Russell, MSCI and ISS ESG to power investment research, products, indices and ratings.

The EFRAG was mandated by the European Commission in June 2020 to prepare new EU sustainability reporting standards. The ESRS, developed by the EFRAG, and officially adopted by the European Commission in July, set out the rules and requirements for companies to report on sustainability-related impacts, opportunities and risks under the EU’s upcoming Corporate Sustainable Reporting Directive (CSRD).

The CSRD, on track to be enforced at the beginning of 2024, will expand the number of companies required to provide sustainability disclosure to over 50,000 from around 12,000 currently, and introduce more detailed reporting requirements on a company’s impact on the environment, human rights and social standards, and sustainability-related risk. Over time, the CSRD would also apply to many large non-EU-based businesses that operate in the EU.

According to CDP and the EFRAG, the new collaboration aims to accelerate market uptake of  ESRS, helping companies prepare for the new reporting requirements and the market prepare for the new environmental reporting system.

Under the new collaboration, CDP said that it would explore and implement alignment of its disclosure system with ESRS, while the EFRAG would provide technical expertise, access and guidance. Additionally, to support capacity building at companies reporting on ESRS data points through the disclosure platform, CDP will offer webinars and detailed technical guidance material, supported by the EFRAG.

In a statement announcing the new collaboration, CDP and the EFRAG highlighted a key area of alignment between ESRS and the disclosure platform with the European disclosure standards following a double-materiality approach, under which companies are required to report on how they expect climate and environmental changes to affect their business and how they impact people and the planet, while CDP’s system already covers areas such as climate change, forest and water security, impacts and risks.

The launch of the new collaboration follows CDP’s announcement last month that it will align its sustainability reporting questionnaire with the IFRS Foundation’s International Sustainability Standard Board’s new climate disclosure standard beginning in 2024, and that it will consider other emerging sustainability disclosure systems going forward, in order to ease the reporting burden on companies and encourage broader reporting on key environmental issues.

Source: CDP to align reporting platform with European Sustainability Reporting Standards – ESG Today