Author: David Wynn, Head of Client Services, Greenstone
Over the course of April and May, I was able to attend CDP workshops in New York, London, Singapore and Hong Kong. The spring workshops are key events in the CDP calendar and an opportunity for disclosing companies to learn about questionnaire changes and to connect with other sustainability professionals on the latest trends and thinking in responsible business practices.
Insight 1: Investors are using the information you disclose, not just the scores
The New York workshop offered a packed agenda of sessions grouped around disclosure, insight and action. In a political-climate lacking leadership on environmental issues, it was of particular interest to hear from the investment community on how they use CDP data to drive change and make investment decisions.
At Greenstone, we know all too well that the key to successful data requests is providing context on the why in addition to just the what. Embedding software is only as good as the process it sits within and the communication around how it’s being used to create a feedback loop on the value of the data is key. The same can be said for investor-company data requests. An increased dialogue between investors and disclosing companies has continued to grow as the investment community look to make decisions on ESG data.
It was interesting to hear about the value investors place on the content of CDP disclosures rather than just the overall scores. In particular, it was the forward-looking aspects, such as governance, management approach and projects-in-plan that provide investors with the most insight into the sustainability performance of a company.
Insight 2: Mature reporters are increasingly grappling with more frameworks
Mandatory carbon reporting was introduced to the UK Companies Act in 2013 and the maturity of UK reporting was reflected in CDP’s London workshop agenda. In a setting of maturity comes increased pressure to disclose more information, to more people, in more ways, more often. As a result, companies in these markets are grappling with an increasing landscape of framework ‘alphabet soup’ and knowing your TCFDs from your GRIs can become a full time job.
In a Greenstone webinar at the end of 2018, we looked at some of the key trends shaping the future of sustainability reporting; one of which was the changing global reporting landscape. Initiatives such as the Corporate Reporting Dialogue have continued to evolve since then to address pressure from the business community for a more streamlined approach.
At the CDP UK workshop, Greenstone hosted a knowledge hub on leveraging CDP data through framework mapping. Software offers an opportunity for framework mapping to be centralised in technology to enable more intelligent data collection (and moving away from the unmanageable and incomprehensible Excel spreadsheet).
Insight 3: There is a need for clarity on what the finance sector should be reporting
Singapore’s United Overseas Bank (UOB) recently announced that they are going to stop funding coal power projects in response to growing concern over the role finance groups play in lending to energy sources linked to climate change. Significant on its own, this message is strengthened when you consider that UOB is the third large bank in Singapore (joining DBS and OCBC) to quit coal in the space of 11 days. It is a reflection of the speed of change around sustainable finance in Southeast Asia and the culture of action around ESG investment considerations more globally.
With this context in mind, it was noteworthy to hear about CDP’s plans for a financial sector specific questionnaire in 2020 at the DBS-hosted workshop in Singapore. Although the finance sector are being consulted on the process, it is in reality a more complex engagement exercise for CDP to consider the distinctively separate needs of lenders, underwriters, asset owners and asset managers. Each has a different influence and impact on climate change so work is underway to engage each group within the process of defining an appropriate framework for disclosure.
Insight 4: Disclosing on initiatives from properties and buildings is key to tackling climate change
Hong Kong’s Business Environment Council were guest speakers at the Hong Kong CDP workshop, presenting on the progress of the Low Carbon Charter. The Charter was developed to mobilise companies to contribute with collective resolve towards Hong Kong’s long-term decarbonisation. In a city where two-thirds of GHG emissions are from buildings, it is particularly important that projects and initiatives from the properties are part of this commitment.
Since implementing an initiative savings function to align with CDP, Greenstone has received international recognition, most recently as Top Product of the Year 2019 from Environmental Leader. In a landscape where companies are setting long –term and science-based targets, quantifying energy initiatives and wider property carbon savings has become a business as usual expectation. If investors are notably looking at your in-plan initiatives, reliable data on energy projects becomes the necessity for futureproofing reporting.