Stockholm (NordSIP) – Global non-profit disclosure platform CDP is reputed to hold the largest environmental database in the world. The scores that the organisation compiles annually are widely used to drive investment and procurement decisions towards a zero-carbon, sustainable and resilient economy. On 3 March, CDP released their latest report, Are companies being transparent about their transition. According to the analysis, corporates are still off track on setting climate transition plans, undermining the deluge of net-zero pledges agreed around COP26.
“Currently, one-third of organisations disclosing through CDP reported developing a low carbon transition plan,” comments Nicolette Bartlett, CDP’s Chief Impact Officer. “This does not match the appetite from investors, customers and employees and governments who are pushing for more scrutiny since COP26. Critically, these plans also need to be assessed to ensure they meet stakeholder expectations and are actually delivering against climate needs,” she adds.
According to CDP’s definition, a credible climate transition plan is “one that succinctly outlines how an organisation will pivot its existing business model towards a 1.5C aligned trajectory, based on the latest climate science recommendations”. Importantly, the plan’s credibility is governed by the guiding principles and critical elements that companies need to disclose in a comparable and consistent manner to enable stakeholders to assess the plan’s ambition and progress over time.
Not many companies meet this standard, however. Some key findings in CDP’s report are the following:
- Fewer than 35% of companies’ emission reductions targets are credible, and only 1,164 organisations have set science-based targets validated by the Science Based Targets initiative (SBTi).
- Only 6% (741) of all reporting organisations disclosed claims of having a net-zero target.
- No companies disclosing from G20 countries had more than 4% disclosure against the 24 key indicators in the CDP questionnaire that related to climate transition plans
- Only 1% (135) of companies disclosed against all 24 indicators.
Shining a spotlight on specific industries, CDP finds that transportation and apparel are the worst performing sectors, with less than 0.3% disclosing against the 24 key indicators which legitimise a climate transition plan. Meanwhile, industries facing the most scrutiny, such as financial services, power, and fossil fuels, have the highest rates of climate transition plan disclosure, even though only 5% of organisations in each of these sectors reported against the 24 key indicators.
Country-wise, Spain, France, and Japan have the highest proportion of organisations disclosing to all the key indicators, albeit at only 4%, 3% and 2% respectively. Indonesia, Saudi Arabia, Argentina, and China have the lowest numbers of disclosing companies.
While the overall number of companies with credible transition plans has increased from 2020, this report shows that corporates have much further to go.