CDP recently finalised its questionnaires for 2018 – and it’s all change. We’ve got several new sector-specific questionnaires, and the structure and question flow has changed. There’s also some new ‘forward-looking’ questions that won’t be all that easy to respond to without a good deal of thought and discussion. Much of this has to do with TCFD – the latest buzz-acronym in town. So what’s the story – and what does it mean for you?
G20 task force on climate risk
Firstly, some context. TCFD stands for the Task Force on Climate-related Financial Disclosures. It was set up after the G20 rightly pointed out that the current failure to price climate change into financial markets represents somewhat of a risk in terms of global financial stability – given the 1.5 – 2°C world we’re all aiming for. Cue the Financial Stability Board (FSB), an international body tasked with promoting global financial stability chaired by Mark Carney, Governor of the Bank of England. They set up the Taskforce, itself headed up by none other than former New York Mayor Michael Bloomberg (yep – it’s serious). The goal? Better, more consistent, disclosures on climate risks and opportunities, with ‘material climate-related information’ forming part of companies’ mainstream financial filings. The implications? Read on.
TCFD and changes to the 2018 CDP Questionnaire
The TCFD makes a number of suggestions when it comes to climate change governance, management, metrics, and reporting. Broadly, it aims to:
- Make disclosures more complete, consistent, and comparable
- Give investors, lenders, and insurers more visibility of how exposed organisations are to climate-related risks and opportunities
For example, companies are asked to use scenario analysis to test how their business strategy fares given the transition to a 1.5 (let’s hope!) or 2°C world. Climate-related risks and opportunities are to be quantified and included in mainstream annual financial statements (this one won’t be easy). And whilst the recommendations are voluntary, they’ve been welcomed by companies and institutions across the board – from banks and insurers, to governments and industry. Over 200 of them have publicly expressed their support, and that number will only continue to grow.
So what does this mean for CDP? Unsurprisingly, the disclosure body has moved quickly to integrate the Task Force’s recommendations in the form of the revamped, sector-specific climate change questionnaires for 2018. The good news is that CDP reports that 82% of the questions are either unchanged or only slightly modified. However, in developing the TCFD themes some interesting – and challenging – new questions have been thrown into the mix. We’ve pulled out some of these here.
So what next?
CDP will publish its scoring methodologies in February / March 2018, and will launch its new disclosure platform soon after. The deadline for disclosure is again end-June. In the meantime there are a few steps you can take to prepare.
- Download the new questionnaire(s) for 2018 from CDP’s website and get familiar with the new format, structure and content
- Do a gap analysis to pinpoint new questions for relevant to your company – including those that are not currently addressed in your disclosures
- Engage internally on the new content to develop a plan for responding to any new questions and to raise awareness of the TCFD recommendations more broadly
- Develop an action plan for drafting this year’s responses in line with CDP’s timeframes
TCFD promises a real shake-up when it comes to businesses talking about climate change – starting with this year’s CDP. As it continues to gain traction, expect to see more changes in the future.
We’ll be keeping an eye on things and keeping you posted.
Watch this space.