CDP reporting: a valuable framework for risk assessment

The months of April and May are synonymous with Carbon Disclosure Project (CDP) reporting for many of Energetics’ clients. In acknowledging the increasing pressures that investor activist groups are placing upon corporations to disclose how they are accounting for climate change risks, CDP 2014 carries an increased degree of significance as a core communication tool with these stakeholders, in the absence of policy certainty on emissions reduction measures and climate change more broadly (read more in our article on business risk profiles).

Reporting to CDP using a consultative and interdisciplinary approach to identifying risks and opportunities, can offer broader business benefits than simply meeting an annual reporting commitment.  We are seeing evidence of the increased value placed on CDP disclosures. Many of our clients are also noticing greater competition in the CDP leadership classifications, with a number of companies dropping off these lists of high performers as others more actively pursue the opportunity to promote their credentials to stakeholders.

What does CDP require?

Within the CDP Climate Change Information Request, a set of questions are asked which require the identification of climate change risks and opportunities for the responding organisation. Additionally, CDP seeks insights to strategies in place to manage these risks (or to pursue the opportunities), along with associated financial implications of inaction and the costs associated with action.

These questions have become progressively more detailed and technically complex over time, with recurring themes within CDP responses that relate to climate change risks including:

  • Physical: The impacts that increasing, extreme weather events might have upon existing and planned assets. Employee health risks associated with temperature, disease and other. If an organisation has performed any work in Climate Change Adaptation readiness, this would be invaluable when articulating physical climate risks. 
  • Regulatory: Current regulatory uncertainty within Australia is a dominant theme along with current compliance costs under the carbon price. Additional considerations include potential removal of fuel tax subsidies, energy performance standards and emissions trading schemes in other regions of operation.      
  • Other: changing consumer behaviours, reputational issues or other matters specific to the organisation.    Developing a response to these questions provides respondents with the opportunity to engage a broad range of internal stakeholders and to commence the conversation on what a changing climate might mean for their organisation. Preparation of a complete response could require input from internal legal, government relations, environment, health and safety, engineering/asset management/operations and business development.

CDP reporting provides a useful framework that supports business planning, internal risk assessment and further readies your business for a carbon constrained future.  Please contact one of Energetics’ consultants to consider the value of reporting to CDP for your organisation. 

 

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