As mandatory environmental reporting comes into force from next year for companies in Europe, and expands globally, businesses are disclosing their environmental data in record numbers. This year more than 23,000 companies worth US$67 trillion disclosed through CDP – including those responding to requests on behalf of over 740 financial institutions worldwide. More than 5,600 European businesses are among those disclosing, including listed companies covering about 89% of the continent’s market capitalization. It represents a 26% annual rise in the number of European companies disclosing – above the 24% increase worldwide – with Swatch Group, Interparfums, Louis Dreyfus Company (LDC) and Buzzi among those reporting through CDP for the first time this year.
All countries across Europe have seen growth in the number of companies reporting, with considerable increases from the Netherlands, Norway and Denmark to Poland and Portugal. Germany, France and Italy rank within the global top 10 of countries with the most disclosing companies in 2023.
With Europe warming twice as fast as the global average, and the world on track to have its warmest year on record, companies have a crucial role to play in limiting climate change and nature degradation to create a sustainable economy and planet.
Nature plays a vital role in regulating climate and net zero goals cannot be achieved without it. In the key areas of water security and deforestation, disclosure by European companies increased by 29% and 13% respectively, compared to 27% for climate. Companies responding for the first time on at least one additional nature theme this year include Hugo Boss, Deutsche Telekom and Mowi.
However, only 1% of all disclosing companies reported on all three areas, both within Europe and globally. Corporate transparency across climate and nature enables companies to take action and financial institutions to fully assess the risks and opportunities of their portfolios and clients – underlined by the EU’s incoming Corporate Sustainability Reporting Directive (CSRD).
Applying to more than 50,000 companies operating in the EU and in force from 2024, the CSRD will require companies to report their environmental impact, based on the ambitious European Sustainability Reporting Standards (ESRS). They will also need to show how they are setting targets and transforming their business to mitigate climate change.
Those companies disclosing through CDP are showing preparedness on some of the critical information that will be required under these standards, as well as for additional regulation on deforestation-free products.
Environmental disclosure has also reached more than 130 cities, states and regions across Europe, alongside 1,100 globally. This covers cities from Berlin to Barcelona, Austin to Auckland, alongside regions such as Latin America, where nearly 90% of the Brazilian Amazon is covered by regions reporting to CDP. CDP-ICLEI Track, the world’s leading climate reporting platform for cities, and CDP’s disclosure platform for states and regions remain open for 2023 disclosure.
Maxfield Weiss, Executive Director of CDP Europe, said: “Companies play a crucial role in the action we must take to prevent the worst effects of climate change and nature loss. To manage their environmental impact, they need to measure it – and it will be mandatory for many companies in the EU from next year. With more than 23,000 businesses now disclosing globally through CDP, these organizations have taken the essential first step towards futureproofing their businesses, our economy and planet.”
As the global landscape of mandatory disclosure expands alongside that of the EU, CDP is committed to align with new and upcoming reporting frameworks, standards and regulation, to support companies to address them, reduce the reporting burden and ensure investors and regulators have access to the data they need across regions and regulatory requirements.
Already aligned with the TCFD recommendations, CDP’s 2024 questionnaire will integrate the ISSB’s climate disclosure standard (IFRS S2) and from next year will start to also reflect the TNFD framework, encouraging more companies to report across both climate and nature matters. CDP has also committed to reflecting the ESRS in its disclosure system and upcoming climate disclosure rules by the United States Securities and Exchange Commission.
Sherry Madera, Chief Executive Officer at CDP, said: “CDP recognizes its unique role and responsibility to accelerate action as the driving force for collecting primary environmental data from organizations for over 20 years.
“As the demand for sustainability data gets increasingly intense and complicated for organizations to negotiate, we have the expertise to prepare organizations – large and small – to meet the needs of their stakeholders. This is why in 2024, we will be making it easier and quicker to disclose and access data, through a new framework on a new and enhanced technology platform. These improv