Information presented in this profile is for reference only. The Climate Action in Financial Institutions Initiative does not guarantee as to the exhaustiveness of this information and invites you to contact the Secretariat (firstname.lastname@example.org) if you wish to propose any modifications. By including this profile, the Initiative, its Supporting Institutions and the Secretariat do not endorse the activities described below nor the guidance and information provided in this profile. Last updated: July 2018 Website: www.cdp.net/en Contact: Steven Tebbe (Managing Director), Europe: email@example.com Lance Pierce (President), Americas: firstname.lastname@example.org Summary: Launched by environmental stakeholders and investors in 2000, CDP is a not-for-profit charity working with investors, companies, cities, and states and regions to manage environmental impacts through enhanced disclosure of environmental data. Every year, CDP releases its “A List” naming the leading world’s businesses on environmental performance. CDP’s main working areas are climate, water and forests. Aligning with the TCFD recommendations, CDP’s evolving climate change questionnaire takes an increasingly broader scope than the initial focus on carbon disclosure, integrating, for instance, questions on scenario analysis. Currently, CDP concentrates on corporate disclosure but a financial-sector specific questionnaire is planned for 2019 and 2020. What are the objectives of the initiative? “CDP, formerly the Carbon Disclosure Project, runs the global disclosure system that enables companies, cities, states and regions to measure and manage their environmental impacts. We have built the most comprehensive collection of self-reported environmental data in the world.” Who launched it? Who is participating? CDP works with three different types of stakeholders: Investors: “Investors can use CDP’s data and award-winning analysis to understand risk, protect investments and seize opportunities. We gather the most reliable data from companies at the request of shareholders. This information is used to improve financial decision making and increase corporate engagement.” Companies: “Companies that measure their environmental risk are better able to manage it strategically. And those that are transparent and disclose this information are providing decision makers with access to a critical source of global data that delivers the evidence and insight required to drive action.” Cities: “Cities are vital in the transition to a sustainable economy. CDP helps cities disclose their environmental activities, understand their impact and take action. State and regions “CDP provides a global platform for states and regions to measure, manage and disclose their environmental impacts.” Why has this been put into place? “We want to see a thriving economy that works for people and planet in the long term. To do this we focus investors, companies and cities on taking urgent action to build a truly sustainable economy by measuring and understanding their environmental impact.” What are the main work streams/areas of work? CDP focuses on three different areas: climate, water and forests. Regarding these areas they engage with and inform companies, cities, governments, supply chain, investors, states and regions. What are outcomes of the initiatives linked with the 5 Principles? “Over the past 15 years CDP has created a system that has resulted in unparalleled engagement on environmental issues between investors, companies, cities, states and regions worldwide. CDP’s data enables [its] network to link environmental integrity, fiduciary duty and public interest to make better-informed decisions on climate action.”  “In 2017: – Over 6,300+ companies responded to the climate change, water, forests and supply chain questionnaire – Over 650 investors with US$87 trillion in assets request information on climate change, water or forests.”  CDP is involved in different initiatives and coalitions, among which: CDP is one of the four founding members of the Portfolio Decarbonization Coalition (PDC). CDP launched, together with the United Nations Global Compact, the World Resources Institute and the WWF the Sciences Based Targets Initiative (SBT). CDP is a founding member of the We Mean Business Coalition. CDP is co-chairing the Mobilizing Business working group within the Carbon Pricing Leadership Coalition. CDP is leading the Carbon Pricing Pathways Project with the We Mean Business Coalition and developed a Carbon Pricing Pathways Toolkit “to stimulate productive dialogue about the future of carbon pricing” In 2017, CDP launched the Carbon Pricing Corridors initiative with the We Mean Business Coalition to enable large market players to define the carbon prices needed for industry to meet the Paris Agreement. In 2012, “the CCLA AM, the most influential members of the Church Investors Group and the Local Authority Pension Fund Forum (LAPFF), teamed up to launch a collaborative engagement initiative […] focused on 10 major UK-listed extractives and utilities companies. The goal of this “Aiming for A coalition” is to bring about improvement in these companies’ CO2 reporting so that they obtain the highest CDP performance band (“A”) and become eligible for the Climate Performance Leadership Index, made up exclusively of companies demonstrating best practices.” CDP is also working closely with GRI and CDSB (among others) to align areas of reporting and provide the guidance to communicate that content in mainstream reports. In 2019, CDP has been involved in the design and creation of a thematic equity fund dedicated to the fight against global warming with CPR AM, a subsidiary of Amundi. Have intermediate or final reports / guidance been issued? Regarding its climate focus CDP published different reports: CDP scores 2018 – “Our annual A List names the world’s businesses leading on environmental performance. This year, we recognize more than 150 corporates as the pioneers acting on climate change, water security and deforestation, and building our future economy: one that works for both people and planet.” Technical notes: CDP Technical Note on the TCFD “This technical note provides an overview of the Task Force on Climate-related Disclosures (TCFD) recommendations, how CDP has committed to aligning its questionnaires with the TCFD’s recommendations, and where organizations can find TCFD-related questions in our questionnaires.” CDP Technical Note on Scenario Analysis (2018) – “This technical note provides an overview of climate-related scenario analysis, key considerations for conducting scenario analysis – as identified by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD), and how CDP has incorporated scenario analysis into our questionnaires.” Carbon pricing (guidance for companies): Carbon Pricing: CDP Disclosure Best Practice (2018) – “In 2018, CDP dedicated a new section of the Climate Change Questionnaire to carbon pricing – requesting companies to disclose their exposure to regulations that put a price on carbon and the company’s risk management strategy against such regulations. […] This technical note provides additional guidance for companies to understand and effectively respond to CDP’s carbon pricing questions.” Putting a price on carbon: Integrating climate risk in business planning (2017) – “Over the past few years, CDP has been tracking a steady increase in the number of companies embedding an internal carbon price into their business strategies.” How-to guide to corporate internal carbon pricing (2017) – “This guide explains how a company can design and implement a best practice internal carbon pricing (ICP) approach. Such an approach is defined as one that contributes to a journey of bringing a company’s business strategy in line with the transition to a low-carbon economy.” Better Information, Better Investments: Case studies from global investors on how CDP data and services support smarter investment decision-making (2017) – “From portfolio building to policy setting, indexes to insurance, engagements to education, it is clear from the seven case studies in this book that there are many innovative ways that investors are putting financially-material environmental data at the heart of decision making.” Picking up the pace (2017) – “CDP’s second annual analysis in the ‘Tracking corporate action on climate change’ series shows that companies are stepping up their response to climate change, setting more ambitious targets to drive longer-term progress towards their low-carbon future.”Different case studies include: Unilever, AkzoNobel, EDP, Nissan, San Diego, BT and Aviva A brief introduction to climate disclosure in France (2018) – “This policy briefing by CDP and the Climate Disclosure Standards Board (CDSB) is one of a series looking at climate disclosure regulations in G20 countries. France is regarded as a global leader and pioneer in mandatory climate-related disclosures since the enactment of Article 173 of the Energy Transition and Green Growth Law in 2016, which has brought the reporting of climate-related risks into the mainstream reports of large companies and institutional investors.” Cities: The Low Carbon Investment Landscape in C40 Cities (2017) – “This report and the accompanying spreadsheet aims to highlight the scale of opportunity for investors and to encourage cities to improve project development data in order to attract finance. The accompanying beta pipeline spreadsheet […] aims to highlight the a) scale of opportunity for investors and b) lack of project data to drive cities to improve project development information and to enable the market shift needed to ensure sufficient finance flows to these vital projects.” White paper: barriers to private sector investments into urban climate mitigation projects (2015) – This white paper presents “barriers and solutions for cities to access finance to scale-up climate mitigation efforts”. Calendar and milestones Associated Supporting institutions of the Climate Action in Financial Institutions Initiative on the 2018 CDP Investor Signatories and Members list include, as of June 2018:  https://www.cdp.net/fr/info/about-us  https://www.cdp.net/fr/info/about-us  https://www.cdp.net/en/info/about-us  https://www.cdp.net/en/info/about-us  https://www.novethic.com/fileadmin/user_upload/tx_ausynovethicetudes/pdf_complets/Responsible-investors-acting-on-climate-change-2015.pdf . Links with the 5 Voluntary Principles for Mainstreaming Climate Action This section aims to support discussions on the implementation of the 5 voluntary Principles for Mainstreaming Climate Action. Information provided in this section is for reference only; the Climate Action in Financial Institutions Initiative, its Supporting Institutions and the Secretariat do not endorse the activities nor the guidance and information provided in this section. The CDP Technical Note on the TCFD recommends companies to disclose on questions adapted from the TCFD recommendations: “Provide further details on the board’s oversight of climate-related issues.” “Below board-level, provide the highest-level management position(s) or committee(s) with responsibility for climate-related issues.” “Describe where in the organizational structure this/these position(s) and/or committees lie, what their associated responsibilities are, and how climate-related issues are monitored.” “Are climate-related issues integrated into your business strategy?” Carbon Pricing: CDP Disclosure Best Practice: “In 2018, CDP dedicated a new section of the Climate Change Questionnaire to carbon pricing – requesting companies to disclose their exposure to regulations that put a price on carbon and the company’s risk management strategy against such regulations. […] This technical note provides additional guidance for companies to understand and effectively respond to CDP’s carbon pricing questions (C11.1, C11.2, and C11.3).” “This information will enable investors to consistently track and analyze an organization’s current and expected exposure to carbon pricing regulations, and start to quantify their associated costs. CDP aims to encourage unregulated companies to consider potential future exposure.” With CDP Europe publication on the European Commission’s Action Plan: “Financing Sustainable Growth”, CDP takes position on the European Commission’s Action Plan on Financing Sustainable Growth, making recommendations regarding some of the proposed actions: “CDP strongly welcomes and supports the European Commission’s ambitious agenda to operationalize the objectives of the Paris Agreement and the Sustainable Development Goals by managing the European financial system more sustainably.” “Action 1: Establishing a EU classification system for sustainable activities CDP welcomes the development of a EU taxonomy that will create a common understanding of what is ‘sustainable’ among private and public market actors.” “Action 2: Creating standards and labels for green financial products” “CDP welcomes the Commission’s action on facilitating market participants’, especially retail investors’ and consumers’, ability to invest in ‘green’ projects, assets or business activities. However, we are concerned with the focus on creating tools that are limited to defining ‘green’ financial products. This will only drive a small market which cannot absorb large capital shifts in the short term and will not deliver the holistic approach needed. We strongly recommend fostering a systemic approach; which means tools and assessment that aim to drive change across all sectors and companies. For these reasons, CDP together with ISS-Ethix Climate Solutions developed Climetrics, which creates transparency on climate-related impacts in the European investment fund industry for the first time.” “Action 3: Fostering investment in sustainable projects” “EU Member States’ capacity to drive finance into sustainable infrastructure should be supported by the following key services: – Require proactive disclosure of all Public Private Partnership (PPP) project and contract data throughout the planning and delivery of the PPP in an open data format; – Capacity building among local and national authorities on ESG criteria and facilitate collaboration between national authorities and local authorities when translating their goals; – Technical assistance for public authorities to develop bankable green projects that attract private sector investments, and guidance on how to lower lending risks for sustainable projects; – Support Member States’ national authorities to incorporate their National Determined Contributions into public investment plans, so that local authorities such as cities can also benefit from low-cost investment into sustainable projects, such as those provided by development banks.” The report How-to guide to corporate internal carbon pricing provides detailed recommendations fro companies to support a wider use of best practice approaches to Internal Carbon Pricing approaches globally. The CDP Technical Note on Scenario Analysis states: “Scenario analysis is broadly involved in the narrative behind all sub-questions in CC3 (Business Strategy) [of the Climate change questionnaire], which is designed to elicit how companies are evaluating their climate risks and integrating it into business reliance strategies. Does your organization use climate-related scenario analysis to inform your business strategy? Provide details of your organization’s use of climate-related scenario analysis. Why does your organization not use climate-related scenario analysis to inform your business strategy?” The technical note states that “A top-down approach to scenario analysis is an effective way to identify and assess substantive risks and capturing tail events. – With top-down risk identification, many low-level risks and management techniques can be encapsulated within a single, meaningful scenario. – The bottom-up risk identification process can provide a greater number of scenarios, but can lead to overcomplicated scenarios at risk of missing macro-trends.” “CDP echoes the TCFD’s recommendations that there should be a progressive approach to adopting scenario analysis as a strategic planning tool. As an organization’s experience matures, scenarios should shift from qualitative to quantitative and qualitative, in turn providing stakeholders with increasingly decision-useful information.” In the paper a changing context for disclosure: from data to de-risking, CDP and CSDB indicate that “effective disclosure should be: Consistent – in scope and objective across the relevant industries and sectors; Comparable – to allow investors to assess peers and aggregate risks; Reliable – to ensure users can trust data; Clear – presented in a way that makes complex information understandable; and Efficient – minimizing costs and burdens while maximizing benefits.” The CDP Technical Note on the TCFD recommends disclosing on questions adapted from the TCFD recommendations. Questions are addressing companies, but could be of interest for financial institutions in the light of Principle 5: “Explain how climate-related issues are integrated into your business objectives and strategy.” “Did you have an emissions target that was active in the reporting year?” “Provide details of your absolute emissions target(s) and progress made against those targets.” “Provide details of your emissions intensity target(s) and progress made against those target(s).” “What were your gross global Scope 1 emission in metric tons CO2e?” “What were your gross global Scope 2 emission in metric tons CO2e?” “Account for your organization’s Scope 3 emissions, disclosing and explaining any exclusions.” “Have you published information about your organization’s response to climate change and GHG emissions performance for this reporting year in places other than in your CDP response? If so, please attach the publication(s).” The recommendations made in CDP Europe on the European Commision’s Action Plan: “Financing Sustainable Growth” also address questions of accountability for climate action: “Action 7: Clarifying institutional investors’ and asset managers’ duties” “To effectively implement and operationalize the Commission’s proposal, we see an urgent need to address shortcomings on the corporate disclosure (transparency) side. Investors with fiduciary duties that require them to ensure long-term, low-risk investment strategies do not encounter sufficient information on long-term climate-risk mitigation and adaptation strategies of the companies they invest in. Climate risks or opportunities that are unlikely to materialize over the next few years, but could be significant over longer horizons, tend to be under-priced or underappreciated by investors. We recommend the following measures to resolve this conflict: Companies must be required to disclose their long-term transition plans towards well-below 2 degree Celsius and water-secure scnearios; Climate change, water security and deforestation risks are acutely impacting supply chains. The level and detail of disclosure of corporate action to mitigate these risks in their supply chains must be specified in corporate disclosure regulation; Committing to EU legislative implementation of the G20 FSB Task Force on Climate-related Financial Disclosures (TCFD) recommendaitosn would provide investors and companies with the regulatory certainty to take the necessary steps on providing consistent information on climate-related financial risk and opportunity criteria around governance, strategy, risk management and metrics and targets.” “Action 9: Strengthening sustainability disclosure and accounting rule-making” “To be useful, disclosures must systematically account for the actual contribution of investments and capital allocation decisions in achieving environmental and societal goals, set out by the Paris Agreement and the Sustainable Development Goals. CDP is fully committed to supporting the Commission’s fitness check of EU legislation on public corporate reporting, including the EU Directive on the disclosure of Non-Financial Information (NFI), to assess whether public reporting requirements for listed and non-listed companies are fit for purpose, as well as the revision of the guidelines on non-financial information. The NFI Directive is the key vehicle to provide the information required to drive capital flows towards sustainable investments and business models.