Column 2024.11.05

What is the CDPs score for environmental measures? Explaining the evaluation criteria for climate change measures

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What is the CDPs score?

The CDPs score is an index that evaluates the state of response to climate change on an eight-level scale (A to D, F) based on the environmental information disclosure submitted by companies and local governments to the CDPs (Carbon Disclosure Project).
As the need to respond to climate change increases, it is attracting attention as a system for quantitatively evaluating a company's environmental measures.
The score is reviewed annually and is based on a comprehensive assessment of a company's progress in climate change measures, its governance structure, and the quality of emission amount data.
The CDPs score is considered an important indicator for ESG investors and business partners to judge a company's environmental capabilities, and is also an indicator that contributes to a global assessment of reliability.

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What is the CDPs questionnaire?

Companies that respond to the questionnaire are determined by requests from Financial Institution, purchasing companies, banks, etc. Companies can also respond voluntarily if there is no request.

Previously, the questionnaire was divided into three sections: "Climate Change," "Forests," and "Water Security," but from 2024, this will be consolidated into one, making it possible to comprehensively address multiple environmental issues.

The SME questionnaire was also introduced in the same year to better suit the resources of small and medium-sized enterprises, and by focusing on climate change, it makes it easier to understand where to focus in the future.

What is CDPs score?

CDPs evaluates companies based on the responses they submit to the questionnaire. Scores are determined based on the following four evaluation levels, and are rated on an eight-level scale (A to D).

The highest grade is at the top, and if you do not submit an answer, you will be given an "F (no answer)" grade.

〇A, A-: Leadership level

Demonstrate Best Practice in managing environmental issues. Have an understanding of environmental issues as they relate to your business and can explain their recognition and the actions they have taken.

〇B, B-: Management level

Demonstrates that action is being taken to address environmental risks and their impacts. Tracks and seeks to mitigate or eliminate environmental risks and their impacts.

C, C-: Awareness level

It shows that the impact of environmental issues is taken into consideration in business operations. This is a step beyond increasing transparency through disclosure to deepening awareness of environmental issues.

〇D, D-: Information disclosure level

Demonstrate completeness of response Promote reliability and quality of data Ready to respond to the questionnaire but stewardship efforts are immature

〇F: No answer

Companies eligible to respond to CDPs

Disclosing information to CDPs is no longer just a Issue for large companies. CDPs originally requested information disclosure mainly from listed companies, and in 2021, approximately 500 Japanese companies were required to respond. From 2022, however, all 1,841 companies listed on the Tokyo Stock Exchange Prime Market will be included, and approximately 20,000 companies and local governments worldwide will respond to the questionnaire.
Furthermore, through its Supply Chain Program, CDPs encourages information disclosure from small and medium-sized enterprises that do business with large corporations. Because a company's CO2 emission amount are evaluated throughout its entire supply chain, it is increasingly likely that business partners will request CDPs compliance in the future. In particular, if you do business with large corporations, deepening your understanding of CDPs and taking steps to comply from an early stage will help you strengthen your competitiveness.

Benefits of increasing CDPs score

There are three main benefits to responding to CDPs.

1. Improved reliability

A high CDPs score indicates that a company is serious about combating climate change, which helps it gain the trust of investors who value ESG (environmental, social and governance) investments.

2. Improving the company's brand image

A high CDPs score is an indicator that a company is proactive in protecting the environment, which increases brand value and improves reputation among environmentally conscious consumers and business partners.

3. Always be able to make decisions based on the latest framework

The questionnaire is reviewed annually to reflect international initiatives, user feedback, and the latest environmental science, allowing the response process to identify new areas for improvement.

CDPs is an international platform for evaluating the environmental performance of companies. By responding to CDPs, you can not only improve your company's reputation and credibility among stakeholders such as investors and customers, but also influence your own management efficiency and risk management.