- CDP is a nonprofit that helps companies and investors manage and track their environmental impact.
- It uses a scale of A to F to grade companies like Stanley Black & Decker on management and progress.
- Disclosing scores give investors and stakeholders a glimpse into a company's actual climate impact.
- This article is part of the "Financing a Sustainable Future" series exploring how companies take steps to set and fund sustainable goals.
For nearly a decade, Stanley Black & Decker, the world's largest tools and storage company, has been reporting on its sustainability goals with CDP, a nonprofit founded in 2000 that helps companies track their environmental impact.
In its 2018 corporate responsibility announcement, the manufacturer declared it would reach "carbon positivity" — where its carbon capture exceeds carbon emissions — by 2030, along with improving the sustainability of products and the lives of employees. That same year, the company made the CDP "A List," which recognizes organizations for disclosure and management of environmental risks, including climate change, water security, and deforestation. It's remained on the list ever since.
In 2020, Stanley Black & Decker reported a 10% boost in renewable energy consumption and 20% reductions in energy use, carbon emissions, water use, and waste generated by its facilities.
"We believe that if we help people and the planet flourish, so will our business, so we've always set goals to help track our progress on sustainability," Deb Geyer, the corporate responsibility officer at Stanley Black & Decker, told Insider. CDP is a "north star" for environmental, social, and governance efforts, or ESG, she added, since it brings all the right stakeholders together to ask questions.
About 80% of the S&P 500 companies disclose through CDP, said Simon Fischweicher, the head of corporations and supply chains for CDP North America. In 2021, CDP collected information from more than 13,000 companies, a 35% increase from 2020 and a 141% increase from 2015 when the Paris Agreement was signed.
Disclosure is a binding agent in the ESG ecosystem. A 2019 McKinsey report found that a strong ESG proposition helps companies grow within their markets and beyond, sparks consumer interest, and drives more investment returns since capital is better allocated to more sustainable practices. The act of disclosing, Fischweicher said, gives a glimpse into a company's actual climate impact, with boosts to reputation and trust in customers, suppliers, and investors alike. And while $120 billion poured into ESG investments in 2021, according to Bloomberg, that comes with greater expectations of transparency.
And that transparency helps companies track progress, uncover risks and opportunities, and get ahead of potential mandatory environmental reporting, Fischweicher said.
"What gets measured, gets managed," he added.
How CDP scores companies' environmental impacts
Each year, CDP publishes its climate change, deforestation, and water security questionnaires, guidance documents, and scoring methodologies for companies.
The questionnaire focuses on emissions targets and use, the percentage of energy use from renewable sources, incentives for employees to reach these targets, and board-level oversight of climate change. Companies input their responses and data into CDP's online reporting system. CDP scores the company based on the detail of its questionnaire responses and its management and progress on a grade scale of A to F. The scores are publicly available — among the best performers in 2021, the latest year with complete data, were Unilever and HP.
Most environmental disclosure requests come from stakeholders. "Many times, they'll disclose because their investors or customers have asked," Fischweicher said. But some organizations are proactive about disclosing their targets, he added, and even require their suppliers to disclose their environmental metrics, too.
Fischweicher said even though the information is self-reported, organizations are held accountable by the fact that the information goes to investors — and misleading investors could be a liability. CDP also encourages companies to verify some metrics, like emissions reports, through a third party, like the Carbon Trust Standard.
"Our role as a nonprofit is not just to produce this score — although the score is a really valuable taste test of who's leading and who may have some gaps to fill. We also hope to use that to incentivize best practice and environmental management," Fischweicher said.