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A quarter of all companies disclosing environmental data to CDP last year appear to have developed 'credible' climate transition plans
Corporate climate transition planning appears to be edging into the mainstream, with over 5,900 companies worldwide disclosing plans to shift their business onto 1.5C-aligned decarbonisation pathways through the CDP platform last year.
The non-profit confirmed today over 23,200 companies reported environmental and climate-related data to the investor-backed organisation last year, with around a quarter claiming they have a 1.5C-aligned climate transition plan in place, marking a 44 per cent jump on the previous year.
The data reveals a further 36 per cent of those providing data - some 8,200 companies - said they expected to create climate transition plans by next year, which would set out time-bound action plans detailing how their assets, operations, and business models can shift onto a decarbonisation trajectory in line with a 1.5C warming scenario.
CDP said the data indicated transition planning was "no longer a nice to have" for many businesses, with corporates increasingly viewing credible net zero strategies as critical for accessing capital, driving efficiency, and complying with regulatory demands.
Companies disclose their data to CDP via a questionnaire that includes 21 indicators designed to support the disclosure of a credible climate transition plan, covering key areas such as governance, emissions reporting, strategy, target-setting, financial planning, and value chain engagement.
Based on disclosures from these indicators, CDP said its analysis indicated it was possible for many companies without formal net zero strategies in place to develop and disclose a 'credible' climate transition plan within less than two years.
Overall, 39 per cent of companies providing data - more than 2,300 in total - which reported having no plan in place last year are already disclosing data on most of the 21 indicators needed to fully assess the credibility of their decarbonisation efforts, which CDP hailed as "a clear sign that they are well on the way to developing robust plans".
Sherry Madera, CEO of CDP, said the latest data demonstrated the momentum in support of corporate climate transition plans was "unmistakeable".
"This is encouraging and a smart business move, as climate transition plans are an essential tool needed for credible businesses as they shift to net zero," she said. "Having robust plans is becoming more important for accessing capital, driving business efficiencies, and for complying with regulatory and market demands. Our data shows that companies consistently disclosing climate information through CDP are raising their ambition, and are more likely to be developing detailed, credible, and effective transition plans."
The latest CDP data comes as voluntary and regulatory standards governing the measurement and public reporting of corporate environmental and climate risks, opportunities, and business planning become stricter and more widely adopted worldwide.
Disclosure guidelines drawn up by the International Sustainability Standards Board (ISSB) are increasingly being adopted by companies and governments around the world, while companies in the EU now have to comply with the recently adopted European Sustainability Reporting Standards (ESRS) and Corporate Sustainability Due Diligence Directive (CSDDD), among others, which require large firms to publish net zero transition plans.
CDP said businesses listed on Europe's FTSEurofirst 300 Index and Korea's KOSPI 200 index were on average the best performers with regards to robust climate and environmental data disclosures last year. More than 75 per cent of firms in these indices covered most key indicators in their CDP disclosures, outperforming their listed peers in the G20 by a "considerable" margin, it said.
The UK's FTSE 100 was the third-best performing index on average, with 70 firms disclosing against at least two-thirds of the 21 indicators, and CDP said it expected the number of disclosing companies to increase going forward in line with tightening regulatory guidance.
In the UK, large listed firms are currently required to publish transition plans or a comply or explain basis. But Labour confirmed in its manifesto it would mandate "UK-regulated financial institutions - including banks, asset managers, pension funds, and insurers - and FTSE 100 companies to develop and implement credible transition plans that align with the 1.5C goal of the Paris Agreement".
Canada's S&P/TSX60 and China's CSI 300 were the poorest performing indices among G20 countries, with less than 30 per cent of companies in each index disclosing data on most indicators, according to CDP.
Commenting on the new data, UK Transition Plan Taskforce co-head Kate Levick - who is also an associate director for finance and resilience at think tank E3G - urged all companies to "get started on their transition plan in order to stay ahead of the curve".
"Transition plans are now an essential part of any organisation's forward-looking strategy," she said. "CDP's data points to the increased value of using the Transition Plan Taskforce's best practice disclosure framework to ensure their reporting is comprehensive, robust and credible."
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