A record number of companies disclosed their environmental performance data to CDP in 2023, but ambition continues to ‘fall short’.
Over 23,000 companies reported to CDP in 2023 according to its latest factsheet, representing $67 trillion (£53trn) in market capitalisation.
This marks a significant increase from the 18,700+ companies that disclosed through CDP in 2022, demonstrating a growing commitment among companies to environmental transparency and accountability.
The increase in disclosures was particularly pronounced in Europe, which saw a 193% rise over the past three years. Asia followed closely behind with a 172% increase, while Australia and Africa lagged behind with increases of 62% and 67%, respectively. The US sat in the middle ground at 102%.
But, despite the overall positive trend, there are still some areas where companies need to make more progress. For instance, only 56% of the 23,000+ companies in 2023 disclosed how much energy they used. And of those, only 31% disclosed having no energy consumption from renewable sources.
Additionally, just 10% of these organisations have set renewable energy consumption targets. This suggests that while companies are increasingly disclosing their environmental performance, they need to translate this into more concrete actions to reduce their environmental impact.
On the theme of energy usage, almost half of the 575 financial institutions that disclosed their holdings through CDP in 2023 reported an estimated $9 trillion (£7trn) in fossil fuel financing across their portfolios, an amount equivalent to the combined GDP of Japan and Germany.
“CDP’s latest insights underscore an upward trend in companies reporting on their energy use,” said CDP’s Impact director of thought leadership Sue Armstrong-Brown. “However, with 44% still not reporting and only 10% of all disclosers setting targets for renewable energy consumption, corporate ambition to phase out fossil fuel continues to fall short.
“But COP28 is a new opportunity to accelerate the shift to renewable energy consumption. We need to see the G20’s call for a tripling of renewable energy capacity reflected in demand-side targets for transition to renewables in order to support the phase-out of fossil fuel use.”
While climate continues to account for the majority of disclosures, there is a growing recognition of the importance of addressing nature-related issues as well, such as water, forest, biodiversity, and plastic. In 2023, 38% of disclosing companies also provided environmental performance information on these nature-related issues, up from 29% in 2022.
The adoption of the Taskforce on Nature-related Financial Disclosures (TNFD) recommendations, finalised earlier this year, could lead to a significant increase in the number of businesses reporting their nature-related risks and opportunities. While the framework is currently voluntary, there is a growing movement among members, to advocate for a mandatory requirement.
