Less than 300 companies made CDP’s A list for environmental performance in 2021, with fewer companies ranked A for climate action than last year owing to higher expectations

Just two per cent of top companies made CDP’s A List for environmental action and transparency, the climate disclosure not-for-profit today revealed.

CDP has this morning released its annual A-D ranking of companies based on their environmental performance and level of transparency when disclosing information on their carbon emissions, climate strategies, and wider environmental performance.

This year’s list reveals just 272 of nearly 12,000 of companies analysed made it to the top of of the annual A list. Among the top-ranking companies are many leading brands such as PepsiCo, Colgate and Palmolive, as well as packaging giant TETRA PAK, and pharmaceuticals AstraZeneca.

However, 58 per cent of the companies analysed scored between a C and D- rating, suggesting they are aware of their environmental impacts but are not yet taking substantial action to curb those impacts. Some 509 companies, however, transitioned from recognising their climate impact to taking action, increasing their scores from a C or below to a B grade.

CDP acts on behalf of many of the world’s leading institutional investors to call on listed companies to provide detailed information on their environmental performanve. It registered environmental disclosures from a record 13,000 companies in 2021, but revealed nearly 17,000 major companies worth $21tr have been graded F for failing to respond to investors’ calls for climate data disclosure. The 16,870 non-disclosing companies include energy giant Chevron, mining company Glencore, and conglomerate Berkshire Hathaway.

“17,000 corporates failing to even take the first step and report their environmental data is far too many,” said Dexter Galvin, global director of corporations and supply chains at CDP. “These companies are not only putting the planet at risk, but themselves. If they continue with business as usual, they will end up on the wrong side of public opinion, regulation and investor sentiment. And scrutiny is rising – empty targets or greenwash simply won’t fly.”

Galvin added that even among the companies that did provide data more action is required to slash emissions and better protect natural capital.

The CDP ranking covers three themes: climate change, forests, and water security. The ranking revealed more companies are considering nature’s interconnectedness in environmental issues, with the number of companies ranked A for Forests increasing from 16 to 24, and the number ranked A for water increasing from 106 to 118.

L’Oréal, Unilever, HP, and Lenzing AG were among 14 companies awarded a triple A for their work across all three themes analysed by CDP.

However, this year’s ranking saw the number of companies on the Climate A list decrease from 280 in 2020 to just 200 in 2021. CDP said the fall was because the bar for assessing climate action through its grading system has been raised. Companies must show robust governance and oversight of climate action, in addition to risk management processes and verified Scope 1 and 2 direct emissions targets, as well as evidence of action to reduce supply chain emissions.

CDP stressed that it was in companies’ interests to embrace climate data disclosure, as it allows companies to protect their reputation, boost their competitive advantage, and better equip themselves for future risks. CDP recorded that over 590 investors with over $110tr in assets and 200 major buyers with $5.5tr in procurement spend requested corporate environmental data in 2021.

Carola van Lamoen, head of sustainable investing at Robeco, said pressure on listed companies to tackle their climate-related risks is only going to increase. “Investor expectations on climate, water, biodiversity and deforestation data have risen drastically in recent years and there is no doubt that this will continue,” she said.  Robeco supports CDP in its efforts to enhance transparency and comparability in companies’ environmental disclosures. The reporting framework CDP provides enables companies to stay abreast of the growing investor demands for sophisticated disclosures on environmental risks and impacts. For us, CDP is a valued source of information that provides insights into environmental risk management practices and performance across a set of indicators, and supports our engagement with companies.”

CDP currently scores companies based on disclosure, awareness, management, and leadership but has announced it will develop new scoring methods to focus on progress against scientific benchmarks, product portfolios, and investment and transition plans, over the next four years. The organisation also plans to expand its work to cover land, oceans, biodiversity, resilience, waste and food. It looks certain that the annual A list is only going to become more important to investors and stakeholders, just as it becomes ever more challenging to secure the top grades that make a corporate’s climate and environmental strategy stand out from the pack.

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