CDP And EFRAG Release Mapping To Simplify Climate Reporting

In a significant move towards simplifying corporate sustainability reporting, climate research provider CDP and the European Financial Reporting Advisory Group (EFRAG) have launched a correspondence mapping between CDP's disclosure system and the EU climate standard, ESRS E1. The move is aimed at simplifying the reporting requirements for firms that report both through CDP and under the Corporate Sustainability Reporting Directive (CSRD).

CDP runs an international environmental disclosure system that enables investors, regulators, and other stakeholders to measure company performance in key areas of sustainability like climate change, deforestation, water security, and plastic-related issues. The organization has seen its participation surge with over 23,000 companies disclosing through its platform in 2023—a 24% rise compared to the last year. The companies report a combined market capitalization of over $67 trillion and account for over 66% of world market value.

EFRAG, meanwhile, is pivotal in formulating the EU's sustainability reporting regime. Tasked by the European Commission in 2020, the body came up with the European Sustainability Reporting Standards (ESRS), which were subsequently adopted in 2023. These standards define the framework of reporting on sustainability-related risks, opportunities, and impacts by companies under the CSRD.

The publication of the new mapping comes after a 2023 agreement between CDP and EFRAG aimed at ensuring maximum alignment between CDP's reporting requirements and the ESRS. The two organizations last year said they had reached a high level of interoperability between their respective systems. The new mapping further enhances this alignment, especially in climate reporting.

CDP CEO Sherry Madera emphasized the significance of the collaboration, stating, “We’re about making data useful and cutting the burden for businesses. By bridging ESRS E1 and the CDP question bank, companies can cut reporting complexity, tap into richer climate data, and unlock real business value.”

For businesses to traverse sustainability disclosures, this new tool has several benefits. It is likely to make reporting easier, more efficient, and transparent. Businesses that report on ESRS E1 will be in a better position to finalize their CDP disclosures, while those on the CDP platform will be able to easily meet CSRD requirements.

The alignment emphasizes major areas of convergence between the two frameworks, especially with regard to transition plans for climate change mitigation, targets for emissions, gross Scope 1, 2, and 3 emissions reporting, and internal carbon pricing mechanisms. With less duplication of reporting efforts, companies are able to concentrate more on action towards sustainability objectives instead of dealing with intricate compliance requirements.

Patrick de Cambourg, Chair of EFRAG Sustainability Reporting Board, highlighted the significance of this project in ensuring efficiency. "This mapping constitutes a useful tool for companies to consider when addressing climate disclosures according to the European Sustainability Reporting Standard E1. By demonstrating the overlap between ESRS E1 and the question bank of CDP, we enable reporting efficiency by promoting commonality and preventing multiple reports," he said.

The alignment of CDP and EFRAG is especially well-timed, as there is an increasing focus on climate-related transparency and accountability. As regulatory requirements are on the rise globally, companies are under growing pressure to make detailed and credible disclosures about their environmental footprint. By having CDP and ESRS E1 disclosures closely aligned, companies can simplify reporting and focus more resources on making meaningful climate progress.

Beyond immediate benefits, the collaboration between CDP and EFRAG signals a broader commitment to harmonizing global sustainability reporting frameworks. As more companies and investors demand standardized, comparable, and reliable climate data, initiatives like this play a crucial role in shaping the future of corporate sustainability disclosures.

CDP and EFRAG also reaffirmed their commitment to continuing collaboration efforts to further increase interoperability between their systems. Their continued collaboration is expected to result in further improvements in sustainability reporting, allowing companies to easily navigate changing regulatory environments while maintaining maximum levels of transparency and accountability.

This action follows an international trend toward incorporating climate disclosures into company reporting frameworks. Through investor and regulator pressure to further harmonize among reporting systems, collaborations such as this work towards building a clearer and more effective system of sustainability disclosure. This collaboration bridges the divide between the highly recognized platform of CDP and the ESRS standards in CSRD and represents an important advance toward making sustainability reporting more effective for firms operating in Europe and around the world.