Guidance for first-time responders to CDP For corporate disclosure on climate change, water and forests CDP respond@cdp.net +44 (0) 20 3818 3900 www.cdp.net 1
Contents Introduction for first-time responders to CDP... 3 What are the CDP requests for information?... 3 Climate change core modules... 4 Water core modules... 6 Forests core modules... 7 Supply chain module... 8 Small and Medium Enterprises (SMEs)... 8 How do I respond to CDP?... 8 Specific information for the climate change request... 10 What is the difference between a public and private response?... 10 Introduction to scoring... 12 Who will be scored using this methodology?... 12 What is the relevance and meaning of disclosure and performance scores?... 12 Scoring principles... 14 Specific information for the water request... 16 What is the difference between a public and private response?... 16 Introduction to water scoring... 18 Who will be scored using this methodology?... 18 Water stewardship scoring approach... 19 How to progress towards water stewardship... 20 Scoring Principles... 21 Specific information for the forests request... 23 What is the difference between a public and private response?... 23 Scoring of responses... 24 What if a company wishes to change or update a response?... 24 2
Introduction for first-time responders to CDP This document has been produced to give first-time responders to CDP an understanding of how the disclosure process works and how this relates to your company. Introduction to CDP CDP is the only independent global system through which thousands of companies measure, disclose, manage and share vital environmental information covering the interrelated issues of the climate, water and forests. Since its launch in 2000, CDP has assembled the largest database of primary corporate natural capital information in the world. Its mission is to drive environmental disclosure and action that will deliver a sustainable economy, prevent dangerous climate change and protect natural resources by putting relevant information at the heart of business, policy and investment decisions. What are the CDP requests for information? CDP requests corporate disclosure of climate change information, water management information, and information on deforestation risk exposure, through four programs. Three of the four programs issue information requests on behalf of investors and each focuses on one of the three aforementioned areas. The fourth program is issued on behalf of supply chain customers to their suppliers, and focuses on the disclosure of climate change and/or water management information. The questions you will be asked to respond to depend on which of the four programs your company has been invited to participate in. The questions are divided into modules (see below) and the relevant ones will appear when you log in to CDP s Online Response System (ORS), depending on what program(s) you have been invited to respond to. For more information on the ORS, please see CDP s How to use the ORS document available at https://www.cdp.net/documents/guidance/2015/usingthe-ors-guidance.pdf. Some of the modules are only applicable to companies in certain sectors/geographies. It is possible that you have been invited to participate in more than one program or have been invited by more than one investor/customer. In this case you can respond to all requests within the same system, answering questions only once. 3
All questionnaires have an introduction page which needs to be completed before the remainder of the questionnaire will appear in the ORS. Climate change core modules The climate change questionnaire comprises 5 modules: The Introduction module asks you to enter basic information about your company and specify the parameters of your response (e.g. reporting year, currency, countries etc). The Management module asks questions around governance, strategy, targets and initiatives. The information requested in this module is largely qualitative. The Risks and Opportunities module asks companies to list and assess the risks/opportunities on their business presented by climate change and detail the management methods they are applying. The Emissions module is the GHG accounting section of the questionnaire. It is largely quantitative and requests information on direct and indirect emissions, energy and trading activities. The Sign Off module asks companies to identify the person that has signed off (approved) the CDP climate change response. 4
Additional modules As part of the investor request for climate change information, companies in the following sectors should complete supplementary questions in addition to the core modules: Electric utilities (or companies with electric utility activities or assets); Automobile or auto component manufacturing; Oil and gas; Information technology & telecommunications (ICT); and Food products, beverages & tobacco. These modules are only for companies with business activities in these sectors. They should not be answered by companies solely on the basis that they use electricity, automobiles, oil & gas, ICT or FBT hardware/services/products in their work. The presentation of these modules depends on your company s classification according to the Global Industry Classification Standard (GICS). Those that apply are: GICS code (at sub-industry or parent sector level) Sector modules 55101010 Electric Utilities Electric Utilities module 55103010 Multi-Utilities 10102020 Oil & Gas Exploration & Production Oil & Gas module 10102010 Integrated Oil & Gas 10102030 Oil & Gas Refining & Marketing 25101010 Auto Parts & Equipment Auto module 25102010 Automobile Manufacturers 50 Telecommunication Services ICT module 45 Information Technology 302010 Beverages FBT module 302020 Food Products 302030 Tobacco If you want to query your classification, please email CDP at respond@cdp.net. If you have not been presented with a sector module that you consider would be appropriate for your company to answer, you can select the module in the ORS to enable you to complete it. You can view the sector module questions and access guidance at: https://www.cdp.net/en-us/pages/guidance-climate-change.aspx. 5
Water core modules The water questionnaire comprises 7 main modules: The Introduction asks companies to enter their basic information about their company and specify the parameters of their response (e.g. reporting year, currency, reporting boundaries). The Current State module asks companies to explain the context surrounding their organization s water use, company-wide water accounting, supplier reporting and impacts of the organizations water use The Context sub-section asks companies to specify which water related conditions are relevant to the company and its stakeholders at the global and basin level and the level of their importance The Company-wide accounting sub-section ask companies to provide total withdrawal discharge and consumption volumes by sources and destination across their operations The Supplier Reporting sub-section asks companies if they require their suppliers to report on their water use, risks and/or management The Impacts sub-section asks companies if they have experienced any detrimental impacts related to water. The Risk Assessment module asks companies what company-wide procedures and requirements the organization incorporates into water-related risk assessment and if they have evaluated how water risks could impact the company s growth strategy. The Implications module asks companies to identify if their organization is exposed to either current or future water related risks that could substantively impact the company s direct operations and/or supply chain. It also asks companies to examine if water presents strategic, operational or market opportunities that substantively benefit or have the potential to benefit the organization. The Facility level Water Accounting modules request companies to report their withdrawal, discharge and consumption values for any facilities exposed to substantive water-related risk in the reporting year. This module also requests companies to disclose the proportion of the accounting data for facilities at risk that have been externally verified. The Response module ask companies questions relating to governance and strategy, compliance and target and initiatives The Governance and Strategy sub-section asks companies to report on the highest level of responsibility for water within the organization and if it is integrated into the organizational business strategy. The Compliance sub-section asks companies whether they have been subject to any penalties fines and/pre enforcement orders for breaches of abstraction licenses, discharge consents or other water and wastewater-related regulations in the reporting period The Targets and Initiatives sub-section asks companies if their organization has any company-wide targets or goals in relation to water and to report the progress in achieving these. The Sign off module asks companies to identify the person that has signed off (approved) the CDP water response. 6
Forests core modules The forests questionnaire comprises 8 modules: The Introduction module asks companies to specify the parameters of their response in detail including specifying at what stage of the value chain the company pertains forest risk commodities, disclosing any exclusions from the response for both their direct operations and supply chains and confirming on which forest risk commodities they will be disclosing on. The Current state module asks companies to provide how their organization uses their selected forest risk commodities and if they have experienced any impacts related to these commodities. The Risk assessment module asks companies to identify the procedures and requirements their organization incorporates into deforestation related risk assessments with regard to forest risk commodities. The Implications module asks companies to identity their business risks and opportunities associated with the production, marketing or sourcing of these commodities. The Measuring and monitoring module asks companies to report on their total production and/or consumption volumes of forest risk commodities, the systems in place to track and monitor the origin of these raw materials and the level of traceability of these forest-risk commodities. The Response module asks companies questions relating to the governance, strategy, standards, targets and engagement in relation to risks associated with their forest risk commodities. The Governance and growth strategy sub-section asks companies to explain at what level commodity related-risks are governed and managed within the organization and if they assess how deforestation risk may impact the organization s growth strategy. The Policies sub-section asks companies about any commitments they have made in mitigating against the risk of deforestation on climate change and sourcing sustainable forest risk commodities The Standards and targets sub-section asks companies to provide details on the production and/or procurement standards in place for forest risk commodities and to disclose any targets for certification, traceability, or sustainable production by commodity. The Engagement sub-section asks companies how their organization engages with growers and/or suppliers to encourage and support them to comply with their standards and to meet their targets. The Barriers and challenges module asks companies to outline the challenges their organization face to progress toward the sustainable production or sourcing of commodities and what they have done to overcome them. The Sign off module asks companies to identify the person that has signed off (approved) the CDP forests response. 7
Supply chain module In addition to answering the core climate change modules, companies responding to a request for climate change and water information from supply chain members should also answer the additional supply chain climate or water module. Companies responding to a request for climate change and water information from supply chain members will need to complete the climate change, water and supply chain module. The supply chain climate module asks respondents to: Identify and allocate the organization s scope 1, 2 or 3 emissions to their customers according to the goods and/or services that were sold to them Establish and communicate any collaborative opportunities to develop GHG emission reducing projects or products between themselves and their customers. Provide product (goods and services) level data including figures on emissions over the lifecycle of these products and if emission reduction initiatives have been planned or completed for a product The supply chain water module asks respondents to: Identify if any facilities that are exposed to water-related risks could impact upon a customer Identify if there are any collaborative opportunities with supply chain members for reducing risk for facilities exposed to water risk and if such proposals have been communicated between supplier and customer Report the organization s product or service water intensity values across its operations Small and Medium Enterprises (SMEs) If you are responding to the supply chain request, and if you meet certain criteria as an SME (see https://www.cdp.net/en-us/programmes/documents/sme-definition.pdf), you will be presented with the option of responding to a subset of the core climate change questions or water questions dependent upon which type of supply chain request you have received. SME s will still be presented with the full set of questions within the supply chain module for water/climate change or both depending upon the customer s request. SMEs are also scored on the information they provide. The SME scoring methodology is closely related to the full scoring methodology and the links in the ORS should be used to access the relevant section of the full guidance, which is also applicable to SMEs. Any questions which are not presented to SME s will be scored 0/0, so there is no penalty for SMEs responding to fewer questions. How do I respond to CDP? All responses should be entered into CDP s Online Response System (ORS on our website. Full guidance on accessing and using the ORS are provided in Guidance to using the Online Response System (ORS) (https://www.cdp.net/documents/guidance/2015/using-the-ors-guidance.pdf). This document includes details of how to register to respond, log in to the ORS, navigate the ORS and use its multiple functionalities. Response deadlines vary according to the request that you are responding to, and are summarized below: Climate change: 30 June 2015 Water: 30 June 2015 Forests: 30 June 2015 8
9 Supply chain: 30 July 2015
Specific information for the climate change request The climate change information request (climate change questionnaire 2015) outlines the full set of questions companies are asked to disclose information upon and it also provides important details upon why you have been asked to respond to CDP, which companies have also been asked to respond, the financial implications of responding to CDP, data protection, the scoring of responses and the legal status of CDP. This can all be found within the important information section on page 18 (https://www.cdp.net/cdp%20questionaire%20documents/cdp-climate-change-information-request- 2015.pdf) and CDP would encourage companies to read this information before starting their response. When you are ready to construct your response, CDP encourages respondents to visit the climate change 2015 guidance page on our website, https://www.cdp.net/en-us/pages/guidance-climatechange.aspx, where you can find: Climate change guidance document, which explains each question in detail and includes what information to provide, the required format, and where to find tools or further information to construct your answer Guidance to using the Online Response System (ORS), which explains how to activate, log in, and use the ORS, including common problems and solutions Climate change reporting roadmap, a guide to help responders to move from a basic response towards complete disclosure Changes document for 2015, which outlines major changes from the previous year in the climate change questionnaire, scoring, and guidance Scoring methodology, which outlines question level information on disclosure and performance scoring alongside pre-recorded webinars introducing the climate change scoring and a guide detailing how to use the methodology Further information on carbon action, for companies requested to respond to carbon action You can also find pre-recorded guidance webinars, details on future webinars and workshops, FAQs, the questionnaire and module PDFs, technical notes and verification guidance, as well as information on CDP response check service. Response check is a checking service conducted prior to final submission, more information can be found on this page https://www.cdp.net/en- US/Respond/Pages/response-check.aspx. What is the difference between a public and private response? You will be provided with the option to make your answers available to the public or keep them private, meaning they are only viewable by the investors or customers on whose behalf CDP makes the information request. Depending upon the program you are participating in, you will be subject to the following terms and conditions. Investor climate change information request For public responses Companies agree that a public response to the 2015 request for climate change information on behalf of investors will be used by CDP in furtherance of its charitable mission and that the response may be: Made available as soon as it is received by CDP to the climate change program signatory investors, partners, appointed report writers, selected rating agencies and 10
any other parties that CDP deem appropriate Made publicly available at www.cdp.net starting in October 2015 and stored and preserved on CDP s servers indefinitely thereafter Distributed through selected partners Compiled in CDP databases and made available in original, modified or adapted form (for a fee or otherwise) for use by commercial and non-commercial organizations Amalgamated with information about the responding company from other public sources including rating agencies and financial information distributors Used as a best practice example in CDP literature and research Used individually or as part of aggregate results in CDP s reports and in any other research conducted or commissioned by CDP Used in any other way that accords with CDP s charitable mission For non-public responses Companies agree that a non-public response to CDP s 2015 climate change questionnaire on behalf of investors will be: Made available as soon as it is received by CDP to its climate change program signatory investors, partners and appointed report writers but not to any other parties Used in production of aggregate or anonymous statistics in any CDP reporting It should be noted that companies with non-public responses are not eligible for inclusion in the Climate Disclosure Leadership Index (CDLI) or the A List (formally known as the Climate Performance Leadership Index, CPLI). Supply chain information request For public responses Companies agree that a public response to the 2015 request for climate change and water information on behalf of CDP s supply chain members will be used by CDP in furtherance of its charitable mission and that the response may be: Made available as soon as it is received by CDP to its supply chain members, signatory investors, partners, appointed report writers, selected rating agencies and any other parties that CDP deem appropriate; Made publicly available at www.cdp.net from the date of the report launch and stored and preserved on CDP s servers indefinitely thereafter; Distributed through selected partners; Compiled in CDP databases and made available in original, modified or adapted form (for a fee or otherwise) for use by commercial and non-commercial organizations; Amalgamated with information about the responding company from other public sources including rating agencies and financial information distributors; Used as a best practice example in CDP literature and research; Used individually or as part of aggregate results in CDP s reports and in any other research conducted or commissioned by CDP; and Used in any other way that accords with CDP s charitable mission. For non-public responses Companies agree that a non-public response to the 2015 request for climate change information on behalf of CDP s supply chain members may be: Made available as soon as it is received by CDP to its requesting supply chain members, partners and appointed report writers but not to any other parties; and Used in production of aggregate or anonymous statistics in any CDP report. 11
For all responses CDP will at no point divulge the relationship between requesting members and supplier companies. Introduction to scoring A methodology to score company responses to the climate change information request has been developed by CDP, with input from our scoring partners, responding companies, investors, NGOs and other partners. The scoring process is designed to drive positive change in corporate transparency and performance on environmental stewardship. The scoring methodology analyses and assesses a company s response in two parallel ways; firstly upon the comprehensiveness and quality of the information disclosed (the disclosure score) and secondly upon the action companies have taken or are taking on climate change (the performance band). The scoring methodology is available on the climate change guidance website pages https://www.cdp.net/documents/guidance/2015/cdp-climate-change-scoring-methodology.pdf. It details the number of disclosure and performance points available for each question and within a particular pathway through the questionnaire. It also explains what you need to disclose in order to receive maximum disclosure and performance points. Additionally, the data points requested that will score points are also reflected within the full climate change guidance document. Who will be scored using this methodology? CDP has a global reach and targets on behalf of more than 822 investors, the largest companies by market capitalisation around the world. These companies are listed in samples based on index and stock exchanges such as the Global 500 or FTSE 600 indexes. Following this, the majority of responses from these samples will be scored using the published scoring methodology. Companies that have made a voluntary disclosure have the option to be scored through the CDP Score on Demand service in order to measure their transparency, management and performance in respect to climate change as well as the opportunity to benchmark themselves against their peers. CDP also targets companies on behalf of purchasing authorities through the supply chain request. All companies responding to the supply chain request are scored, but these scores are available only to the responding company and their purchasing authority. Some companies respond to both the climate change request and the supply chain request. Whether their score is published will depend on the target sample(s) they fall into. You should contact your local CDP office to check whether your company will be scored and whether the scores will be published: https://www.cdp.net/en-us/whatwedo/pages/cdp-worldwide.aspx. Scores are generally released between September and December each year. CDP supply chain scores will not be published and are available only to the responding company and the requesting member. What is the relevance and meaning of disclosure and performance scores? Disclosure score The disclosure score reflects the potential quality and completeness of the disclosure and hence it s likely usefulness to data-users. It is based on adherence to the scoring methodology, which is made publicly available before the Online Response System (ORS) opens each year. The score is based solely on the information provided in the company s CDP response. A high disclosure score suggests good internal data management and understanding of the risks and opportunities climate change presents to the company s business. However, it is not a metric of a company s performance in relation to climate change management, as it does not make any judgment over absolute levels of emissions, emission reduction achievements, or carbon intensity. The scoring methodology rewards external verification/assurance of emissions data as this is expected to give data-users greater confidence in the reliability of the data, increasing its usefulness. The disclosure scoring methodology does not consider other carbon or wider sustainability disclosures provided by companies unless explicitly requested in the questionnaire. Where this data 12
is requested, it is assessed solely on whether it supports the company s description of the disclosure in their CDP response (e.g. if a company reports that it discloses carbon performance information in its annual report, the attached report will be checked to confirm this). How the disclosure score is calculated At the end of scoring, the number of points a company has been awarded is divided by the maximum number that could have been awarded given the questions selected. The fraction is then converted to a percentage by multiplying by 100. (Points awarded / points attainable) x 100 = Disclosure Score (to the nearest whole number) Eligibility for inclusion in the Climate Disclosure Leadership Index (CDLI) Where scores are published CDP may also choose to publish a CDLI, comprising the top disclosure scoring companies within a sample. Disclosure scores can be compared across samples, but inclusion in the CDLI is relative to the scores of other companies within the sample. In addition to the requirement for a high score, the response must be publicly available and it must have been submitted using CDP s ORS. Performance band The performance score assesses the level of action as reported by the company on climate change mitigation, adaption and transparency. Its intent is to highlight positive climate action as demonstrated by a company s CDP response. Performance points are awarded where a company provides evidence through their CDP response that it is undertaking, or has undertaken, a 'positive' climate change action in the reporting year. A positive action is one whereby companies have disclosed that they are investing resources in the effort to mitigate climate risk and maximising climate opportunities. A high performance score would signal that a company is measuring, verifying and managing its carbon footprint, for example by setting and meeting carbon reduction targets and implementing programs to reduce emissions in both its direct operations and supply chain. Additionally, good performance scores are used by investors as a proxy of good climate change management or climate performance of companies. Please note: Performance scoring is still limited in its consideration of the materiality of actions relative to a company's sector and business. It is based solely on activities and positions disclosed in the CDP response. It therefore does not consider other actions not mentioned in the CDP response. It is not a comprehensive metric of the level to which a company is low-carbon or 'green' but rather an indication of the level of action taken by the company to manage its impacts on a yearly basis on, and from, climate change. Performance scoring does not make any assessment of the impact of a company's disclosed activities on engaging with policy-makers around climate change legislation. Transparency in this area is awarded disclosure points irrespective of the actions reported. The performance scoring is a more recently developed metric and will continue to develop over future reporting cycles. We welcome feedback on how it can be improved in future years. How performance bands are calculated In 2014, a company was eligible for a performance score if it had achieved a disclosure score of 50 or above. Below this level, it was felt that insufficient information was provided to assess a company s performance. To give a performance score, the number of performance points a company has been awarded is divided by the maximum number that could have been awarded given the questions it selected. The fraction is then converted to a percentage by multiplying by 100. 13
(Points awarded / points attainable) x 100 = Performance Score (to the nearest whole number) This figure is then banded. In 2014 the bands were as follows; A and A- 86 B 61-85 C 41-60 D 21-40 E 0-20 In 2015, the performance bands will be allocated based on the distribution of scores received. Eligibility for inclusion in The A List The A list (previously known as the Climate Performance Leadership Index) is a definitive league which presents public companies that are taking the most action to help drive transformative action on climate change at a scale that is so urgently needed. Furthermore, these corporations are implementing strategies that benefit their bottom line. The A list is comprised of companies who must have achieved a performance score sufficient to get into the A band, and have met the following criteria: The response must be publicly available and submitted using CDP s ORS Maximum performance points must have been achieved for question CC12.1a (scope 1 & 2 emissions reduction The company must have disclosed gross global Scope 1 and Scope 2 figures and score maximum performance points for verification/assurance of Scope 1 and Scope 2 (questions CC8.6a or CC8.6b if appropriate, and CC8.7a). If a company achieved a performance score above 86 but did not achieve all of the above criteria, they were allocated band A- (note the minus sign). CDP will review all high-scoring responses in full before determining the A list, and reserves the right to exclude a company from the A list if there is anything in its response or any other information publicly available that calls into question its suitability for inclusion or the transparency of the information provided to CDP. Scoring principles Links, attachments, "Further Information" and references to answers to other questions Scores will be based on answers entered into CDP s ORS. Unless otherwise stated, ONLY information provided in the specific question field will be assessed. References to other questions in the response will not be scored (except in a small number of sector specific instances see section sector modules below. Where this is the case, it is clearly identified in the guidance document and scoring methodology). Companies may provide further information using the available fields in the ORS, but information in these fields will not contribute to the company s score. Companies may also provide attachments. Attachments are only scored where the question specifically requests them (for example, where a company has reported that it discloses information relating to carbon management in its annual report, a copy of the annual report is required to be attached). Where questions request an attachment, only documents that are attached to the correct section of the report will be awarded points. References to documents attached to different sections of the report are not awarded points, but will be scored out of the maximum points available, negatively impacting the score. Hyperlinks to external websites are not awarded points, but may be provided for additional information and will be available to investors or requesting members reviewing the response. If a company is 14
unable to attach a document for reasons relating to CDP s ORS, they should notify CDP by email to respond@cdp.net, and this should be stated in the further information field. Unanswered questions Failure to answer a question is penalised by the scoring methodology as follows: an unanswered question will be scored zero points out of the maximum available points for that question or set of questions. Exact totals will be available in the scoring methodology document. Sector modules & Supplier module Data given in the sector specific modules (for electric utility, auto/auto component manufacturing, oil and gas, food/beverage/tobacco and ICT sector companies) is not scored except in a very limited number of cases where there is overlap between the questions in the core modules of the information request and the sector specific questions. In these cases (which will be defined on the worksheet "Sector Supplement" of the full scoring methodology), a company may choose to direct the scorer to a specific answer in the sector module. In these cases the information in the sector module will be scored against the criteria of the question in the main information request. The supplier module is not scored. Oil and gas scoring pilot CDP is moving strategically towards a more sector focused approach and has now begun working on this development with representatives from the oil and gas sector, investors and other sectors. One element of the sector focus is to develop a scoring methodology for climate change and performance relating to a sector-specific basis. As part of this development, CDP is aiming to pilot such a methodology alongside the climate change scoring methodology. Results of the sector specific pilot scoring methodology will not be made public and will be discussed with the voluntary participating companies privately. The oil and gas module is not scored as part of the general CDP 2015 climate change methodology. Status of the information on scoring The information on scoring contained in the climate change guidance document gives an overview of how answers will be scored. The precise number of points assigned to each question can be found in the scoring methodology: https://www.cdp.net/documents/guidance/2015/cdp-climate-changescoring-methodology.pdf. In common with other scoring processes of this type, we reserve the right to make adjustments to the methodology in light of the application of the methodology to the responses received. 15
Specific information for the water request The water information request incorporates the steps needed for companies to become sustainable in their water use in addition to effectively identify and manage water issues that have a substantive risk to the business. The questionnaire can be used by companies as a tool to help guide them on a journey towards improved water stewardship. Responding for the first time to CDP s water information request demonstrates accountability and transparency to key stakeholders that the business is taking positive first steps to manage their impact on water resources and provides a standardized format in which to do so. As well as the questionnaire, the information request provides important information upon why your organization is being asked to respond to CDP, which other companies have been asked to respond, the financial implications of responding, data protection, the difference between a public and private response and the legal status of CDP as well as the water questionnaire. This can all be found within the important information section on page 20 (https://www.cdp.net/cdp%20questionaire%20documents/cdp-water-information-request- 2015.pdf). When your organization is ready to construct a water response, CDP encourages respondents to visit the water guidance pages on our website, https://www.cdp.net/en-us/pages/guidance-water.aspx, where you will find a number of resources that will assist you in this process to provide a comprehensive disclosure: Water guidance document, which explains each question in detail and includes what information to provide, the required format, and where to find tools or further information to construct your answer Guidance to using the Online Response System (ORS), which explains how to activate, log in, and use the ORS, including common problems and solutions Water reporting roadmap, a guide to help responders to move from a basic response towards complete disclosure Changes document for 2015, which outlines major changes from the previous year in the climate change questionnaire, scoring, and guidance Water scoring methodology, which outlines question level information on scoring alongside pre-recorded webinars introducing the water scoring methodology, the questionnaire and water risk tools. What is the difference between a public and private response? You will be provided with the option to make your answers available to the public or keep them private, meaning they are only viewable by the investors or customers on whose behalf CDP makes the information request. Depending upon the program you are participating in, you will be subject to the following terms and conditions. 16
Investor water information request For public responses Companies agree that a public response to CDP 2015 water information request may be: Made available as soon as it is received by CDP to the water program signatory investors, partners, appointed report writers, selected rating agencies and any other parties that CDP deem appropriate, Made publicly available at www.cdp.net after the release of the 2015 CDP Global Water Report and stored and preserved on CDP s servers indefinitely thereafter, Distributed through selected partners, Compiled in CDP databases and made available in original, modified or adapted form (for a fee or otherwise) for use by commercial and non-commercial organizations, Amalgamated with information about the responding company from other public sources including rating agencies and financial information distributors, Used as a best practice example in CDP literature and research, Used individually or as part of aggregate results in CDP s reports and in any other research conducted or commissioned by CDP, Used in any other way that accords with CDP s charitable mission. For non-public responses Companies agree that a non-public response to CDP s 2015 information request may be: Made available as soon as it is received by CDP to its signatory investors, partners and appointed report writers but not to any other parties, and Used in production of aggregate or anonymous statistics in any CDP reporting. Supply chain information request For public responses Companies agree that a public response to the 2015 request for climate change and water information on behalf of CDP s supply chain members will be used by CDP in furtherance of its charitable mission and that the response may be: Made available as soon as it is received by CDP to its supply chain members, signatory investors, partners, appointed report writers, selected rating agencies and any other parties that CDP deem appropriate; Made publicly available at www.cdp.net from the date of the report launch and stored and preserved on CDP s servers indefinitely thereafter; Distributed through selected partners; Compiled in CDP databases and made available in original, modified or adapted form (for a fee or otherwise) for use by commercial and non-commercial organizations; Amalgamated with information about the responding company from other public sources including rating agencies and financial information distributors; Used as a best practice example in CDP literature and research; Used individually or as part of aggregate results in CDP s reports and in any other research conducted or commissioned by CDP; and Used in any other way that accords with CDP s charitable mission. 17
For non-public responses Companies agree that a non-public response to the 2015 request for water information on behalf of CDP s supply chain members may be: Made available as soon as it is received by CDP to its requesting supply chain members, partners and appointed report writers but not to any other parties; and Used in production of aggregate or anonymous statistics in any CDP report. For all responses CDP will at no point divulge the relationship between requesting members and supplier companies. Introduction to water scoring Corporate water stewardship is an emerging concept and consensus is forming as to how it will be defined and put into practice. A methodology to score company responses to the water information request was piloted in 2014 by CDP on a confidential basis using a select sample of companies including the Global 500 respondents, water members of CDP s reporter services and supply chain program and the endorsers of the UN Global Compact s CEO Water Mandate. Following this pilot, the scoring methodology has been refined with input from our scoring partners, responding companies, investors, NGOs and other partners to prepare the first public water scoring methodology for 2015. The scoring methodology provides a score which assesses the responder's progress towards water stewardship evidenced by the company's CDP response. This includes assessment of the level of detail and comprehensiveness in a response as well as the company's awareness of water issues, and water risk, and management methods to progress towards water stewardship. A scoring methodology document has been published on the CDP guidance webpage, https://www.cdp.net/documents/guidance/2015/cdp-water-scoring-methodology.zip, reflecting the data points that will be scored and their weighting. Who will be scored using this methodology? Each year, CDP targets the largest companies by market capitalisation on behalf of more than 617 signatory investors. Companies are included into CDP samples based on an index or stock exchange such as the global 500, S&P 500 and FTSE 100 indices. CDP currently aims to score all water responses requested from investor signatories that are received by 30th June from publicly listed companies. Which company responses that will or will not be scored will be confirmed at the end of March 2015. With regards to publishing water results this year, CDP s proposals are as follows: 1. Individual company water scores, from both public and private respondents, will be shared with investors via CDP s password protected investor portal. 2. Individual companies will receive their score as well as the ability to benchmark themselves against their peers in an anonymised fashion via score feedback charts. 3. CDP will not release a full Water Scoring Index in 2015. Instead, we will focus communications on those companies that have achieved Leadership status. This approach will allow CDP to continue to create a positive race to the top, whilst avoiding alienating those companies that are at the beginning of their water stewardship journey. CDP also targets companies on behalf of purchasing authorities through the water supply chain request. Companies responding to the supply chain request may or may not be scored and this will also be confirmed at the end of March 2015. 18
Companies that have made a voluntary disclosure have the option to be scored through the CDP Score on Demand service in order to measure their transparency, management and performance in respect to climate change as well as the opportunity to benchmark themselves against their peers. Whether this scoring service will be available or not for the first time this year will be confirmed at the end of March 2015. You should contact your local CDP office to check whether your company will be scored and whether the scores will be published: https://www.cdp.net/en-us/whatwedo/pages/cdp-worldwide.aspx. Scores are generally released between September and December each year. CDP supply chain scores will not be published and are available only to the responding company and the requesting purchasing authority. Water stewardship scoring approach Water stewardship will be assessed across four consecutive levels which represent the steps a company moves through as it progresses towards water stewardship. As shown in the diagram, water stewardship is assessed across four consecutive levels; disclosure, awareness, management, leadership. A minimum score will be required in order to be assessed on to the next level. If the minimum threshold is not achieved, the company will not be scored on the next level. The criteria for scoring the levels are distributed throughout the questionnaire and one question may include criteria for scoring across more than one level. All of the questions are scored for the disclosure level. Some of the questions have no awareness, management or leadership scores associated with them. Disclosure points are awarded for every question Awareness points are awarded for some questions where the response indicates that the company has enough knowledge of the topic to provide a definitive answer and measures how comprehensively the company has evaluated how water intersects with its business Management and Leadership points are awarded when a company highlights that it is undertaking or has undertaken a positive action which contributes to its water stewardship. A positive action is one that contributes to better water governance, awareness of impact, disclosure, accounting and management. Disclosure score The disclosure score reflects the potential quality and completeness of the disclosure and hence it s likely usefulness to data-users. It is based on adherence to the scoring methodology, which is made publicly available before the Online Response System (ORS) opens each year. The score is based solely on the information provided in the company s CDP response. At the end of scoring, the number of points a company has been awarded is divided by the maximum number that could have been awarded. The fraction is then converted in to a percentage by multiplying by 100 and rounded to the nearest whole number. 19
(Points awarded / points attainable) x 100 = disclosure score Awareness score The awareness score measures how comprehensively the company has evaluated how water intersects with its business. For example impacts of business activities on water and how this affects people and ecosystems as well as impacts of water on business impacts. This will therefore influence the degree of risk that a particular company faces. To identify which questions that have a potential awareness score, the maximum number of points available will be listed in the awareness denominator column within the scoring methodology and this will indicate that this question is also available to awareness scoring if your response qualifies for scores at that level. Management score The management score is awarded when evidence has been provided associated with good water management in the CDP response. After assessing how its business impacts on water and how water impacts on its business, a company can decide what action to take to reduce these impacts. A management score would indicate that a company has taken action to reduce these impacts. Efforts can be made to mitigate risks, advance its water accounting in at-risk sites, make its risk assessments more robust and comprehensive, implement a water policy and integrate water issues into its business strategy. Since water issues are context specific, management scoring relies on companies disclosure process and procedure rather than judging the appropriateness or effectiveness of the particular actions that have been undertaken. To identify which questions that have a potential management score, the maximum number of points will be listed in the management denominator column within the scoring methodology and this will indicate that this question is available to management level scoring. Leadership score For leadership status, the company s actions will represent best practice recognised by such bodies as CEO water mandate, CERES, WWF who are working with CDP to advance water stewardship. The effective mitigation of corporate water risk involves not only an understanding of a company s water dependency, but the context in which it operates and how this relates to other water users. Exclusions could include How to progress towards water stewardship A minimum score is required to be met before other scoring levels can be assessed. The minimum threshold of points needed to move up through the disclosure and awareness levels is provisionally set at 50% of the available points for each level in 2015. If 50% of points are not achieved in the disclosure level for instance, the response will not be scored for awareness points. Similarly, if a company received above 50% for disclosure score but under 50% for the awareness score, the response will then not be applicable for the management scoring. A disclosure score that is higher than 50% would indicate that the response has enough information completed in it to assess other aspects of stewardship performance accurately. An awareness score that is higher than 50% would indicate that an organization has assessed a broad range of water issues and demonstrate a basic level of awareness of how water intersects with its business. It does not measure if a company has taken action to address water issues beyond initial screenings or assessments. Important points to note about the CDP water scoring: 20
The CDP water score is based solely on activities and positions disclosed in the CDP response. It therefore does not consider other actions not mentioned in the CDP response and data-users are asked to be mindful that these may be positive or adverse or negative in terms of water stewardship Stewardship scoring does not yet make any assessment of the impact of a company's disclosed water management or water risk mitigation activities. Since water issues are extremely specific to environmental, geographical, social and business contexts in which they occur, assessing impact and developing comparable measures of impact will only be attempted in future versions of the methodology. The scoring is not a comprehensive metric of the level to which a company is environmentally friendly or 'green' or a specific metric on water efficiency or pollution control, but rather an indication of the level of action taken by the company to assess and manage its impacts on, and from, water related issues during the reporting year. Performance scoring is still limited in its consideration of the materiality and effectiveness of actions relative to a company's impact, sector and business. Scoring Principles Unanswered questions Unanswered questions are considered to be blank cells and will be scored zero out of the maximum available pints for that question or set of questions. This is because blank cells, when scored, will be interpreted as not responding to the question or choosing not to disclose data. If you are quite sure a quantitative metric is not relevant to your organization, please enter a zero in the box. This is showing to CDP that you are still willing to disclose however this question is not relevant to your organization. Similarly for a qualitative question, if it is not relevant or your answer is no, please explain why this is no or not relevant to your organization. If questions are unanswered and have received a score of zero this will mean that the questions are also not eligible for performance points (awareness, management, leadership) either. Explanations Explanations should answer the why? and/or how questions requested. A statement such as This is not relevant for our business will not be considered an explanation since it does not explain the why or how topic is not relevant. Explanations that are duplicated (e.g. copied and pasted between questions) will only be eligible for points if it is relevant within the context of each specific question and provide specific details requested in the scoring methodology. As a general note, companies should tailor the text of explanations to fit each question and caution should be exercised when copying text to avoid losing points unnecessarily. Links, attachments, "Further Information" and references to answers to other questions Scores will be based on answers entered into CDP s Online Response System (ORS). Unless otherwise stated, ONLY information provided in the specific question field will be assessed. The ORS has facilities for companies to provide Further information and to provide attachments to answers. Whilst this information will be forwarded to investors/requesting members, Further information and website links are not scored. If a question requests an evidence of a document, please attach the document to the correct section of your response. The document can be a pdf print of a webpage. Attachments will only be reviewed where the attachment is specifically requested (for example, where verification/assurance statements are requested). Similarly only information provided in the specific question response field for the particular question will be assess: reference made to other questions will not be taken into account except in sector-related instances. 21