What is the CDP Climate Disclosure Framework?
The CDP reporting framework for SMEs is open to anyone and can be used directly by SMEs to guide their reporting of climate impacts and strategies to multiple stakeholders.
For the framework, SMEs are defined as non-subsidiary organisations with fewer than 500 employees. It is sub-categorised in:
○ Micro-enterprises (fewer than 10 employees)
○ Small enterprises (10-50 employees)
○ Medium enterprises (50-500 employees)
The structure of the framework
- The framework is designed modularly to enable flexibility to expand into different areas of environmental disclosure.
- It consists of three core modules:
○ Action & Impact
- Also, it consists of four additional modules:
○ Energy Reporting
○ Value Chain Emissions
○ Management & Resilience
○ Climate Solutions
- Each module recommends (“should”) or requires (“shall”) specific indicators and metrics from SMEs that are considered to be necessary, factoring in the requirements of data users and the needs of the SMEs.
- CDP recommends that SMEs adopt the core modules immediately and suggest they report on the additional modules within three years.
How to use the CDP framework?
- This framework lays out the critical climate-related indicators SMEs should report on and use to inform their disclosures. Companies may report this information in their mainstream reports or when using other data collection or reporting platforms.
- The framework does not contain detailed guidance on reporting on the indicators. However, the SME Climate Hub has a dedicated “tools and resources” section that CDP encourages SMEs to utilise when reporting on the indicators in this framework.
- The disclosures shall be:
○ Relevant to SMEs and their data users
○ Clear and understandable
○ Objective and accurate
○ Complete and verifiable
○ Comparable to best practice corporate disclosures
○ Drive impactful SME climate action
○ Annual and provided in a consistent format
Why should SMEs report?
- Globally, micro-enterprises (SMEs with fewer than ten employees) account for 70% to 90% of all firms. As such, SMEs play an essential role in reducing global emissions.
- As high emitting sectors and big enterprises have been transitioning to climate action and neutrality, SMEs might face a competitive disadvantage if they do not start.
- SMEs are increasingly requested to commit to reducing their emissions and report progress on their commitments to their stakeholders and lenders.
- Because supply chain emissions are, on average, 11.4 times higher than operational emissions, large companies ask their suppliers (often SMEs) to measure, report and cut down their emissions. SMEs that can not demonstrate their environmental action and risk may lose out on significant opportunities.
Keep up with climate risk disclosure by reporting on the CDP framework. For your compliance needs, Plan A has the perfect solution. Get in contact with our policy experts.