1. What does CDP mean?
CDP is a global non-profit organisation that was earlier referred to as the Carbon Disclosure Project. Their goal is to work towards environmental sustainability and the mitigation of climate change. Founded in 2000, they wish to encourage companies to disclose their environmental impact. Thanks to their services, it is possible for investors, companies, and governments to assess the extent of impact the companies have on climate change, water security, and deforestation. CDP collects all the data every year and grants ratings based on companies’ sustainability practices. The higher the CDP rating, the more environmentally conscious the company is. This, in turn, translates into better transparency and increases the value of the organisation from the perspective of investors and stakeholders.
2. Is CDP an ESG rating?
These are not the same and can’t be used interchangeably. ESG ratings can use the CDP score that promotes environmental sustainability and transparency. This rating is quite popular among investors in assessing how much of an impact a selected company has. CDP is more of a platform that provides investors, companies, and governments with sustainability reporting and performance data. The ESG rating, on the other hand, is a set of formal and widely accepted criteria that entities can use for evaluation purposes.