A CDP report has outlined the financial returns companies can receive by actioning the information they obtain through disclosures on environmental impacts, risks and opportunities.
The report reads: “The dividend can be attained across three use cases: access to capital, business resilience and compliance. These returns can be financial or strategic. They reward early environmental leadership. By investing in disclosure, companies unearth risks, empowering companies to respond effectively and build resilient business models.”
Based on data from companies that disclose through its platform, CDP estimates that companies will make returns of up to $21 for every $1 they invest in responding to climate-related risks.
Furthermore, the median amount of financial returns offered by environmental opportunities is $33.1m, whilst the average cost of realising these opportunities is $4.6m.
The report recommends that companies adopt climate scenario analyses, internal pricing and transition plans in their reporting to financial capitalise on their disclosures. CDP notes that 79% companies reporting through its platform conducted a scenario analysis and 43% large companies have a transition plan in place.
CDP also highlights three companies – Cellnex, Lenovo and Boticário – have used their disclosure exercised to enhance resilience and engage with their suppliers on sustainability-related issues.