CDP questionnaire now aligns with BRSR framework: How it works, benefits, and more

The Carbon Disclosure Project (CDP) provides a global platform for companies and governments to report on their environmental performance, including their efforts to reduce greenhouse gas emissions, manage water resources, and address deforestation. It offers guidance and support to companies to help them improve their environmental management practices, reduce their carbon footprint, and mitigate climate risks.

The reporting and grading methods used by CDP are widely acknowledged as some of the most thorough and reliable evaluations of business sustainability performance. The organization’s yearly reports offer essential information on the environmental effect of businesses to investors, clients, and other stakeholders. This information can encourage sustainability advancements and increase corporate reporting transparency.

BRSR (Business Responsibility and Sustainability Reporting), on the other hand, was introduced by SEBI (Security Exchange Board of India) in 2021 to promote responsible and sustainable business practices among Indian companies and to encourage them to disclose their environmental, social, and governance (ESG) performance.
Understanding the alignment of the two would help Indian companies that submit reports to CDP be better prepared to disclose their sustainability data to the SEBI’s BRSR, which will be required starting with the fiscal year 2022–2023.
In addition to giving businesses a way to advance to greater levels of environmental stewardship, the scope of CDP questionnaires guarantees that every facet of the most critical global environmental challenges, such as climate change, forests, and water security, is thoroughly covered.

Sustainability reporting in India

ESG reporting is clearly a high concern for the market regulator, as seen by SEBI’s mandate for sustainability reporting (BRSR) for the top 1,000 listed businesses by market capitalization.
Although it is still in its infancy, India’s environmental reporting and disclosure landscape is currently expanding. In 2020, 67 investor-driven Indian enterprises with a market size of over US$697 billion submitted to CDP. The framework for integrated reporting has been implemented by about 45 businesses.

The National Stock Exchange of India conducted research using information gathered from the Business Responsibility Report (BRR) for the 100 listed companies in FY 2016–17. 90% of environmental hazards were identified, 42% adopted carbon reduction targets, 33% identified climate change as a business risk, and 22 published integrated reporting. Of those, 50% established sustainability reporting.

Alignment of CDP questionnaire and BRSR framework

Both CDP and BRSR framework are reporting frameworks that aim to encourage companies to disclose their ESG performance and promote sustainable and responsible business practices.

While there are some differences in their specific reporting requirements, there are more than a few similarities between the two frameworks. For example, they require companies to report on their governance practices, including board composition, executive compensation, and anti-corruption policies.

Both frameworks encourage companies to report on their social and community engagement activities, including employee diversity and inclusion, labor practices, and community investments. Both provide a standardized approach to sustainability reporting that can help companies benchmark their performance against their peers and provide investors and other stakeholders with transparent and comparable information on companies’ sustainability performance.

The need for interoperability with international frameworks has been acknowledged by SEBI. Therefore, the listed entities may cross-reference the disclosures made under such framework to the disclosures sought under the BRSR. These listed entities already prepare and disclose sustainability reports based on internationally recognised reporting frameworks (such as GRI, SASB, CDP, or Integrated Reporting).
There are several things which make the CDP-BRSR linkage more practical. Based on how the BRSR questions relate to the CDP questions, they have been divided into some categories.

Category-1 will include questions from BRSR that are fully covered by one or many questions in the CDP questionnaires on climate, forests and water. There are nine such questions, all from Principle 6 on Restoring Environment, can be fully answered using the CDP questionnaire
Category-2 includes questions in the BRSR whereby some components asked are covered by CDP but it may require additional information are labelled; and vice versa, where for a particular theme, more details of questions are asked by CDP. 32 BRSR issue-based questions can be partially answered using the CDP questionnaire

Category-3 covers those BRSR questions that ask about general aspects; and CDP has a climate perspective of the same question.24 questions fall in this category.
Category-4 includes those questions that show no overlap between the BRSR and CDP questionnaire, including 75 questions.

Benefits of CDP-BRSR alignment

India must ensure a higher climate ambition—preferably net-zero—and committed action to that end. In this situation, CDP cooperation or alignment with SEBI’s BRSR carries huge potential; these collaborations can further the mission in many ways, including reducing reporting burden, alignment with global frameworks, and consistency.

In 2021, 89 BSE 200-listed Indian companies reported to CDP, and future years are only projected to see growth. The reporting requirements for Indian corporations will decrease with the alignment of the CDP questions on climate change, forests, and water with the BRSR.

Since CDP is in line with international frameworks like the TCFD and Sustainable Development Goals (SDGs), it introduces comprehensive environmental reporting for use by investors, businesses, and regulators with an eye towards India.
The depth of the CDP questionnaire can help businesses to not only respond to the mandatory Essential Indicator questions in Section C of the BRSR, but also to attempt the optional Leadership questions in principles 2 and 6. This gives businesses the chance to set an example for environmental action that is in line with a future that is climate resilient.

In order to operate, CDP relies on investor-driven data management systems, which introduces data analysis frameworks helpful to investors. Providing consistent environmental data across all platforms would promote transparency, the organization’s reputation, and its marketability in addition to increasing its visibility.

CDP alignment with other international frameworks

CDP is also aligned with other relevant international frameworks which makes it easier for companies to report. This includes TCFD, GRI, SDGs, and IFRSF.