Climate reporting can be confusing. There are voluntary frameworks like CDP. There are mandatory rules like CSRD. It’s easy to feel lost with all these sustainability requirements.
But understanding these two systems is simple once you know how they work. Are you starting your climate reporting journey or trying to see how these frameworks work together?
This guide will help you navigate both systems. We’ll explore how each framework operates, what they require, and most importantly, how they can strengthen your sustainability strategy.
What is CDP and how does it work?
CDP used to be called the Carbon Disclosure Project. It’s a voluntary global system where companies share information about their climate, water, and forest impacts.
CDP focuses on investors, with big institutional investors using CDP data to make investment decisions. This means companies get valuable exposure to the investment community while demonstrating environmental leadership.
The system covers three key areas:
- Climate change – greenhouse gas emissions, climate risks, and mitigation strategies
- Water security – water usage, risks, and management practices
- Forests – deforestation risks and sustainable sourcing practices
Companies choose which parts to complete based on their priorities and readiness.
CDP scores companies from A to D, with A-list companies recognized as environmental leaders. The scoring evaluates environmental performance, disclosure quality, and management strategies across thousands of participating companies each year.
What makes CDP particularly appealing is its flexibility. Companies can start with one area and expand their reporting as they develop capabilities, while benchmarking their performance against industry peers.
This voluntary approach provides an excellent foundation for companies looking to strengthen their environmental reporting. Building on that foundation, however, many organizations must also navigate mandatory requirements.
Understanding CSRD requirements and scope
The Corporate Sustainability Reporting Directive represents a completely different approach. While CDP is voluntary, CSRD is mandatory EU law that became effective in January 2023, fundamentally changing how European companies approach sustainability reporting.
CSRD implementation follows a phased approach:
- 2025 reports – Large public companies (already subject to NFRD)
- 2026 reports – Large companies and listed SMEs
- 2027 reports – Listed micro and small companies
- 2029 reports – Non-EU companies with significant EU operations
The directive affects more than 42,500 companies in the EU, plus thousands of non-European companies with significant EU operations.
Where CDP focuses on environmental metrics, CSRD covers all sustainability topics. This includes environmental, social, and governance areas such as climate change, biodiversity, workers’ rights, and business ethics.
The directive introduces double materiality, requiring companies to report both how sustainability issues affect their business and how their activities impact society and the environment. All reporting must follow European Sustainability Reporting Standards (ESRS), with non-compliance leading to fines and reputational damage.
Given these fundamental differences in scope and requirements, it’s important to understand how these frameworks compare in practice.
Key differences between CDP and CSRD reporting
The most obvious difference is mandatory versus voluntary participation. However, the distinctions run much deeper than compliance requirements.
CDP operates globally with any company able to participate. CSRD specifically targets EU companies and those with substantial European operations.
Scope varies dramatically between the frameworks. CDP allows companies to choose focus areas among climate, water, and forests, while CSRD requires comprehensive reporting on all material sustainability topics.
The reporting frameworks themselves differ significantly. CDP uses its own established format, while CSRD mandates adherence to ESRS standards.
Data requirements also vary considerably. CDP emphasizes environmental metrics and targets, including emissions and resource use, while CSRD demands both quantitative data and qualitative descriptions covering governance processes, risk management, and stakeholder engagement.
Verification approaches differ as well. CDP relies primarily on self-reporting with encouraged but optional external verification, whereas CSRD requires independent assurance of reported information.
Despite these differences, the frameworks complement each other well. CDP experience can provide valuable preparation for CSRD, while CSRD’s comprehensive approach can strengthen CDP submissions.
However, successfully managing either framework requires specialized knowledge that many organizations lack internally.
Ready to tackle climate reporting with confidence?
Understanding CDP and CSRD doesn’t have to be overwhelming. Whether you’re preparing for mandatory CSRD compliance or looking to enhance your CDP participation, having the right expertise makes all the difference.
At Dazzle, we recognize that every sustainability challenge is unique. Our flexible approach connects you with experts who specialize exactly in what you need, whether that’s CSRD compliance support, CDP score improvement, or broader sustainability reporting expertise.
We can match you with the right professional within 48 hours, giving you access to specialized knowledge without the overhead of traditional consulting arrangements. Ready to start your climate reporting journey with confidence? Reach out to our team of experts and let’s tackle your sustainability challenges together.
If you are interested in learning more, reach out to our team of experts today.
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