CDP has integrated the guidance provided by the Glasgow Financial Alliance for Net Zero (GFANZ) into its reporting system, demonstrating how its disclosure requirements are in harmony with various frameworks. The adoption of net-zero targets is gaining momentum within financial institutions, and their proactive response is fueled by net-zero transition plans. GFANZ, in particular, has established voluntary recommendations and directives that outline the credible formulation and execution of net-zero transition plans (NZTPs) across five overarching themes and ten constituent components. A transparent approach to both the NZTPs of real economy entities and financial institutions is crucial in order to channel financial resources towards tangible emissions reductions and a smooth transition, thereby effectively addressing systemic risk on a broader economic scale.
CDP, renowned as the world’s largest annual disclosure platform encompassing environmental initiatives across companies, financial entities, municipalities, and other entities, offers an ideal avenue for divulging components of a transition plan. CDP delineated the credible facets of a real economy business in the years 2021 and 2022. Expanding upon this foundation, recently published a technical note on Financial Services Transition Plans and Net Zero Commitments. This guide employs six elements that constitute a credible transition plan, showcasing the interconnection between CDP’s climate indicators and the guidance provided by GFANZ for net-zero transition planning, along with inputs from the United Nations High-Level Envoys on Climate Change (UN HLEG) and the Investor Agenda (ICAPs).
Taking into consideration the technical guide on the financial services sector, it is evident that the principles of real-economy transition plans, as defined by GFANZ, can be seamlessly disclosed through the CDP questionnaire by leveraging the listed indicators.
By facilitating transparent disclosure of transition plans, CDP provides an optimal avenue for enhancing transparency regarding the constituents of such plans, akin to its alignment with the recommendations set forth by the Task Force on Climate-Related Financial Disclosures (TCFD).