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ESG Challenge: Luisa Brasil, CDP Capital Markets Interview — Transcript

by Alliance for Responsible Capitalism · 2,187 words · 381 segments · language en · Watch on YouTube

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0:00okay awesome so we will go ahead and get
0:02started um if you could could you please
0:04introduce yourself and your work in the
0:07capital markets program at CDP sure uh
0:11well my name is Louisa Brazil um from
0:14Brazil shocker and I'm a project officer
0:17at CDP North America Capital markets
0:19team just uh for background CDP is a
0:23global nonprofit that runs the world's
0:25environmental disclosure system for
0:27companies cities states and regions
0:30founded in 2000 and working with more
0:33than 700 financial institutions with
0:36over 142 trillion dollars in assets CDP
0:41pioneered using Capital markets and
0:44corporate procurement to motivate
0:47companies to disclose their
0:48environmental impacts and to reduce
0:52greenhouse gas emissions Safeguard water
0:54resources and project forests nearly
0:5825,000 organizations around the world
1:00disclosed data through CDP in 2023
1:03including more than
1:0523,200 companies and over 1100 cities
1:09states and
1:10regions um I guess in other words the
1:13capital markets program creates a
1:15positive feedback loop right so the more
1:19financial institutions such as asset
1:21managers asset owners and Banks sign up
1:24as signatories the more companies are
1:26motivated to disclose their
1:28environmental impacts and as more
1:30companies disclose the quality of the
1:33data improves providing fincial
1:35institutions with better benchmarking
1:38for their decision making I I I am an
1:41account manager so my job includes
1:43making sure our signatories have a very
1:46positive experience with cdp's products
1:48and services and ensuring we can support
1:52them on their sustainability Journey no
1:54matter how early that may be great
1:58awesome thank you so much
2:00all right so next question is could you
2:03explain what happens when a financial
2:05institution becomes a signatory of the
2:08CDP Capital markets program both for the
2:11public and the private
2:12markets sure thing um CDP is a mechanism
2:17for these financial institutions to
2:20request and then have access to
2:22companies's environmental data so on the
2:25public market side CDP reached out to
2:28organizations selected through our
2:30sample methodology which includes for
2:33example all public listed companies
2:36globally generating more than $50
2:39million annual revenue and all private
2:42corporate bond issuers globally
2:44generating more than $500 million annual
2:47revenue whereas signatures focus on the
2:50private markets can send us the list of
2:53their portfolio companies they wish to
2:55have access to their environmental
2:57disclosure when uh financial institution
3:00becomes a signatory they are supporting
3:03CDP on building a sustainable economy we
3:06want to see a a thriving economy that
3:09works for people and the planet in the
3:11long term and then signatur have access
3:14to comprehensive data sets from
3:17companies cities states and regions
3:19showing how they're tackling climate
3:21change deforestation water security
3:24going far beyond what companies
3:27generally disclose in any reports
3:30uh data in a standardized bulk format
3:33that it's useful for investors doing
3:35their own analysis developing indicators
3:38and ESG scores or prioritizing companies
3:41for
3:42engagement data aligned with the most
3:44upto-date standards and scientific
3:47requirements including the task force on
3:50climate related Financial disclosures or
3:53tcfd and our data on corporate emissions
3:56targets trajectories and transition
3:59metrics supports portfolio alignment
4:02with emerging standards and Frameworks
4:04such as the spti finance framework or
4:08other Glasgow Financial Alliance for Net
4:11Zero or
4:13Chans it's a lot of acronyms yeah
4:16Frameworks um such as we have the Net
4:19Zero asset owner Alliance or
4:22nzaa Target setting or the Institutional
4:26Investor groups on climate change or iig
4:28GCC that's Z investment
4:32framework
4:33a great so you've touched on this a
4:37little bit or have kind of alluded to it
4:39in the answers to your first couple
4:40questions but what generally is the goal
4:43of this work and why is it important
4:45part of decarbonizing the
4:47economy yeah um the short answer is it's
4:52important because we can't manage what
4:54we can't measure the reality is that
4:58without immediate any itive
5:00environmental action we could face $ 38
5:03trillion dollar in Damages every year by
5:062050 despite this reality CDP data shows
5:09that 6% of global emissions are covered
5:13by on track emission reduction targets
5:16only 1% of emissions disclosed through
5:18CDP are covered by credible 1.5 Celsius
5:21aligned climate transition plans in line
5:24with the Paris agreement and
5:27insufficient action makes our current
5:29pathway
5:30untain right and the most strategic
5:33weapon we have on this is data the data
5:36suggest that progress on transition
5:38planning is no longer a nice to have for
5:42for showing climate credibility rather
5:44it is critical for business access and
5:47capital driving efficiency and complying
5:50with market and Regulatory demands the
5:53the the the new CDP analysis show that
5:56companies can develop and disclose a
5:58credible plan in in under two years
6:01overall 39% of companies that reported
6:04having a plan are already disclosing
6:06data on most of cdps there are 21
6:10indicators needed to fully judge
6:12credibility which is a clear sign that
6:14they are well on the way to developing
6:16robust
6:18plans yeah
6:20great all right why do institutions
6:23become signatories of the CDP Capital
6:25markets initiative and what is driving
6:28demand
6:30basically becoming a CDP signatory means
6:33that you as a financial institution is
6:37signaling to the market that you VA you
6:39value quality and quantity information
6:42for decision making so our our data sets
6:45go far beyond what companies generally
6:47disclose in annual reports we provide
6:50data that it's useful for investors
6:52doing their own analysis developing
6:54indicators and issue scores or they are
6:58prioritizing companies for engage M and
7:00our data is aligned with the most
7:02upto-date standards and scientific
7:04requirements like I mentioned before the
7:06tcfd and supporting portfolio alignment
7:09with standards and Frameworks such as
7:11sbti Finance framework or other gense uh
7:16Frameworks uh in other words financial
7:19institutions value information and we
7:22are a resource that provides actionable
7:25data
7:27great how would you characterize the
7:29overall quality of emissions disclosure
7:31data today and what is needed to improve
7:34data
7:35quality well um emissions disclosure
7:38data is increasing
7:40fortunately uh disclosure has increased
7:42year onye 24% last year to
7:4723,000 over 23,000 uh with
7:5166% of global market cap and this
7:54matters because disclosure is the first
7:57step to taking action on average
8:00businesses cut emission 7 to 10% within
8:03two years after disclosing for the first
8:05time 50% of companies disclosing through
8:09CDP now have initiatives in place to
8:11reduce
8:13emissions and the the first step to
8:16improving data quality is starting to
8:19measure and disclosing early adopters
8:21are learning from their experiences
8:24identify the challenges adjusting and
8:28innovating and
8:30well environmental disclosures are a
8:32Runway trained several years in the
8:33making certain regions like Europe are
8:36pressing ahead with mandatory disclosure
8:38and regulation may come slowly in
8:41countries like the us but companies that
8:44don't get on board will will be left
8:48behind yes great all right so I
8:52understand that you have a dedicated
8:53process for small and medium
8:55Enterprises why are these Enterprises
8:57important in the disclosure land
8:59landcape and how is this process
9:01increasing visibility on emissions for
9:03this class of
9:06companies yeah well small and medium
9:09Enterprises account for 90% of global
9:12business so they they are very important
9:15therefore it's crucial that these smmes
9:17or small and medium Enterprises are
9:20equipped with the knowledge tools and
9:22resources required to commit to and
9:25accelerate climate action while ensuring
9:29business well long-term business
9:32viability in in April this year CDP
9:36rolled out a dedicated cdpm corporate
9:39questionnaire the questions in this
9:41questionnaire are aligned to the CDP
9:44full corporate questionnaire but with
9:45fewer data points simplified question
9:48formats and enhanced guidance as a
9:51result smes can more easily understand
9:54and Report their emissions data with
9:56less reporting burden
9:59yeah
10:00great all right so we hear that
10:03disclosure is just the first step as you
10:05mentioned we then need these insights to
10:08translate to action on
10:09decarbonization what is needed in the
10:11broader Financial landscape to
10:13accelerate decarbonization
10:15efforts uh you are absolutely right we
10:19need these insights to translate to
10:21action on the
10:23carbonization there is I mean there's no
10:26point in Regulators demanding that
10:28companies report if this data is hard
10:31for users to compare performance between
10:34markets forcing businesses to report to
10:36several places at once or Worse still
10:40just leave valuable data Gathering dust
10:43in a report no one need no one
10:46reads um CDP data shows that only 6% of
10:49all emissions are covered by on track
10:51targets that's almost all of global
10:53emissions having no end dat let alone I
10:57plan for actually reducing them so
10:59I mean as I mentioned before only 1% of
11:02emissions disclosed through CDP are
11:04covered by 1.5 celsus climate transition
11:08plans uh commitment to meaningful
11:10climate action therefore one thing to to
11:14accelerate their commonization efforts
11:16is to make things easier for
11:19businesses
11:21um so CDP is building is an
11:23environmental data market with a right
11:26ones used many ethos at its core
11:29companies CDP disclosure will prepare
11:31them for regulatory requirements go
11:34directly into the hands of the investors
11:36allocating Capital who can make or break
11:39their bottom line and populate other
11:42platforms that make data openly
11:45accessible um another thing is
11:48consistent climate
11:50transparency our data shows that
11:52companies consistently disclosing
11:55climate information through CDP are
11:57raising their ambition and more likely
12:00to be developing detailed credible and
12:03effective transition plans overall less
12:07than 1% of all
12:10companies uh disclosing through CDP
12:12reported to all those 21 indicators uh
12:15required to judge uh transitions plans
12:19transition plans credibility but almost
12:22all of these companies have reported
12:24data through CDP year on year
12:26demonstrated that consistent climate
12:28transparen helps businesses to build
12:32these credible climate transition
12:34plans great all right how has the recent
12:39anti-g backlash affected your
12:43work yeah um well climate risk is
12:48Financial Risk right if um investors
12:52don't consider climate change's impact
12:54on assets and the return of on
12:57investments they will not not fulfill
13:00their duty to responsibly manage
13:02shareholder returns after all investment
13:05decisions are made to ensure companies
13:07remain sustainable competitive and
13:09profitable profitable over the long term
13:13moreover at no point has current
13:15legislation demand fiduciaries to
13:18consider climate risk but rather
13:20expanding the the assessment of risk to
13:23include all material
13:26factors so for any company or investor
13:30access to data is Paramount that's why
13:33year on year CDP has seen growth uh both
13:36in the investor signatories that are
13:38demanded data that supports uh ESG and
13:43in the other side in the corporations
13:44that find it increasingly desirable to
13:47disclose it the argument that any
13:50investor should have limited information
13:52on risk is counterintuitive and anti-e
13:55ethical to the very principles of
13:58fiduciary
14:01doy great all right similarly how has
14:05the trend of new emissions disclosure
14:07requirements affected your work such as
14:09the eu's corporate sustainability
14:11reporting directive and the proposed
14:13requirements from the Securities and
14:15Exchange Commission in the
14:18US well despite the pervasive headlines
14:22that would make you think otherwise 90%
14:25of disclosing American companies already
14:27report the climate data now mandated by
14:30the SEC it it is positive to see the SEC
14:35formally recognize the need for
14:37disclosure data as essential for
14:40investors to assess their climate
14:42related R climate related risks and make
14:45informed decisions this is something the
14:494500 plus us companies already
14:52disclosing through CDP have clearly
14:55recognized the sec's TCF inform armed
14:59rule is another welcome step toward the
15:02harmonization of disclosure requirements
15:04among the world's largest markets
15:07something investors and companies have
15:10long called
15:11for however there's there there's still
15:15a way to go uh many large US companies
15:18will soon be impacted by Disclosure
15:20requirements that go beyond those of the
15:23SEC as far-reaching regulation is
15:26implemented by the European Union like
15:28with touched upon before others will be
15:31forced to follow suit if they are to
15:34remain on a Level Playing Field this is
15:38indicative of the fact that the need for
15:41robust disclosure data goes far beyond
15:43just
15:45compliance it's uh fast becoming a
15:48prerequisite for ensuring access to
15:50Capital a necessity for remaining
15:53competitive in today's global economy
15:55and retain the highest level of of
15:57talent MH
16:00great all right so then the last is just
16:02a catchall question are there any final
16:05points you would like to add or any
16:06message you would like to leave us
16:09with sure uh well sustainable investing
16:14in business practices focus on
16:17mitigating the financial risks of
16:19climate change and other sustainability
16:21challenges to ensure long-term economic
16:24health ideally one day we won't need to
16:28call it it impact investing it will
16:31simply be considered
16:33investing and this will only happen as
16:36more professionals are trained to
16:38evaluate all risks and opportunities
16:40when making decisions which simply put
16:43includes climate risks and to identify
16:48and manage those climate risks I'll say
16:50it again you can't manage what you can
16:53measure so having access to Reliable
16:56data is critical for making formed
16:57investment decisions not just in terms
17:01of financial data but environmental data
17:03too as both are interconnected so
17:06ultimately just makes good business
17:09sense yes so I'm excited for for for
17:13this competition I think it's extremely
17:15important in this path

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