The Power of Environmental Disclosure: Strengthening Data Ecosystems for Policymakers with Better Business Data

Corporations are a major contributor to environmental change – so also critical players in our ability to stop it. Public companies are responsible for an estimated 40% of global greenhouse gas emissions; the operations of four major value chains account for more than 90% of anthropogenic pressure on biodiversity; and globally, 80% of wastewater is discharged untreated.

The disclosure of data on corporations’ environmental risks, opportunities and impacts allows headline statistics such as these to be reached, mobilising industries to alter their practices under the pressure of public scrutiny. By encouraging companies to disclose data on their environmental impacts, it becomes possible to monitor and focus efforts on reducing the most harmful industrial practices. Doing so also produces crucial competitive advantages for businesses, identifying environmental risks and opportunities that may otherwise be overlooked, and improving decision-making on capital allocation.

Data from corporations isn’t just for corporations: policy stakeholders need an understanding of their impacts and actions. So, it is imperative that policy stakeholders are supported effectively in the pursuit of environmental regulation, and to achieve this, data from economic actors must be curated in a way that makes them applicable and usable for the specific goals of governments and regulators. They can’t manage what they don’t measure.

How Can Government Data Ecosystems be Complemented?

Governments often have an abundance of data; the development of official statistics in recent years has been tremendous. The System of Environmental-Economic Accounting (SEEA) is one such development, which will help governments to understand the relationships between the economy and the environment through improved compilation of statistics, and provide businesses with a standardized methodology to account for their environmental impact. Similarly in the financial markets, the disclosure of environmental, social and governance (ESG) data has reached a higher level of maturity, and financial institutions are increasingly basing decisions on this. But do governments have access to relevant business data? And is such data presented in a way that makes them relevant to the action that policymakers intend – or need - to take? The data ecosystems of governments often lack this critical element, resulting in a repository of data which may not offer the right insights, or can’t be effectively acted upon. This is why the UN World Data Forum have dedicated one of their Thematic Areas (TA4) to address the need to develop data ecosystems.

CDP has the most comprehensive collection of self-reported corporate environmental data in the world, with nearly 20,000 entities disclosing in 2022. This includes more than 18,700 companies worth half of global market capitalization. Evidence coming from these data creates a significant opportunity for policymakers to develop, refine and implement evidence-based policies, and track progress against national and international goals and commitments.

To better support policymakers in this pursuit, CDP launched its Government Dashboard in 2022 - a free-to-use data tool specifically for policymakers based on CDP disclosure data. It contains cleaned, curated, and visualized data and insights on several policy-relevant thematic areas. Themes such as climate change, deforestation and water security can be viewed at both a global and national scale, with relevant datapoints selected to facilitate policymaker's ambitions and needs.

These data help policymakers to assess the actions that companies are taking in response to environmental change, identifying the gaps in these actions, and engaging the private sector to set science-based targets and transition plans, ultimately driving progress towards a net-zero, nature-positive economy.

This information can be used in turn to increase the ambition of governments by creating an enabling environment where they can set targeted policies; widening the opportunities for companies to unlock further investments, and resulting in an ambition loop. Creating this link between corporates and governments will ensure the accountability of both parties when it comes to limiting climate change and environmental degradation.

How Can We Maximise the Usefulness of Data Tools?

The lack of statistical resources that governments have access to limits their ability to process large volumes of data and turn these raw data into useful insights. Even when the data have been processed, many institutions don’t have the level of infrastructure needed to disseminate available data to the departments that could use them. This means that even when useful data are collected, they often aren’t made available to policymakers, and so can’t inform meaningful action. CDP offers its Government Dashboard as a free public good for policymakers to access the data disclosed by companies in a meaningful and actionable way.

Corporate disclosure included in CDP data is also based on internationally agreed standards and frameworks such as the Greenhouse Gas (GHG) Protocol, Global Reporting Initiative (GRI), and Task Force on Climate-Related Financial Disclosures (TCFD), and will be reflecting the upcoming International Sustainability Standards Board (ISSB) Standards, ensuring decisionmakers can access data that is standardized and comparable across regions and sectors.

The UN Sustainable Development Goals (SDGs) are an important way for companies to benchmark their progress towards lowering their environmental impact, and the Paris Agreement provides a target to limit the increase in global average temperature to below 1.5°C.

As CDP’s framework allows companies to measure this progress, the Government Dashboard’s KPIs create an opportunity for governments to look at the progress towards the SDGs within their jurisdiction, relative to the rest of the world. This ensures that governments are getting access to high quality data, specific to their goals, the importance of which is outlined by the Forum’s aim to maximize the value of data for better decision making (TA2).

To address the environmental crisis and achieve the ambitious goals of the global environmental and sustainable development agenda, we need to empower governments with access to relevant, reliable, and well-structured data. The UN World Data Forum gives us the opportunity to confront this challenge, such as through their session on How Public-Private Data Collaboration Helps Governments Address Crises, allowing participants to exchange ideas on how data generated by the private sector can aid partnerships between governments and companies.