The Climate Disclosure Standards Board’s framework is designed for reporting environmental impact information using similar parameters as financial information. CDSB integrates natural capital and climate change-related data into mainstream corporate reports. This helps organizations present investors with environmental information in their annual corporate report and enhances the decision-making process and efficient allocation of capital.
The framework can also help organizations understand how environmental issues affect their performance and the necessary actions they may be able to take to address the related risks and opportunities. It is for use by organizations such as single companies, or entities and corporate groups.
CDSB aims at standardizing environmental information reporting, and recognizes that information about natural capital and financial capital is equally essential for an understanding of corporate performance.
CDSB defines natural capital as: “All renewable and non-renewable environmental resources and processes that provide goods or services that support the past, current or future prosperity of an organization. It includes air, water, land, minerals and forests, biodiversity and eco-system health.”
The framework is organized around Guiding Principles and Reporting Requirements. The Guiding Principles are designed to ensure that environmental information in mainstream reports is useful for investor’s decision-making process, is correct and complete, supports assurance activities and is prepared by applying the principles of relevance and materiality. The environmental information is material if it is expected to have a significant impact on the organization’s financial condition and operational results.
The Reporting Requirements describe the type of environmental information that should be included in the mainstream reports, encourage standardized disclosure, and complement and supplement other data contained in those reports. The framework establishes 12 Reporting Requirements, including:
- Governance
- Management’s environmental policies, strategy and targets
- Risks and opportunities
- Sources of environmental impact
- Performance and comparative analysis
- Outlook
- Organizational boundary
- Reporting policies
- Reporting period
- Restatements
- Conformance
- Assurance
The organization also offers resources such as online courses and case studies to help companies understand the topics associated with climate-related disclosures.
Self-evaluation encourages management to apply judgement to: (1) reflect the reality of the business, and (2) identify the information that is relative to the needs of investors, management and regulators.
The CDSB was formed at the World Economic Forum’s annual meeting in 2007 and builds on the activities of CDSB Board members including CDP, Ceres, the Climate Registry, the International Emissions Trading Association, the Sustainability Accounting Standards Board, the World Business Council for Sustainable Development, the World Economic Forum and the World Resources Institute. It is headquartered in London.
The first CDSB framework, called the Climate Change Reporting Framework, or CCRF, was released in 2010 and focused on the risks and opportunities that climate change presents to an organization’s strategy, financial performance and condition.
It required a company to determine what disclosures are made according to relevant categories, valuable to investors or could affect the organization’s strategy.
In 2013, the CDSB’s board expanded the scope of the framework beyond climate change and greenhouse gas emissions to encompass environmental information and natural capital.
The frameworks are now used by 374 companies in 32 countries across 10 industry sectors, including BT Group, Nestle and Coca Cola, and are referenced in seven stock exchanges across the world.
CDSB is aligned with the Task Force on Climate-related Financial Disclosures and SASB, with the intention of helping streamline the reporting cycle for many organizations. It also provides a method of compliance with environmental reporting legislation such as the U.K. Companies Act and the EU Non-financial Reporting Directive.
The CDSB framework can be found here.
