Many investors are interested in environmentally and socially responsible investing, also known as sustainable, responsible, and impact (SRI) investing. SRI uses environmental, social, and corporate governance (ESG) factors to screen investments. The Investor Responsibility Research Center Institute (IRRCi) defines SRI as “investing that seeks to promote environmental and social sustainability along with financial gain.”
The Carbon Disclosure Project (CDP) is an important part of ESG reporting. The CDP is a nonprofit that encourages companies to disclosure their greenhouse gas emissions and their strategies for reducing those emissions. The CDP collects data from over 6,000 companies worldwide and makes that data available to investors
How Investors Use the CDP
Many institutional investors use the CDP to screen investments and make decisions about where to allocate their assets. For example, BlackRock, the world’s largest asset manager, uses the CDP to engage with companies on climate-related risks and opportunities. In 2018, BlackRock committed to vote against corporate directors who fail to adequately address climate risk
Other institutional investors use the CDP to inform their investment decisions as well. For example, State Street Global Advisors, the third largest asset manager in the world, uses the CDP to track the progress of companies on reducing their greenhouse gas emissions. SSGA has also said that it will vote against corporate directors who fail to address climate risks.
Columbia Threadneedle Investments, another large asset manager, uses the CDP as one input in its investment decision-making process. CTI has also engaged with company management on climate-related issues and voted against corporate directors who fail to adequately address those risks
The Carbon Disclosure Project (CPD) is an important part of environmental, social, and governance (ESG) reporting. The CPD collects data from over 6,000 companies worldwide on their greenhouse gas emissions and strategies for reducing those emissions. Many institutional investors use this data when making decisions about where to allocate their assets.