Targets, ratings and CDP

What a target is for

A target converts intention into something checkable. Its purpose is not the number — it is the mechanism the number creates: someone has to own it, budget has to be allocated, progress gets reported, and failure becomes visible.

That is also why targets are the most over-promised part of sustainability reporting. A goal set without a costed plan is a public commitment to something nobody has agreed to fund. Missing it later damages more credibility than never having set it.

Setting one that survives

1. Fix the baseline first. A specific year, a defined boundary, and data good enough to be restated if the boundary changes. Everything else depends on this.
2. Pick the right metric. Absolute reduction, intensity, or both. Intensity targets can be met while absolute emissions rise, so if you use one, say so plainly.
3. Decide what is in scope. Scope 1 and 2 only, or Scope 3 as well. Excluding Scope 3 is defensible for many businesses and needs to be stated, not implied.
4. Test it against a plan. List the actual interventions, their cost, their expected saving and their timing. If the arithmetic does not reach the target, change the target or change the plan.
5. Set interim milestones. A 2050 goal with no 2030 checkpoint is not manageable and is read as unserious.
6. Decide about external validation. Science-based target validation adds credibility and imposes real constraints. Worth it if your customers or investors ask for it; not obligatory otherwise.
7. Name an owner and a review cycle. A target with no named owner is a statement, not a target.
8. Write the restatement policy now. Acquisitions, disposals and methodology changes will happen. Deciding the rule in advance protects you from the accusation that you moved the goalposts.

CDP: what it is and who needs it

CDP operates a major independent global environmental disclosure system used by companies, cities, states and regions. Companies respond to a questionnaire covering climate change, forests and water security, with further themes such as plastics, biodiversity and — new for the 2026 cycle — ocean. Responses are scored, and the scores are visible to investors and customers.

Scale gives a sense of why it matters: more than 23,100 organisations disclosed in the last cycle, the dedicated SME questionnaire drew close to 11,000 responses in its second year, and CDP's capital markets signatories — over 540 financial institutions representing around US$110 trillion in assets — request disclosure from tens of thousands of organisations each cycle.

Is responding worth it

It depends entirely on who is asking and why.

• A customer or investor requested it. Then yes, and treat the deadline as contractual. Non-response is recorded and visible, and in a supply chain programme it is often scored worse than a weak response.
• You are listed with significant institutional ownership. Usually worth it. Analysts use the data and non-response reads as unwillingness rather than absence.
• You sell into European or multinational supply chains. Increasingly a practical requirement rather than a choice.
• Nobody has asked and you are a small domestic business. Probably not yet. The effort is substantial. Spend it on your own data foundation first — which is what a good CDP response needs anyway.

A realistic view of effort: a first full corporate response is a serious exercise across finance, operations, procurement and legal. Most companies score modestly the first year. That is normal, and the first response is what tells you where your data gaps actually are.

How ESG ratings actually work

ESG ratings are not measurements of performance. They are assessments of disclosed performance, produced by different providers with different methodologies, weightings and sector baselines. Two providers can rate the same company very differently and both be internally consistent.

Three consequences follow. Ratings reward disclosure, so a genuinely well-run company that publishes little will score poorly. Sector context matters, because you are scored relative to peers. And methodologies change, so a score can move without anything in your business changing.

Improving a score for the right reasons

There is a version of score improvement that is disclosure hygiene, and a version that is gaming. The first is worth doing and mostly consists of writing down what you already do.

• Find out which ratings actually matter to you. Ask your investors and your largest customers which they look at. Optimise for those, not for all of them.
• Read the methodology. Most providers publish it. A surprising share of lost points are for indicators the company simply never disclosed.
• Close disclosure gaps before changing anything operational. The cheapest points are policies you have but never published — anti-corruption, whistleblowing, supplier standards, human rights, data privacy.
• Publish the policy documents themselves, not references to them. Many raters only credit what they can access directly.
• Provide quantitative data with boundary and method. Unqualified numbers are often discounted or ignored.
• Cover three years where you can. Trends score better than a single year.
• Fix the governance disclosures. Board oversight, committee mandates, responsibility and remuneration links are heavily weighted and cheap to disclose properly.
• Respond to controversies directly. Unaddressed incidents carry outsized weight. A clear account of what happened and what changed is worth more than silence.
• Correct factual errors with the provider. Most have a review process. Errors are more common than companies expect.
• Keep it consistent across channels. Report, website, CDP response and rating submissions should not contradict each other. Inconsistency is penalised and is easy to detect.