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Lindsey Hall: Hi. I'm Lindsey Hall, Head of Thought Leadership at S&P Global Sustainable1.

Esther Whieldon: And I'm Esther Whieldon, a Senior Writer on the Sustainable1 Thought Leadership team.

Lindsey Hall: Welcome to ESG Insider, an S&P Global podcast, where Esther and I take you inside the environmental, social and governance issues that are shaping the rapidly evolving sustainability landscape.

Esther Whieldon: Climate Week is taking place in New York City September 22 through 29, and it's a big week for the sustainability world. Thousands of stakeholders come together for hundreds of events across the city.

Lindsey Hall: All this week, Esther and I are in New York covering many of these events. Today, I'm talking with Sherry Madera, CEO of CDP Worldwide. This is a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts.

When the organization launched back in 2000, it was called the Carbon Disclosure Project, and it asked companies to disclose their climate impact. Since then, it has broadened its scope to incorporate deforestation and water security and also to support cities, states and regions. Sherry took on the CEO role about a year ago, and she sat down with me at CDP's New York offices. Here's our interview.

Sherry Madera: I'm Sherry Madera. I am the CEO of CDP. I am approaching one year, so I get to say I'm the new CEO of CDP at least for the next few days. I started on October 1 of last year. And I came to this role with an eclectic background. I started as an investment banker. I was an entrepreneur. I moved to Asia as a diplomat and worked with both data as well as technology and very much rooted in financial services.

Most recently, I was the Chief Industry and Government Affairs Officer for LSEG. That came from Refinitiv. So the deep data roots are definitely there. And I moved immediately from Mastercard to CDP when they gave me the chance to have the honor of leading this great institution. So eclectic, and I mentioned it because I think CDP is a really unique piece of the ecosystem, and it needs to be thought about differently from now forward.

Lindsey Hall: Okay. Tell me a little bit about what this first year has been like for you. Where have you focused most of your attention?

Sherry Madera: Well, CDP does a lot of things in a lot of places around the world. So focus is something that was thin on the ground as I approached this new role. Thankfully, I have an incredible, incredible team around me. We're over 600 people in over 11 offices worldwide, and we're able to really be that world's global disclosure platform but also have the understanding of what that means locally.

And so where have I focused? I've focused on really understanding what only CDP can do. And that's super important at this point because CDP has been around for 24 years, 24. It's incredible. And it's actually time for us to claim and take the win that we started this ecosystem. Climate data being able to be used in the financial industry and many industries wasn't a thing before CDP started. And now we need to think about what does that mean going forward because we don't need to do everything.

In a maturing ecosystem, it means that we should focus on what CDP is here to do. And that's really where I've been focused. It's continuing to challenge, just because we did do it in the past, does it mean we should be doing it in the future? And how is it that we can build through partnership something that's even more efficient?

Lindsey Hall: Okay. So it sounds like you're really in the process of evolution. What does that look like? And where do you see your role in the future?

Sherry Madera: I love that you use the word evolution. I use it a lot, Lindsey. It's evolution, not revolution because I think that we all in the climate industry in the sustainability world want revolution. We want things to happen quickly. We want to be able to take decisions that are positive for people and planet quickly.

The reality is that CDP is a bedrock of information, and we need to make sure we understand how that evolution is going to continue to drive efficiency. Let's measure twice and cut once. So I'm personally wedded to fast pace. So this has been a hard thing for me to think about all year, but we're ready to really make some changes.

And our vision for the future is really to put ourselves in the shoes of our disclosing companies, cities, states and regions. So over 23,000 companies in the world disclose through CDP. That's over 2/3 of the world's market cap. That includes companies that are part of some of the largest world supply chains. And we need to understand why they do it because if we don't understand why, we are in danger of missing the point as to why it is that they're going to do it in the future.

So what we've determined is that there's really three drivers for a company to disclose, full stop. First one is access to capital. Second is business efficiency and being able to actually meet the business needs, for example, of questions from their customer. And third is compliance. And increasingly, we're seeing that mandatory disclosures coming through. So access to capital, business efficiency, compliance. Let's keep it simple. It's the ABCs.

If we forget the ABCs, we're actually going to lose corporates because that is actually the reason for them to be able to come to CDP and use us as that global disclosure platform. So we need to drive writing it once, using it many. So the same data works for A, B and C, so trying to make sure that corporates only write at one time and use it for it all, that's squarely a rule for CDP going forward.

Lindsey Hall: Okay. And should we expect any changes in the near term? Any announcements coming at Climate Week where we're talking right now? Or is there anything you can share with us at this point?

Sherry Madera: Well, we're, of course, the world's global climate disclosure platform, and we're also not-for-profit. And so we have a very core dual purpose, which is to make sure that we are delivering to customer bases, including supply chain owners and investors who are looking for this data, but also to make sure that the data is available for public good. So keep your eyes out for some announcements this week on that.

But one thing I can be really proud of is the team has been working very hard with Brazil. And in particular, Brazil and CDP have decided to work together on the regulatory future in that important jurisdiction. So CVM is the regulator in Brazil, who has agreed to adopt the ISSB, which is obviously the sustainability standard that is aligned with the IFRS Foundation. And we're working with them in partnership exclusively to be that data ingress point for the regulator to be able to use that data.

I think it's a real testament to the fact that CDP is a global platform that can take that Brazilian company's data and be able to have it used in all the jurisdictions that they work in and for the buyers that are from around the world that are interested in this data. So we're really excited about that. It's a great proof point of that writing it once and using it many.

Lindsey Hall: Okay. And of course, COP 30 next year in 2025, the UN's Climate Change Conference is going to take place in Brazil. So I imagine there'll be a lot of focus on that part of the world.

Sherry Madera: Absolutely. And I think that that part of the world, if we're going to sort of make vast generalizations, Latin America is also hosting COP 16 in a few weeks' time. And of course, COP 16 is the biodiversity side of the COP process. And nature and biodiversity is absolutely on the rise in terms of commentary about how do we as an economy start thinking about how we protect nature, protect biodiversity.

And the only way that we know how to do that at CDP is to ask the right questions, get the right data because what you can measure, you can manage, and that's certainly been our mantra for climate. And frankly, nature data is no different. It's additional insight into thinking about how we protect the planet. And the additionality isn't as much as you might think, Lindsey. CDP is already collecting water data, forestry data, governance data on how -- impact on land use. This has been part of our DNA for 10 years.

So now that the world is talking about nature, CDP can help. We can contribute. We can support this narrative by talking about what data we already have so that again, we can make sure that we are lowering the burden and increasing the benefit.

Lindsey Hall: Okay. I'm glad you brought up nature and biodiversity because of course, there is COP 16 coming up very soon, hard on the heels of Climate Week NYC. And in general, like it's something that's come up more and more in climate events that I've attended. There's more understanding of how these two, climate and nature, are interconnected. But I'll also say that our data at S&P Global indicates that a lot of companies are still pretty early stages when it comes to thinking about a biodiversity strategy or deforestation commitments. Would love to know more about what you're hearing from companies.

Sherry Madera: Yes, absolutely. I think that you're right, it's on a journey. And deforestation and protecting the forest, there were some pretty high-level pledges that have come out over the course of the last few years, both from UN Compacts but also at the corporate level. And we need the data to be able to understand how those targets are going to be met or missed so that we can course-correct and think about how we move that.

We have had 10 years' worth of forest data. It grows at double digits a year in terms of the number of companies that are submitting that information. This year, CDP created a combined questionnaire, which included forests, water and our base climate questionnaire because we saw that these things were not separate. Nature and climate is the same. And if we are not protecting nature, we are not protecting overall climate either.

And I think that that's something that it's a bit sad, isn't it, Lindsey, that we're talking about nature now, and it feels like it's a layer on top, it's a new thing to talk about. Really, it's too bad we didn't start talking about that at the beginning because the reality is there are so much overlap already about what data is needed and how it is that we can use the data we already have to be able to understand how that impacts nature and biodiversity.

So we're super excited about COP 16. I think that some of those biodiversity commitments that were made in Montreal two years ago, it's about making sure that we've got that understanding of how you implement that. We're a really proud partner of the TNFD. And again, alignment with TNFD is one of our priorities. And that ISSB-IFRS work is moving into nature and biodiversity.

So what we feel is important when we're talking about it is this isn't another big burden. And we need to make sure that we're actually not creating multiple avenues by which questions are being asked. If there's a way for us to be able to be helpful and consolidate that, so it can be used in multiple places, I'm hearing from many, many of the world's leading companies that this will be very welcome.

Lindsey Hall: Okay. I'm glad you brought up some of these key acronyms, and I'd like to dive into those a bit more.

Sherry Madera: So many acronyms out there.

Lindsey Hall: That's right. So you mentioned TNFD, the Taskforce for Nature-related Financial Disclosures, and also the ISSB, the International Sustainability Standards Board. We'll throw on some more acronyms. There's CSRD, the Corporate Sustainability Reporting Directive out of Europe, among many others. So tell me more about where CDP sits in this landscape.

Sherry Madera: Well, first things first, hurrah that there are more mandatory requirements for disclosure. And CDP has been working on that drumbeat and that need for transparency for 24 years. So we know this in our DNA that transparency breeds change. And there are some really interesting statistics. It matters because disclosure is the first step to taking action. Disclosure for disclosure's sake is no good for anyone.

And so when we think about all of our acronyms, our alphabet soup, which is lots of different standards out there, we see CDP as being a part of the ecosystem that can tag the data in a way that allows it to be used in all the different scenarios. Let's be simple about this, I like my simple, which is that if you are asking a company about climate data, we can probably guess what some of those key data points are going to be, Scope 1 emissions, Scope 2 emissions, increasingly Scope 3 emissions, a bit more of a challenge to get those right, but certainly, these are top, top questions. Governance questions, how is it that sustainability is being governed within that corporation? Water usage, waste management, some of these big topics.

All of those topics and the questions that are asked and the data that is resulting is being used by investors and your customer and your internal stakeholders and your compliance requirements. So why do you have to answer it multiple times? That is a terrible use of scarce resources. And CDP's view is that every dollar that you spend on reporting is a dollar you cannot spend on action. And that's just not okay.

We need to be driving as an ecosystem more efficiency through that. So we definitely see that that is the way forward even with more mandatory disclosure requirements, more mandatory acronyms that are out there in the world, but they all have a jurisdiction. You mentioned CSRD, which is a European initiative. You mentioned probably CSDDD, another European one for your listeners to look up. And there's many more around the world, in Japan, in the U.K., et cetera. CDP's jurisdiction is global. So we're creating that comparability at the data point level so that you can write once, read many, especially as a multinational or any company that exports.

Lindsey Hall: So for someone who's looking at, okay, now here's the ISSB standards, why do we need CDP basically, to be very blunt? Like help them understand how those two come together.

Sherry Madera: So ISSB came to CDP and said, we should partner on this. We should think about this because you are the point that is closest to the corporate that has been disclosing for years and you have the knowledge about how to bring new corporates into the system. So of course, that's something that is absolutely fulfilling our mission. And what we've done is we've fully aligned our questionnaire to ISSB, which means that as of this year, any corporate who answers the questions posed by CDP is in alignment with ISSB.

And so why do it? Why not just go straight to ISSB? Well, again, it's this point that if you're going to be writing to CDP, there are multiple uses that you can use for that same piece of data. And as you're thinking about going forward, ISSB is going to be one of your avenues, not all of them. So how we work together with ISSB is the fact that we also work with EFRAG, who are another acronym but are the body that creates the standards behind the CSRD in Europe. So being able to tag the same data set twice, three times, five times, 10 times, that allows us to drive the efficiency across the different markets.

Lindsey Hall: Okay. That's really helpful. I think some of our listeners are just struggling to get to grips with all the different rules, standards and reporting frameworks that are out there.

Sherry Madera: Yes. And I think that there's a lot, and I don't think we should gloss over that. I think that there is an abundance of enthusiasm on being able to ask a lot of questions. And you may not sort of think that this is the logical thing to come from me, but perhaps we should be challenging ourselves as an ecosystem to wonder if we need more data or if actually what we need is data density because there will be some questions, and I mentioned a few earlier, that are going to be across the board of interest to stakeholders and those that are going to take action on the basis of that data. And making sure that we have those data sets comparable, consistent and comprehensively and get that density, that may be what we need to unlock a more accelerated action plan globally.

Lindsey Hall: And when you talk about the reams of data that are out there, it makes me want to ask about the thing everyone is asking about, which is AI and the role of other new technologies in the work that you do. How do you see that playing in? And is there a potential for it to reduce some of the data collection burden for survey respondents, for example?

Sherry Madera: Yes, absolutely. This year, CDP has launched a new technical platform. It's been difficult. Any new technical platform, of course, has its bumps along the road. And AI has played a role already in what we're doing, which is to be able to check and see the curious fat-finger errors, so to speak. So AI can simply understand sort of where it is your data was last year versus what you're inputting this year and be able to throw back a question mark that says, is this correct? Did you drop a zero? Did you add too many? And again, that logic is something that can happen at the point of inputting the data, which is actually quite powerful. So we're playing with that even more. So seeing how it is, and it can really drive efficiency into the collection point.

There's also opportunities to work with partners. So again, I mentioned partnership earlier, and we really need to go forward at CDP with as many partners across the ecosystem. We work with a group called CO2 AI, and they're looking at product-level data. It's something that we helped codevelop some of the thinking that went behind the product. And again, using AI data to be able to create sort of the comparability at the product level unlocks companies' ability to share more data.

So again, there's, I think, many, many different avenues. And we need to, as CDP, think about which partners can help us along the way. Frankly, let's be honest, CDP is here to surface new information. We're here because we are climate experts 24 years running. And we're being asked by the market, what's next? What's needed? What's critical? How is it that we can answer these questions with the most integrity? Technology is a tool, and we are really excited about using that tool, but it makes a lot of sense to do it with partners so we can move faster.

Lindsey Hall: Let me dig in more on the question of accuracy. What's the trend you would say when it comes to the accuracy of company-reported emissions? And we'll start maybe by talking about just the Scope 1 and Scope 2.

Sherry Madera: Yes. I think that there's been a trend to more and more accuracy. I think that we can attribute the fact that more assurances and verification have gone into the system. So again, for CDP, we're not here to judge. We're here to help guide and to be able to collect and surface data for action.

And one of those data points is, has this been externally assured? Has this been externally verified? Can you attach the proof of that? And again, I think this is also driving a rapid increase in quality in terms of the data points that are being entered into our system and are being shared through corporate sustainability reports and elsewhere because that verification really focuses the mind of corporates that are saying, I am standing behind this, and I've invested in an external audit-type function in order to make that real.

And that's not something that is going away. That is something that's going to be accelerating because ISSB and others are requiring that assurance and verification in order to be able to be aligned with their standards. So I think that that is the biggest change as to driving quality.

Lindsey Hall: How are you thinking about Scope 3 emissions? And what kind of conversations are you having about Scope 3 at this point?

Sherry Madera: Yes. Scope 3 is really integral to what we provide to the marketplace. So we work with over 350 of the world's largest supply chains, Walmart, Carrefour, Lenovo, BT. So many of the common international multinationals work with CDP in order to be able to ask our questions into their supply chain.

Now the challenge, of course, is getting enough density, there's that word again, in responses from a supply chain because you really are targeting sort of 80% to try and get a real feel for that. And it's improving. It's improving year-on-year, and it's difficult because you are really challenging some of the smaller end, the private companies, those that don't have the capacity, the bandwidth, the resources to be able to provide the data that is needed by the large supply chain owners.

So if we're looking at it from a real economy-type perspective, so industrials and manufacturing, et cetera, or even services, it has its challenges, but we are seeing that part of our organization grow more rapidly than others. So our disclosures are running at 26% year-on-year growth. Of that, actually, the work that we're doing with supply chains is in excess of 26%. It's over 30%.

So I think that's an indication that there's a real desire for that data to come flowing through in a consistent way for two reasons. One is so that companies who avail themselves of the program can make a more accurate Scope 3 submission, great, important but probably secondary in my mind to actually using that data. So just being able to disclose it is one thing if actually you're looking at year-on-year, especially when Scope 3 emissions are 26x higher on average than Scope 1 or Scope 2. So it is going to be a huge contributor to many companies around the world. And if that is the case, then year-on-year changes are going to come most significantly from your supply chain.

So how do you do that? You need to look at the data that's being provided and be able to work with your supply chain to help facilitate investment in cleaner technologies, help facilitate investment in investing in renewables as opposed to using more traditional hydrocarbons. It is being able to encourage sort of how to minimize emissions of all different sorts depending on what it was being produced. So that active participation in the supply chain is actually what's making the biggest difference.

So again, what you can measure, you can manage. And I think that that is a really good example of where the supply chain is coming to being, financial services and thinking about Scope 3 and that -- just as tricky, but it's the same model, isn't it? So instead of it being a buyer, it's a portfolio manager. It's a loan portfolio. It's a financier, be it a pension fund or an insurance company, et cetera, that's looking at those companies that they're servicing in terms of finance.

So it's the same methodology, and we have -- a number of our supply chain members are banks and asset managers who are doing just that. So I think that there is an increasing need, but the complexity remains.

Lindsey Hall: And what's your best advice for financial institutions and other corporations that are looking to address this challenge?

Sherry Madera: I think that you need to start now. What we have seen is that companies that engage their supply chain, it is a journey, and we recommend a three-year plan in order to be able to build up the density to really have a meaningful rounded-up number of your Scope 3.

First year, having a return from the requests of 30% to 40% of those that you've identified in your supply chain is not unusual. And part of this is because the request needs to then come with capacity building. Why are you doing this? How do you answer these questions? What does this mean? And also, how can you -- as a company who's being asked this as a supply chain member, how can you use this data for good? So how can you make this burden into a benefit? How can you start thinking about the data that you're producing and acting on it for your own benefits as well?

All of that takes a lot of investment in capacity building. So if you start at 30% or 40%, you can work up to 60%, 70%, 80% in year 3 and 4. But I think it's about patience on that front. So my biggest advice is start now and do not expect 100% return from those that you request through your either portfolio or your own supply chain. It's just not realistic.

Lindsey Hall: Okay. Can I come back to what you said about disclosure for disclosure's sake? How do you avoid that? Because I think it's a really important question as there is this big ramp-up in disclosure frameworks.

Sherry Madera: Yes, absolutely. So in some ways, it feels like CDP is at the head of this thinking curve because when you think about most of the mandatory disclosures, that is where that regulatory request ends. And the data is expected to be picked up by actors in the economy, be that an investor, be that a buyer, be that a company who's looking at using it to attract talent, et cetera. But the regulatory piece ends at the point of saying, you must disclose. It doesn't tell you what good looks like. It doesn't tell you how you are versus your other comparable companies in your sector or in your region.

And that's where CDP is already thinking ahead. So no disclosure for disclosure's sake says to us that every question we ask needs to be linked to what action could be taken from it and by who. Now of course, you may need three or four or five or 10 questions in order to be able to be a group of data that's dense enough to take an action, but we need to actually have that very, very clear in our minds.

And what CDP is hoping to do is continue our great work with policymakers to bring them on that journey as well so that disclosure is the beginning and that they are actually promoting the actors in their own economies to be able to utilize that data. And we're very, very happy to share the mapping that we have already done, which is these are the data sets that lead to these potential actions, which moves the dial on how it is we're either moving capital at scale to more sustainable future or indeed how it is that we as an economy are consuming in a much more sustainable way.

Lindsey Hall: You mentioned policymakers. And this week, alongside Climate Week obviously is the UN General Assembly taking place here in New York. And then we've got the COPs, the climate-focused COP and the biodiversity-focused COP. So a lot of opportunities for these issues to be discussed among decision makers. What are you hoping to see come out of Climate Week this week?

Sherry Madera: Yes. No, I think that we are looking for being able to make sure that partners know that we're here for change. And CDP has not been known as the simplest disclosure platform, and we need to do better because we need to listen to the partners that are in the ecosystem so that we can make sure that the years that come are increasingly use case-focused.

And I think that one of the things that is important this week because you're right, Climate Week is not just a corporate grouping or event or like any other conference. UNGA, UN General Assembly running in parallel allows us to remind ourselves where it is that some of this data from a CDP perspective goes. So countries commit to NDCs, nationally determined contributions, through the COP processes you mentioned. And what is that? That is a target. That is a country-level target. And in order to meet those country-level targets, they need a plan. Countries need a plan.

And the reality is that they have two levers to pull to achieve their target. One is their own spending in government. How is it that they are heating their buildings? How is it that they are making decisions about how they spend their money? And the second is policies. And what policies are they going to put into effect in their jurisdiction in order for their market to be able to meet the targets that they are setting in their NDCs?

Well, how do you do that if you don't have a whole-of-economy approach and bring in the private sector, bring in non-state actors, bring in the corporates that disclose to CDP already, and understanding in these jurisdictions, in these countries, how do you roll all that data up so you know where you're at? Because a target only works if you have a baseline and a plan to be able to get there. And I think that we are not at a place where we should be globally.

And so the UNGA work is something that we are contributing to, to be able to make that point and to be able to see how it is that we can be part of the solution, which is really determining how those NDCs get done.

Lindsey Hall: So a lot to look forward to this week and throughout this busy fall season of sustainability events. Sherry, I know you've got a lot on your plate this week. Anything that I haven't touched on, though, before you have to get off to the next thing?

Sherry Madera: Yes. I think that one of the things I'd love to hear from your listeners is the thinking about what really matters. Often, we can get really excited about the idea that says, the data is not available. If we only had more data, we can actually take decisions. If the data was there or if the data was more reliable, we could do different things. And of course, data is on a journey. I think all of us agree that it's not complete enough, we don't have a global picture on everything, but it's getting better. It's getting better really fast.

So let's all not make data the scapegoat for doing good because even if we think about the financial markets, we're working on data from a financial system that isn't even joined up as it is. If you think about the standards there, GAAP, U.S. GAAP, European GAAP, these are standards for financial reporting. They're different from the IFRS, which is also a standard for financial reporting. And somehow, we have all figured that out and are able to still invest in companies and take a view.

So let's be kind to ourselves and be able to take this journey quickly and with great dedication, but let's not make the perfect the enemy of the good.

Lindsey Hall: It's a great note to end on. Thank you so much for sitting down with me, Sherry.

Sherry Madera: Oh, I appreciate your time, Lindsey. Have a great week.

Lindsey Hall:  So as you can hear, there's a lot to look forward to in the days ahead.

Esther Whieldon: Please stay tuned as we bring you more special coverage from Climate Week NYC.

Lindsey Hall: Thanks so much for listening to this episode of ESG Insider. If you like what you heard today, please subscribe, share and leave us a review wherever you get your podcast.

Esther Whieldon: And a special thanks to our agency partner, The 199. See you next time.

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