In Oct. 2016, Novozymes was again recognized for its practices in reducing carbon emissions and mitigating climate change by the CDP. Novozymes was ranked on the so-called A list for these efforts, alongside companies such as Nestlé, DSM and Novo Nordisk.

But why does the ranking matter, and why do companies participate in it? Steven Tebbe, Executive Director at CDP Europe, shares his thoughts.

Novozymes: Why should companies participate in the CDP ranking?

Steven Tebbe: Companies demonstrate that they measure and are transparent about their contribution to climate change, water security and/or deforestation. This signals to their investors and that they’re willing to tackle climate-related impacts.

Companies that respond to the CDP survey are better able to identify business opportunities of a carbon-constrained world and lead the way in shaping our transition to a sustainable economy. Non-responders that continue business as usual face serious risks – from regulation, shifts in technology, changing consumer expectations, an increase in their cost of capital and climate change itself.

Why did Novozymes make it to the A list?

Novozymes’ overall performance reflects their holistic approach to climate change, being a role model for other companies and therefore part of CDP’s leadership category. It’s worth mentioning Novozymes’ comprehensive integration of climate change into their business. Reducing CO2 emissions and mitigating climate change is one of the top priorities for Novozymes that has fundamentally influenced Novozymes’ business strategy.

Novozymes also actively engages in global discussions. At COP21, the company called upon governments to limit global temperature. In September 2015, Peder Holk Nielsen was the only business leader invited to address the U.N. General Assembly on the topic of climate change. These initiatives have been the foundation for an A list award.

Why do the results from the CDP ranking matter to investors, businesses and policy makers?

Business has a significant role to play in enabling the global economy to achieve – and exceed – its climate goals. Improvement in CDP’s scoring is a clear signal to investors and clients that a company strives to mitigate its contribution to global warming.

Investors are more focused than ever on companies monitoring the risks related to climate change – and the information they gain is fundamental to their decisions. Their decisions become more and more influenced by environmental-social-governance factors that support an estimation of risks and opportunities a business is exposed to.

Some of the biggest index providers in the world, including S&P and STOXX, have created low carbon indices to help investors direct their money towards the sustainable companies of the future.

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What is the CDP?

Formerly known as the Carbon Disclosure Project, CDP is an international, not-for-profit organization that measures, ranks and discloses information about companies’ environmental performance. This helps companies take action on their environmental impact, and it gives decision makers, such as investors and businesses, the data they need to change market behavior. In 2016, 5,800 companies participated in the CDP ranking.