CDP, the international environmental disclosure platform, has announced plans to separate into two independent but closely aligned entities. The first, CDP, will operate as a commercial organisation supported by global investment firm Permira and will continue providing environmental disclosure, data, and reporting services to businesses worldwide. The second, CDP Foundation, will function as a charitable organisation responsible for guiding disclosure principles based on the latest environmental science.

Although operating independently, both organisations will share a common objective: generating critical environmental information that supports decisions benefiting the planet and future generations.

Over the past 25 years, CDP has played a significant role in advancing environmental disclosure from a niche practice to a key component of corporate and investment decision-making. In response to growing environmental challenges and increasing market expectations, the new structure is designed to strengthen science-based disclosure while enabling greater investment in technology, data capabilities, and user experience.

For companies, investors, and other stakeholders that rely on CDP data, the change is expected to enhance access to tools, analytics, and insights that support risk assessment, resilience planning, and sustainability strategies.

Under the new arrangement, the CDP Foundation will retain a shareholding in CDP and representation on its board. The Foundation will focus on translating emerging scientific research into practical disclosure frameworks and will help shape the future development of CDP's questionnaires. Meanwhile, CDP will concentrate on operating and expanding the world's most comprehensive environmental disclosure system, generating information that supports sustainable economic development.

The Foundation will also work to incorporate cutting-edge environmental indicators aligned with planetary health, ensuring that disclosure practices remain ambitious and impactful. This approach will allow the Foundation to focus on environmental priorities while leveraging CDP's extensive disclosure infrastructure to drive change.

By establishing two complementary organisations, CDP aims to preserve its mission-driven and innovative approach while enabling each entity to pursue its distinct role more effectively. Both organisations will continue to use environmental data to support informed decision-making, while the Foundation advances its charitable objectives.

CDP confirmed that its existing products, services, and the 2026 disclosure cycle will continue without disruption throughout the transition period.

Sherry Madera, Chief Executive Officer of CDP, described the move as a significant milestone in the organisation's evolution. She stated that the new structure would strengthen science-based disclosure efforts and enable greater use of technology to improve the reporting experience for participants. Madera emphasised that CDP and the CDP Foundation would remain united in their mission to generate meaningful insights that support an Earth-positive economy, while the partnership with Permira would help expand the value delivered to companies, financial institutions, and other data users.

Katherine Garrett-Cox, Chair of the CDP Board of Trustees, highlighted that innovation and science have always been central to CDP's work. She noted that the new model would strengthen the role of CDP's data in promoting sustainable markets, driving positive environmental outcomes, and safeguarding future generations.

Permira brings extensive experience in supporting data-driven organisations through growth and transformation. The investment firm intends to support CDP through increased investment in talent, technology, and product development.

The partnership will allow the CDP Foundation to remain a shareholder in CDP while helping the commercial organisation enhance its services for corporate and financial-sector users worldwide. The goal is to improve both the disclosure process and the quality of environmental insights available to decision-makers.

Sustainability has long been a focus area for Permira, which has established a dedicated Energy Transition investment strategy aimed at supporting businesses that contribute to the transition toward a more sustainable economy through technology, data, and service platforms.

Anish Patel, Partner and Co-Head of Energy Transition, and Gabriel Andrews, Managing Director – Energy Transition at Permira, noted that as environmental risks increasingly influence supply chains and investment decisions, reliable environmental data has become essential. They described CDP as a critical provider of such information and stated that the partnership would strengthen CDP's ability to support informed environmental decision-making on a global scale while also supporting the Foundation's ongoing mission. They further highlighted Permira's experience in helping organisations expand their reach and impact and expressed enthusiasm about supporting CDP's next phase of development.

Legal advice for the transaction was provided by Bates Wells and Baker & McKenzie LLP on behalf of CDP, CDP North America, and CDP Japan. Financial advisory services were provided by Rothschild & Co and Alvarez & Marsal.

The transaction remains subject to regulatory approvals, including approval from the Charity Commission, as well as the fulfilment of customary closing conditions. Completion is expected within the next six months.

Climate-focused investing has historically concentrated on assessing industries’ shifts toward low-carbon practices. This involves examining their adaptation to environmentally friendly regulations, new green technologies, and evolving consumer demands. However, while transition-related risks and opportunities provide one way to gauge climate change’s impact on investments, physical risks and opportunities offer another vital perspective.
 
Recognizing Physical Risks Enhances Evaluation
In 2023, a CDP Worldwide survey reported a 24% increase in companies acknowledging the direct financial impacts of climate change. Nevertheless, physical risks tend to receive less focus compared to transition risks. From 2009 to 2020, for instance, mentions of transition risks in 10-K filings rose from four to 10, while mentions of physical risks only increased from two to four, according to Brookings Institute data. This suggests that businesses are still in the early stages of understanding how physical risks might affect their finances.
 
The reality of physical risks is undeniable, whether through gradual challenges like rising temperatures and sea levels or immediate events like extreme heatwaves and hurricanes. These risks pose substantial financial burdens on businesses and the global economy, often resulting in property damage, lost production capacity, facility closures, and supply chain disruptions, not to mention legal liabilities for failure to make infrastructure resilient.
 
Disasters also impact local communities by affecting employment and displacing residents, which can reduce labor supply and demand for products and services. Over time, these localized effects can accumulate, affecting global productivity, trade, government revenue, and influencing inflation and interest rates.
 
Addressing Physical Risks: Coping and Mitigating
Climate change is a global disruptor with the potential to reshape living, working, and consumption patterns worldwide, affecting nations, industries, and assets at many levels. For instance, population shifts may occur within and between countries as rising temperatures affect agriculture and outdoor labor conditions. Agriculture-dependent areas face particular risks, including food scarcity and increased vulnerability to exploitative practices.
 
Emerging markets are particularly exposed to physical risks, often through flooding or droughts. However, many governments and private entities in these regions are adopting adaptation strategies, such as early warning systems and risk assessments, to mitigate some of this high exposure. Such measures offer a pathway for these countries to manage physical risks and potentially enhance their creditworthiness.
 
Local Data for Global Assessment
While climate change is global, its impacts are often local, as seen with hurricanes in Florida, wildfires in Canada, and flooding in Abu Dhabi. Investors benefit from understanding physical risks at a local level to assess financial damage accurately, even for multinational firms. In the U.S., for example, the Natural Hazards Index developed by AllianceBernstein and the Columbia Climate School maps disaster risks across 75,000 census tracts. Internationally, the Aqueduct Water Risk Atlas helps identify regions with high risks to water availability and quality.
 
A challenge in analyzing physical risks lies in linking them to specific company locations, as companies often don’t uniformly disclose this information. Initiatives like Climate TRACE, which tracks atmospheric carbon emissions, are making strides in identifying high-emission sites and mapping local risk areas for global firms. Additional tools from providers like Moody’s, S&P, and MSCI offer scenario analyses, though their insights sometimes vary, requiring thorough evaluation.
 
Direct engagement with companies can provide valuable insights into their physical risk exposures and resilience strategies. By discussing these issues with company leaders, visiting facilities, and participating in shareholder meetings, investors often gain a clearer understanding than from data alone. A Brazilian bank, for example, faces significant physical risks due to its reliance on agriculture-related loans and crop insurance, as well as potential damage to its branch network from regional flooding and droughts.
 
Physical Risks and Investment Opportunities
The financial toll from extreme weather events increasingly affects both people and assets, highlighting the need for investors to consider opportunities linked to climate adaptation, disaster response, and resilience efforts. With a growing number of data sources, coupled with active investment strategies and company engagement, climate-focused investors can better gauge physical risks and their effects on asset values across regions, sectors, and industries.