DEFINITION of 'Carbon Disclosure Rating'

A numerical score that indicates the level of reporting of a company's climate change initiatives. The carbon disclosure rating for a company is based on its response to the Climate Disclosure Project's (CDP) climate change questionnaire. A high carbon disclosure rating would indicate a comprehensive response to the questionnaire, as well as sound understanding and management of climate change-related issues - including greenhouse gas emissions - relevant to the company.

BREAKING DOWN 'Carbon Disclosure Rating'

The carbon disclosure ratings are based on a methodology developed by the U.K.-based CDP, in consultation with its global advisor, PricewaterhouseCoopers. Note that the carbon disclosure score is not a reflection of the actions taken by the company to mitigate its impact on climate change and offset its carbon footprint, but is simply indicative of its level of disclosure with regard to these issues. Most of the world's largest companies have a carbon disclosure rating.

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