FAQs
GENERAL QUESTIONS
What is CDR?
Client Disclosure Reporting (CDR) is a tool for achieving transparency, requiring professional services providers to disclose the breakdown of their revenue by industry.
What’s the purpose of CDR?
CDR is a transformative methodology designed to enhance transparency and accountability in the professional services industry. By requiring professional service providers to disclose their client industries and revenue sources, CDR empowers stakeholders to make informed choices about which professional services providers to work with. This increased transparency enables stakeholders to:
Align with clients that prioritise sustainability.
Select service providers that align with their values and goals.
Minimise exposure to problematic industries and reduce the risk of reputational damage.
CDR aims to foster trust, drive positive change, and promote a more sustainable business landscape.
Who is CDR for? Who should adopt CDR?
All professional service providers, regardless of size, location or industry. We see “professional service providers” as any individual or business providing specialised expert knowledge in a given field to a client or customer to help them achieve a goal or run a project. This can be anything ranging from creative and advertising agencies to financial advisors, legal, IT, logistics and much more.
Is there a cost associated with adopting CDR?
The CDR methodology itself is freely available. However, there may be internal costs for your company associated with data collection, analysis, and reporting.
Where should I share my completed CDR?
Please send your report to hello@clientdisclosurereporting.org and it will be published on the official CDR website: www.clientdisclosurereporting.org
You can also publish your CDR within your companies overall impact or annual reports, or on your own website and marketing channels. Your report will be yours to share as you wish.
METHODOLOGY & PRINCIPLES QUESTIONS
What are the core principles guiding the CDR methodology?
The CDR methodology is guided by the principles of universality, comparability, accountability, and objectivity. These principles ensure credible reporting and facilitate comparisons between professional service providers.
How does CDR ensure comparability between different professional service providers?
CDR ensures comparability between different professional service providers by using standardised reporting formats, metrics, and data presentation. This allows stakeholders to easily compare professional service providers' disclosures and assess their environmental and social impacts. By promoting consistency and transparency, CDR facilitates a level playing field and drives positive change in the professional services industry.
How does CDR ensure accountability for professional service providers?
CDR ensures accountability for professional service providers by requiring them to disclose their client industries and revenue source. This transparency empowers stakeholders to assess the potential environmental and social impacts of a professional service provider's work and hold them responsible for their actions. By disclosing their client base, professional service providers are encouraged to align their practices with sustainability goals, contributing to a more responsible and sustainable professional services industry.
BENEFITS & IMPACT
What are the benefits of adopting CDR for professional service providers?
Adopting CDR can offer several benefits for professional services providers, including:
Enhanced reputation: By demonstrating transparency and accountability, professional service providers can improve their reputation among stakeholders, including clients, investors, and employees.
Increased stakeholder trust: CDR can help build trust with stakeholders by providing them with a clear understanding of a professional service provider's impact. This can lead to stronger relationships and increased business opportunities.
Improved business development: CDR can help professional service providers attract clients who are committed to sustainability and social responsibility. This can lead to new business opportunities and long-term growth.
Competitive advantage: As more professional service providers adopt CDR, those that are early adopters can gain a competitive advantage by demonstrating their leadership in sustainability and transparency.
How can CDR contribute to a more sustainable future?
CDR can contribute to a more sustainable future by:
Empowering stakeholders: CDR empowers stakeholders to make informed decisions and hold professional service providers accountable for their actions. This can lead to increased pressure on professional service providers to adopt sustainable practices and contribute to a more sustainable future.
Encouraging professional service providers to align with sustainable practices: By disclosing their client industries and revenue sources, professional service providers can identify potential risks associated with their client base and take steps to mitigate them.
Promoting transparency and accountability: This can help to create a more responsible and sustainable business environment, where professional service providers are held accountable for their actions and encouraged to adopt ethical practices.
Driving industry-wide transformation: As more professional service providers adopt CDR, it can create a new standard for transparency and sustainability across the $6 trillion professional services industry.
IMPLEMENTATION & ADOPTION
How can professional service providers implement the CDR methodology?
Professional service providers can implement the CDR methodology by following the step-by-step guide provided in the Client Disclosure Reporting methodology. This guide covers data collection, analysis, and reporting, providing a clear framework for professional service providers to follow. Additionally, professional service providers can use the Client Disclosure Reporting spreadsheet to efficiently collect, organise, and analyse client-related data for CDR purposes. Seeking guidance from experts or industry organisations can also provide valuable support and insights.
What types of client data should professional service providers collect for CDR reporting?
Professional service providers should collect the following types of client data for CDR reporting:
Client and organisational type: Whether the client is a for-profit organisation, non-profit organisation, or governmental organisation.
Revenue share: The percentage of the professional service provider's total revenue generated by each client.
Industry classification: The primary industry or sector in which the client operates, using standardised classification systems like Global Industry Classification Standard (GICS®) or International Classification of Nonprofit Organisations (ICNPO).
What are the challenges that professional service providers may face in adopting CDR?
While CDR is built on the robust and recognised classification systems of GICS® and ICNPO, professional service providers may face several challenges when implementing it:
Self-reporting bias: CDR relies on self-reported data, which can introduce potential biases or inaccuracies.
Complexity of diversified companies: Assigning a single GICS® or ICNPO code to companies with diverse operations can be challenging and may not fully capture their activities.
Subjectivity in code selection: The process of assigning GICS® or ICNPO codes can involve some level of subjectivity, potentially influenced by the professional service provider's perception of its clients or desire to present a specific image.
Focus on revenue-generating work: CDR focuses on paid client work, potentially excluding pro-bono projects that may be considered problematic by some stakeholders.
Addressing these challenges requires careful consideration and may involve additional measures to ensure data accuracy, transparency, and inclusivity.
How can professional service providers ensure the accuracy and completeness of their client data?
To ensure the accuracy and completeness of client data in a CDR report, professional service providers should:
Establish data governance policies: Implement clear policies and procedures for data management, including data quality standards and ownership.
Conduct cross-assessments: Assess data quality to identify and address errors or inconsistencies.
Use data cleaning and deduplication tools: Remove duplicate records and correct errors to ensure data consistency.
Train employees on data entry and management: Ensure employees understand the importance of data accuracy and are trained on proper data handling procedures.
Document data sources and verification processes: Maintain records of data sources and verification methods to support data accuracy claims.
Consider using third-party data verification services: Outsource data verification to ensure accuracy and reduce the risk of internal bias.
By implementing these strategies, professional service providers can significantly improve the accuracy and completeness of their client data, enhancing the reliability of their CDR reports.
INTEGRATION WITH OTHER SUSTAINABILITY INITIATIVES
What are the potential synergies between CDR and other sustainability reporting frameworks, such as ESG reporting or BCorp assessment?
CDR can supplement other sustainability reporting frameworks, such as ESG reporting or BCorp assessment, to provide a more comprehensive and holistic view of a professional service provider's impact. By combining CDR with these frameworks, professional service providers can:
Enhance transparency: Provide a more detailed and nuanced picture of their sustainability performance.
Demonstrate alignment with industry standards: Show that they are meeting or exceeding industry expectations for sustainability.
Strengthen stakeholder relationships: Build trust and credibility with stakeholders by providing a more complete understanding of their sustainability efforts.
Identify areas for improvement: Identify gaps in their sustainability performance and prioritise areas for action.
For example, CDR can be used to supplement ESG reports by providing more granular information on a professional service provider's client base and its alignment with sustainable practices. This can help stakeholders understand the specific environmental and social impacts of a professional service provider's operations and assess its overall sustainability performance.
How can Client Disclosure Reporting (CDR) help professional services providers prepare for future regulations related to sustainability and corporate social responsibility? What are the potential implications of regulatory changes or new regulations?
CDR can help professional service providers prepare for future regulations by demonstrating their commitment to transparency and accountability. By proactively disclosing their client industries and revenue source, professional service providers can anticipate and address potential regulatory requirements. Regulatory changes or new regulations may require professional service providers to modify their CDR reporting practices but professional service providers that have already adopted CDR may be better positioned to adapt to these changes.
How can professional service providers demonstrate the value of CDR to stakeholders who are already familiar with other sustainability reporting frameworks?
Professional service providers can demonstrate the value of CDR by highlighting its unique focus on client industry information and its ability to provide a more granular view of a professional service provider's impact. Additionally, professional service providers can emphasise the importance of CDR in building trust with stakeholders and promoting accountability.
STAKEHOLDER ENGAGEMENT & COMMUNICATION
How can professional service providers effectively communicate their CDR reports to stakeholders?
Professional service providers can effectively communicate their CDR reports to stakeholders by:
Tailoring messages: Adapt communication to the specific needs and interests of different stakeholder groups.
Using clear language: Avoid technical jargon and present information in a clear, concise manner.
Employing visual aids: Enhance understanding with charts, graphs, and other visuals.
Engaging stakeholders: Foster open dialogue, seek feedback, and involve stakeholders in the process.
By following these strategies, professional service providers can build trust, strengthen relationships, and drive positive change.
What are the key messages that professional service providers should convey in their CDR reports?
Professional service providers should convey the following key messages in their CDR reports:
Commitment to sustainability: Clearly articulate the professional service provider's commitment to sustainability and ethical practices, emphasising how CDR aligns with these goals.
Transparent and accountable processes: Outline the professional service provider's internal governance and due diligence processes for client selection, risk assessment, and impact mitigation. Demonstrate a commitment to transparency and accountability throughout the process.
Data-driven insights: Provide a detailed breakdown of the professional service provider's client base using Global Industry Classification Standard (GICS®) or International Classification of Nonprofit Organisations (ICNPO) classifications, highlighting the revenue share for each industry. This data can offer valuable insights into the professional service provider's environmental and social impact.
Methodology and limitations: Explain the CDR methodology used, including assumptions, limitations, and potential biases. Reference the official CDR website for further information.
Accessibility and clarity: Ensure the report is clear, concise, and easily accessible to a wide audience. Use visuals and plain language to enhance understanding.
Future plans: Outline the professional service provider's plans for improving the sustainability of its client base and reducing its environmental and social impact. This demonstrates a commitment to continuous improvement.
By effectively conveying these key messages, professional service providers can build trust with stakeholders, demonstrate their leadership in sustainability, and drive positive change in the professional services industry.
How can professional service providers address potential concerns or criticisms from stakeholders regarding their CDR reports?
Professional service providers can address potential concerns or criticisms from stakeholders regarding their CDR reports by:
Proactively addressing concerns: Anticipate potential concerns and proactively address them in the report or through supplementary materials.
Engaging in open dialogue: Foster open communication with stakeholders, actively seeking feedback and addressing their questions directly.
Providing transparent explanations: Clearly explain the methodology used for data collection, analysis, and reporting, addressing any concerns about accuracy or completeness.
Demonstrating progress and commitment: Highlight the steps the professional service provider has taken to improve its sustainability performance and reiterate its commitment to continuous improvement.
Incorporating feedback: Consider incorporating stakeholder feedback into future CDR reports..
By adopting these strategies, professional service providers can build trust, strengthen relationships with stakeholders, and demonstrate their commitment to transparency and accountability.
How can professional service providers effectively engage with stakeholders, such as investors, clients, and employees, to promote the value of CDR?
Professional service providers can effectively engage with stakeholders to promote the value of CDR by tailoring communication, utilising various channels, encouraging feedback, building relationships, highlighting benefits, providing case studies, and involving stakeholders in the process. By adopting these strategies, professional service providers can build trust, credibility, and support for CDR, driving positive change in the professional services industry.
GOVERNANCE
Who developed the CDR methodology? And how is the CDR methodology updated and maintained?
The CDR methodology was developed by Futerra Solutions Union through a collaborative effort involving industry experts, disclosure experts, and academics. The CDR methodology is regularly reviewed and updated to ensure its continued relevance and effectiveness. This process involves:
Periodic assessments: Regular assessments of the methodology to identify areas for improvement or adaptation.
Stakeholder input: Seeking feedback from stakeholders, including companies, investors, regulators, and other organisations.
Alignment with global standards and regulations: Ensuring that the CDR methodology is aligned with evolving global standards for reporting and reflecting changes in relevant regulations and industry practices.
Technological advancements: Incorporating advancements in data collection, analysis, and reporting technologies.
By following these steps, the CDR methodology is kept up-to-date and continues to provide a valuable tool for assessing service providers’ impact.
How does the CDR protect the privacy and confidentiality of clients data?
The CDR prioritises the protection of client privacy and confidentiality. No sensitive data about individual clients, such as their names, specific projects, or proprietary information, is being published as part of the CDR. The data released is anonymised, providing only aggregated information, including the client's industry and the revenue share derived from their business with the service provider. This approach ensures that client confidentiality is maintained while still providing valuable insights into the service provider's overall client base and revenue streams.