Cities increasingly have to plan flood defences, ways to manage water in times of drought, ensure new buildings provide natural cooling to occupants and adapt old buildings and infrastructure to become more energy efficient.
The report surveyed 22 cities - including Amsterdam, Berlin, Istanbul, London, Manchester, Moscow, Paris and Rome - about their greenhouse gas emissions and climate change strategies.
The report comes less than a week after a United Nations' summit in Rio de Janeiro failed to define clear sustainable development goals and left many convinced that local governments and businesses will have to lead efforts to improve the environment.
The survey found that 17 of the 22 cities have completed or almost completed risk assessments to understand how climate change will affect them.
Eighteen cities said they face "significant risks" arising from climate change and a dozen of them see these risks as "severe" or "very severe".
Due to these risks, cities are increasingly looking at developing adaptation plans. Fourteen cities already have an adaptation plan in place while two more are currently developing them.
"European cities are demonstrating leadership and best practice in managing climate change at the local level," said Conor Riffle, head of CDP's cities programme.
"The report shows that other cities can benefit by implementing similar strategies, like annual measurement and reporting of greenhouse gas emissions."
Mixed emissions reports
Global carbon dioxide emissions, one of the main greenhouse gases blamed for global warming, hit a record high last year, International Energy Agency figures show.
Eighty-six percent of the European cities surveyed have set a citywide emissions-reduction target, compared to a global average of 70%, CDP said.
Out of the four cities which report their emissions to CDP, London's emissions fell 3.6% to 43.4 million tonnes of carbon dioxide equivalent in 2010 from previous data in 2008, and Copenhagen's dropped 5.2% to around 2.5 million tonnes in 2010 from 2009.
Berlin's emissions rose 4.1% and Rotterdam's grew by 6%, though the time periods were not immediately available.
"Population growth, economic activity, weather patterns and other factors that are outside the city government's direct control can make it difficult, if not impossible, to show steady reductions in emissions," the report said.