How to audit-proof your greenhouse gas assessment (according to the GHG Protocol)

Written by
Camille Charluet
April 19, 2024
‚ÄĘ
4
min read

Starting your journey toward net zero or any environmental goal requires a detailed inventory of your greenhouse gas (GHG) emissions. While this process can do wonders for enhancing your business’s efficiency and reducing its environmental impact, the complex data collection and calculations involved often leave room for error or uncertainty.

Accuracy in your greenhouse gas assessment is crucial for a clear understanding of your carbon footprint, identifying decarbonization opportunities, and developing an effective sustainability strategy.

This is where an independent GHG audit comes into play. It adds a layer of trust and credibility, ensuring your inventory is not only accurate but also meets globally recognized standards like those set by the Greenhouse Gas Protocol (GHG Protocol).

In this blog post, we'll outline the importance of auditing your GHG assessment, explain the implications under the Corporate Sustainability Reporting Directive (CSRD), and provide a step-by-step guide on how to prepare your GHG inventory for a third-party audit.

Why it’s important to audit GHG assessments

Whether you're conducting a greenhouse gas assessment for regulatory compliance or voluntarily, auditing your assessment can significantly enhance the credibility of your data. It can also help to minimize the risk of publishing incorrect or even misleading information, reducing liability. 

An external perspective also builds trust among stakeholders, not only in the accuracy of your emissions data but also anything that builds on that data set such as your environmental targets. It demonstrates your commitment to transparency and accuracy, giving stakeholders confidence about the reliability of your data and claims.

A recent study by the Center for Audit Quality analyzed 2021 data from S&P 500 companies. It revealed that 328, or 65%, of these companies obtained assurance or verification for their ESG reporting‚ÄĒa 13% increase from the previous year. This notable increase shows how quickly assurance is becoming a standard business practice.

The audit process also drives companies to develop more robust internal processes for emissions accounting. It encourages companies to strive for best practices in environmental reporting, effectively putting their best foot forward.

For companies reporting voluntarily, this practice helps them be fully prepared if or when mandatory GHG audit comes into effect.  

GHG audit: A mandatory requirement under the EU’s CSRD

If your company falls under the scope of the EU’s CSRD, your sustainability reports must undergo mandatory assurance. This is an external audit or independent verification to ensure that your publicly reported ESG data is accurate and reliable.

There are two types of assurance: limited and reasonable. Limited assurance is more a review of compliance whereas reasonable assurance is a more costly and in-depth verification process. In sectors like manufacturing, reasonable assurance may involve site visits to verify data collection methods, for example.

In the same Center for Audit Quality study mentioned above, limited assurance was found to be the most common level of assurance, used by 263 of the 500 companies.

Under the CSRD, companies are currently subject to limited assurance until latest October 1 2028. By that time, the EU will have drafted reasonable assurance requirements, given that it is feasible for auditors within sustainability reporting.

Until October 1 2026, limited assurance can be guided by national assurance requirements (i.e. no harmonization). After that date, the EU will have set up an EU-wide limited assurance standards.

Timeline for assurance under the CSRD:

  • Until October 1, 2026: Limited assurance guided by national standards.
  • After October 1, 2026: EU-wide limited assurance standards will be established.
  • By October 1, 2028: EU plans to introduce reasonable assurance requirements if feasible.
  • By December 31, 2028: The EU Commission will assess legal measures to diversify the sustainability assurance market and enhance reporting quality.

Language requirements under the CSRD

Language requirements for reporting under the CSRD are decided on by EU member states.

In the Netherlands, the existing legal basis for non-financial reporting states that Dutch companies shall publish their annual reports in Dutch, English, German or French. 

This has already been proposed in a late 2023 document from the Dutch government, but is not yet official. The Dutch government must announce its CSRD regulations by June 30 2024 at the latest.

How to audit-proof your GHG assessment

Meeting the high level of accuracy needed for assurance requires significant preparation. Here’s a step-by-step guide to ensure your greenhouse gas assessment is audit-ready when the time comes:

1. Identify your emission sources

Start by reviewing your business operations and processes in detail to identify all potential sources of GHG emissions.

Break down your emission sources into three categories as outlined in the GHG Protocol: Direct emissions from your operations (Scope 1), emissions from purchased energy (Scope 2), and all other indirect emissions across your value chain (Scope 3).

It's important to be as thorough as possible at this stage as it sets the basis for the data collection and calculations that follow.

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2. Gather relevant data 

Next, it's time to collect data for each emission source you identified in step one. This should include both financial and activity-based data like fuel consumption, kilograms of materials purchased, and kilometers traveled by company vehicles.

Make sure the data you gather is accurate as this is crucial for precise emissions calculations. Consider using automated data collection tools like Coolset to reduce errors and maintain data integrity. You can also engage professional energy auditors to assess your energy usage and efficiency.

Keep all of your documentation such as utility bills, fuel receipts, and accounting records well-organized and readily accessible. This will make it easier when auditors request documentation on your emission sources.

3. Calculate your upstream and downstream GHG emissions across scope 1, 2 and 3

Select a carbon accounting method best suited to your company’s needs. Using this method along with the data collected in step two, calculate your GHG emissions across Scope 1, 2, and 3. Note: Scope 3 emissions are notoriously hard to measure.

Use standardized emission factors and follow the GHG Protocol guidelines. This ensures your calculations comply with international standards and accurately reflect your carbon footprint.

4. Verify your GHG inventory accuracy by using a pedigree matrix

A pedigree matrix is a tool that assesses data quality across five dimensions: precision, completeness, temporal representativeness, geographical representativeness, and technological representativeness. 

Applying a pedigree matrix to your GHG assessment helps to identify any potential weaknesses in the data or methodology. This can help you understand the degree of uncertainty in your assessment and provides an opportunity to make improvements before undergoing the assurance process.

Using the right tools and resources

As you can see from the above steps, preparing your emissions inventory to pursue assurance is a significant commitment. Thankfully, there are many tools and resources out there to make the process more manageable: 

Carbon accounting software

Many companies are turning to carbon accounting software to streamline the auditing process. Tools like Coolset ensure data accuracy, consistent application of emission factors, and compliance with international standards like the GHG Protocol to make sure your data is audit-ready.

GHG Protocol’s tools and guidance

First launched in 1998, the GHG Protocol sets the global standard for businesses and governments to measure, manage, and report GHG emissions.

The protocol offers specific standards and tools for different types of GHG-related calculations and reporting, such as the Corporate Standard for company-level emissions, the Product Life Cycle Standard for product emissions, and the Scope 3 Standard for value chain emissions. 

These tools are designed to help organizations produce consistent, comparable, and reliable GHG measurements that are essential for effective climate action planning and reporting.

The GHG Protocol has also developed a range of resources to help companies develop comprehensive and reliable inventories of their GHG emissions. Each tool uses best-practice methods validated by industry experts. 

Get started with GHG accounting the right way, today

Looking to get your greenhouse gas assessment audit-ready? 

Coolset’s carbon accounting software can fast-track your preparation and streamline the audit and assurance process. It simplifies how you organize and present data, ensuring auditors can easily access and review the necessary information.

Discover how Coolset can support your next GHG audit by requesting a free demo today.

Get support for your next GHG audit

Discover how Coolset can support your next GHG audit by requesting a free demo today.

Get support for your next GHG audit

Discover how Coolset can support your next GHG audit by requesting a free demo today.

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