Assurance Needs and Requirements
Due to an increase in SMEs requesting independent verification of their carbon footprint we explore the different types of assurance needs and requirements in this article.
We are seeing an increase in businesses and organisations wanting carbon footprint assurance. It's encouraging to see so many businesses take action, however, many are surprised by the wait time for an audit and the resources involved. So the first question we'd like to answer is:
Do you need assurance at all?
Firstly, confidence in the base year inventory is essential to set emission reduction or science-aligned targets. So we encourage all businesses to get some form of assurance for the base year footprint.
However, if your carbon footprint is for a year other than the base year, there are a number of considerations that might determine whether or not assurance of your footprint is necessary.
Aotearoa New Zealand has many SMEs with simple footprints, and it might be suitable to use a credible online emissions calculator using the latest emission factors. In other cases, a review of the footprint by a competent person (either from internally or an external carbon measurement consultant) may meet stakeholder needs.
If you supply carbon data to a customer (usually scope 1 and scope 2) the customer may request primary evidence as part of that process. If the information you supply to the customer is material to their footprint, then they may require independent assurance.
When independent assurance is not specified by a customer or required by legislation, the business needs to decide on what type of assurance is appropriate. An important factor in that decision is the Fair Trading Act and reputational damage from greenwashing.
What type of assurance do you need?
To answer this question, we facilitate a discussion on the type of external claim the business would like to make, the intended use and users of that claim, decisions that internal users will make, and stakeholders' expectations.
There are three types of assurance to consider:
First-party – an internal review that your staff or a consultant could undertake.
Second-party – your customer verifies requested data (e.g. via a supply chain audit).
Third-party – independent assurance to a measurement and reporting standard.
In our view, there are specific situations where independent assurance is necessary. This includes but is not limited to:
Reporting emission reductions, e.g. reduced emissions by 25% from the base year;
Reporting emissions publicly, e.g. annual report, website, tenders, etc;
Making a comparative claim or a claim about avoided emissions;
Making a net zero, carbon neutral, or climate-positive claim;
Making a statement that the footprint meets the requirements of ISO 14064-1 or the GHG Protocol.
If your business has decided that independent assurance is required, you might find our blog on the difference between verification and certification useful.
Last updated November 2023