Glossary
Greenhouse gas (carbon) auditing often uses technical language. To ensure everyone is on the same page, we have collated the most common (and confusing!) terms in the carbon assurance sector.
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National standards for climate-related financial disclosures. NZ CS1 covers governance and risk, NZ CS2 covers strategy, and NZ CS3 covers metrics and targets. Mandatory reporting by Climate Reporting Entities (CREs) under the Aotearoa New Zealand Climate Standards requires assurance. Disclosures include governance, risk, strategy, and emissions data.
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An independent evaluation of data, processes, or claims—such as greenhouse gas inventories or sustainability reports—against a defined standard. McHugh & Shaw provides assurance under ISO 14064-3, NZ SAE 1, and other frameworks.
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Reasonable assurance means reducing the audit risk to an acceptably low level, meaning there is a high (but not absolute) level of confidence that the information is accurate and complete. The auditor will be able to issue a positive statement in the conclusion of their report (eg. ‘...is materially correct and a fair representation of the data and information’) It is typically applied to Scope 1 and 2 emissions.
Limited Assurance, on the other hand, has a higher acceptable risk, meaning less scrutiny is placed on the evidence, and the auditor concludes their report with a negative statement (eg. ‘...there is no evidence that the information is not correct’).
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The Assurance Report is formal document issued after an audit, detailing the scope, methodology, findings, and assurance conclusion. This report outlines the scope of our assurance engagement, our audit opinion and conclusion, the final total emissions in tonnes of carbon dioxide equivalents (tCOâ‚‚e), and a summary of the work we performed, including any limitations and areas that the lead auditor would like to highlight to the reader of the emissions inventory report. The wording of this document is standardised and follows the ISO 14064-3:2019 and NZ SAE 1 requirements.
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The more material a specific source is to the inventory, the higher the scrutiny that is being placed on the data. Possible audit tests that are being done by our auditors are: control tests, retracing from data acquisition to reporting, recalculations, sampling of evidence, reconciliation of activity data and emission factors, quality of third-party data, sense checks, reasonableness of assumptions and sensitivity testing.
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A standard unit for measuring greenhouse gases, converting various gases into the equivalent amount of COâ‚‚ based on their global warming potential.
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Greenhouse gases that are released into the atmosphere from activities like transport, energy use, and manufacturing. These are generally measured in tonnes of COâ‚‚e.
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Also referred to Greenhouse Gas Footprint. They are the total greenhouse gas emissions caused directly and indirectly by an individual, organisation, event, or product, expressed as carbon dioxide equivalent (COâ‚‚e) and reported in a Greenhouse Gas or Carbon Inventory Report.
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A New Zealand government initiative requiring public sector organisations to measure, report, and reduce greenhouse gas emissions. Participants must set gross emissions reduction targets for 2025 and 2030 and report annually to the Ministry for the Environment. McHugh & Shaw is an approved CNGP supplier.
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The Greenhouse Gas Protocol (GHG Protocol) and ISO 14064-1 both provide frameworks for organisations to measure and manage their greenhouse gas emissions. However, they differ in the number and categorisation of scopes or categories. Download our comparison table here.
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A professional designation in New Zealand for individuals qualified to lead or oversee carbon audits. All full audits at McHugh & Shaw are led or reviewed by CEP-certified auditors.
On our website, you can find more information on carbon auditing as a career and further Greenhouse Gas training opportunities.
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A coefficient used to convert activity data (e.g., litres of fuel) into emissions. Updated annually and used in carbon calculators. These are usually country-specific – in New Zealand they are updated by the Ministry for the Environment. Basic quality criteria for all emission factors are:
Geographically relevant
Temporally relevant
Credible
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Environmental, Social, and Governance metrics reported by organisations. These may be independently assessed by a qualified third party such as McHugh & Shaw to enhance credibility and stakeholder trust.
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The Greenhouse Gas Protocol provides globally accepted standards for measuring and managing emissions. It includes guidance for corporate, product, and city-level inventories. Along with the ISO 14064-1 / ISO 14064-3 standard it is the most commonly used and accepted greenhouse gas emissions reporting and auditing standard.
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These are digital tools used to calculate and manage greenhouse gas inventories. In New Zealand there are a number of providers offering this service.
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A systematic assessment that verifies the accuracy and completeness of a greenhouse gas inventory. It includes identifying emission sources, calculating emissions, and preparing for assurance. It may be required for regulatory compliance, voluntary reporting, or sustainability-linked finance. We conduct audits in line with ISO 14064-1 and the GHG Protocol.
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A global framework for sustainability reporting developed by the Global Reporting Initiative. It includes disclosures on emissions, energy, water, and social impacts.
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International standards for quantifying and verifying greenhouse gas emissions. ISO 14064-1 covers inventory development; ISO 14064-3 outlines requirements for third-party verification. Along with the Greenhouse Gas Protocol it is the most commonly used and accepted standard in greenhouse gas reporting and auditing.
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This refers to two methods for calculating Scope 2 emissions:
Location-Based: Uses average grid emission factors.
Market-Based: Reflects emissions from purchased energy contracts or certificates.
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Qualitative Materiality generally refers to intangible issues (such as missing information) that could affect the decisions of the intended users of the Carbon Inventory Report. This could for example be an emissions source exclusion that has not been clearly identified or a mandatory requirement of the reporting standard that has not been met.
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Quantitative Materiality generally refers to (numerically) exceeding a predefined threshold beyond which it will make a noticeable difference, e.g. 5% of the total GHG inventory. The materiality may relate to a specific emission source, e.g. if emissions from business travel are anticipated to be less than 1% of the total emissions, then this emission source is not material and may be excluded.
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Aotearoa New Zealand’s climate-related disclosure standards, which require certain entities to report on climate risks, governance, and emissions. McHugh & Shaw provides external reviews aligned with these standards.
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Defines which parts of a company or group are included in its greenhouse gas inventory. It determines whether emissions are reported based on equity share, financial control, or operational control approaches, setting the scope for what is accounted for under the organisation’s footprint. Any exclusions have to be justified based on control and ownership criteria.
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A sustainability approach where producers take responsibility for the environmental impact of their products throughout the lifecycle. Often assessed during assurance.
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Science-based targets (SBTs) outline how organisations can reduce greenhouse gas emissions in line with climate science and the Paris Agreement goals of limiting global warming to 1.5°C or well below 2°C, aiming for Net Zero between 2050 and 2100. In New Zealand, these are called science-aligned or climate-aligned targets because ‘Science Based Target’ is a trademark of the Science Based Target initiative (SBTi). Only organisations with SBTi-validated targets may use this term officially.
Setting a science-aligned emissions reduction target involves aligning goals with scientific evidence and climate science.
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Scope 1: Direct emissions from owned or controlled sources.
Scope 2: Indirect emissions from purchased electricity, heat, or steam.
Scope 3: All other indirect emissions, such as business travel, freight, and supply chain activities.
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When activity data is not available (e.g., supplier litres of fuel), organisations may be able to source spend-based data (e.g.; $ spent at the fuel station). Spend-based emission factors convert this data into emissions. They play an important role to fill data gaps while initiatives are implemented to improve data quality over time.
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Independent verification of sustainability claims, metrics, or reports. This includes assurance of ESG disclosures, sustainability-linked loans, and ecolabel assessments like Eco Choice Aotearoa.
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A loan where financial incentives (usually interest rates) are tied to the borrower’s achievement of sustainability performance targets, such as lower emissions or better energy efficiency. McHugh & Shaw provides assurance over SLL metrics and reporting.
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An independent assessment confirming the accuracy of reported data. Validation is often used for carbon footprints. Validation is the assessment of future emissions such as end-of-life disposal of products sold by the reporting entity.
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An independent assessment confirming the accuracy of reported data. Verification is often used for carbon footprints, sustainability claims, and ecolabels. Verification is the assessment of historic information.
Feel free to contact us at info@mchugh-shaw.co.nz to discuss your assurance requirements. We have over 15 years of experience and complete ISO 14064-1, GHG Protocol, ISO 14067, Airport Carbon Accreditation, Eco Choice Aotearoa, Product Stewardship and Aotearoa New Zealand Climate Standard assurance.
Last Updated July 2025