What are the emerging trends and standards for carbon reporting and verification?

Initiating a systematic measurement and disclosure of an organization's greenhouse gas (GHG) emissions is the first step toward the green transformation of a company. This process enables businesses to understand their footprint, identify emission sources, and develop strategies to mitigate their environmental impact. An independent assessment of reported carbon data ensures accuracy and compliance, fostering trust both externally and internally. As carbon reporting becomes increasingly significant from a legal perspective, being well-prepared significantly aids in mitigating the long-term costs of transforming your business while also adding a positive image of the company.

Carbon reporting is the first step in assessing a company's impact on climate change, which is unequivocally affecting the globe. Based on the data collected, a company can develop mitigation and adaptation strategies to reduce its GHG emissions both within and beyond its organizational boundaries. Third-party verification of the carbon report is essential to ensure data accuracy, and regulatory compliance, and to provide credibility to the emissions data. Accurate carbon reporting and performance can attract investors and open opportunities such as sustainability-linked loans and green loans, while also improving the company's brand image.

Emerging trends in carbon reporting and verification include increased granularity in data collection, with a focus on real-time monitoring and third-party verification to ensure accuracy. Standards are evolving toward greater transparency and comparability, often driven by regulatory bodies and stakeholder demand. Companies are adopting frameworks like the Task Force on Climate-related Financial Disclosures (TCFD) for more structured reporting. Blockchain technology is also being explored for its potential to provide immutable and transparent records of emissions data. These advancements aim to provide stakeholders with clearer insights into corporate environmental impact and progress toward sustainability goals.

Emerging trends in carbon reporting and verification include Science-Based Targets (SBTs) to align emissions reduction goals with climate science, Scope 3 reporting to assess full value chain impacts, and TCFD (Task Force on Climate-related Financial Disclosures) guidelines for disclosing climate-related risks and opportunities. Standards such as ISO 14064 and the GHG Protocol provide frameworks for quantifying and reporting greenhouse gas emissions. Increasingly, third-party verification by accredited auditors ensures accuracy and credibility in carbon reporting. Integrated reporting frameworks like SASB and CDP streamline carbon disclosure alongside broader ESG metrics, reflecting a holistic approach to sustainability reporting.

The first step in Carbon Reporting would be to calculate your footprint. Depending on the maturity of the organisation, you will first have to understand your business, identify the various sources of emissions, start measuring the data along with proper documentation. Post this, proper organisation and reporting boundaries need to be established. An inventory can be created with documented references for all the emission factors, GWPs used (All these references used should be from the latest documents). Depending on your intended users requirements, regulatory requirements and business objectives, you may choose to report on various scope of emissions within our outside your boundary as defined by GHG protocol.

To measure the carbon footprint, start by selecting a guidance framework, with the GHG Protocol being the most widely accepted. Reporting according to the GHG Protocol involves: 1. Setting the Organizational Boundary: Decide on the boundary for reporting - equity share or control approach. 2. Setting the Operational Boundary: Identify and categorize emissions as follows: a. Scope 1: Direct emissions from operations. b. Scope 2: Indirect emissions from purchased energy. c. Scope 3: Indirect emissions from the value chain. 3. Choosing the Emission Factors: Use emission factors from IPCC, DEFRA, or USEPA. 4. Choosing GWP: Apply Global Warming Potential values for 100 years, as specified in the latest IPCC Assessment Report.

The method and scope for your carbon calculations depend a bit on where you are on your journey, as your calculations will be improved over time. However, if you're just about to start, I suggest to start with some of the categories where you have a good understanding of your emission source activities, where data is available and where you can access relevant emission factors. Scope 1 is related to your company owned buildings and vehicles while scope 2 relates to purchased energy. These emission categories are often relatively easy to start with. A good idea is to ask your suppliers for the emission factors to use!

Let's do it for an industry... Identifying Emission Sources: To commence the measurement process, it is essential to identify and categorize emission sources within the industry. 1. Combustion Emissions: For emissions originating from combustion, gather data on the consumption of fossil fuels (coal, natural gas, etc.) or biomass. The key greenhouse gases associated with combustion are CO2, CH4, N2O. Utilize emission factors provided by regulatory bodies or industry standards to convert fuel consumption into CO2e emissions. 2. Process Emissions: Process emissions arise from chemical transformations and fugitive releases. The chemical transformation of raw materials releases CO2, CH4, and N2O and convert into CO2e.

The first step in carbon reporting is to measure your footprint using frameworks like the Greenhouse Gas Protocol. It divides emissions into Scope 1 (direct), Scope 2 (indirect from energy), and Scope 3 (indirect from the value chain). Choose which scopes to report based on your business goals.

After measuring your carbon footprint, report it using platforms like CDP, GRI, TCFD, or SBTi. These frameworks help disclose environmental data, sustainability performance, and climate-related risks and targets to relevant audiences.

The number of standards for sustainability reporting starts to feel a bit overwhelming.. However, the CSRD legislation that came into affect in EU from 1st of Jan this year require about 50 000 companies (with some phase-in requirements the comming years) to disclose sustainability related information based on the standards called ESRS. These standards have a high interoptability with many of the standards mentioned here - such as GRI, TCFD, GRI - and also inclues disclosures that requires the undertaking company to use the GHG Protocol for calculating carbon as well as the EU Taxonomy for assessing sustainable activities. I beleive ESRS will be considered as the most important standard to follow for companies in the EU going forward.

Financial institutions are recommended to report their GHG emissions using PCAF (Partnership for Carbon Accounting Financials). This standard is based on the widely-adopted GHG Protocol, which ensures that emissions data is consistent and comparable. Moreover, PCAF is aligned with the TCFD (Task Force on Climate-related Financial Disclosures) which promotes transparent climate-related financial information.

Except GRI, TCFD, CDP and GHG, we do have other standards which we can also consider and they are : 1-> ISO 14064 standard 2-> The Partnership for Carbon Accounting Financials (PCAF) 3-> The Verified Carbon Standard (VCS) Program

When reporting your carbon footprint, it is essential to consider relevant standards and platforms. The Carbon Disclosure Project (CDP) offers a global, non-profit approach to collecting and publishing environmental data from companies, cities and regions. The Global Reporting Initiative (GRI) stands out as a leading framework, covering economic, environmental and social aspects of corporate sustainability performance. The Task Force on Climate-related Financial Disclosures (TCFD) offers a voluntary approach to communicating climate risks and opportunities to investors and stakeholders. Complementing these initiatives, Science Based Targets (SBTi), the result of collaboration between CDP, World Resources Institute (WRI),

When dealing with GHG emissions data, utilising carbon accounting software can be the key for your company to ensure accurate data processing and methodologies. Leading providers of carbon accounting software have dedicated scientific teams continually refining calculation methodologies. They update sets of global and detailed emission factors, addressing the specific needs of companies in a more tailored manner. It is suggested to opt for a partner certified for compliance with the GHG protocol.

The analogy with tropical peatlands highlights the need for a balanced environment, where verification becomes a valuable tool for identifying possible errors and opportunities for improvement. Various types of entities, such as accredited verification bodies, certification systems or auditors, can carry out this verification. It is important to note that in some standards and reporting platforms, such as CDP, TCFD or SBTi, verification may be both required and recommended. Therefore, by aligning themselves with these practices, organizations not only strengthen their environmental commitment, but also contribute to the construction of a sustainable future.

To verify your carbon footprint, engage an independent third party, such as accredited verification bodies or auditors. This ensures accuracy, completeness, and credibility in emission data and calculations. Verification enhances transparency and identifies areas for improvement, aligning with reporting standards like CDP, TCFD, and SBTi.

Verification is not just a formality but a critical step in ensuring the integrity of your sustainability efforts. It provides an objective assessment, helping you identify potential errors and areas for improvement. This rigorous scrutiny can lead to more accurate reporting and better environmental performance Some reporting standards and platforms, such as the Carbon Disclosure Project (CDP), Task Force on Climate-related Financial Disclosures (TCFD), and Science Based Targets initiative (SBTi), either require or recommend verification. Complying with these standards can enhance your organization’s reputation and provide a competitive advantage by demonstrating a commitment to credible and transparent sustainability practices.

What are the benefits of carbon reporting and verification Carbon reporting and verification can bring multiple benefits to your business, such as reducing your environmental impact and operational costs, enhancing your reputation and stakeholder relations, increasing your market access and competitiveness, and supporting your innovation and growth. By engaging in carbon reporting and verification, you can identify and implement emission reduction strategies, demonstrate your sustainability performance and leadership, meet the expectations of customers, investors, regulators, and partners, as well as explore new opportunities and risks related to climate change and low-carbon transition

Just like tropical peatlands, which represent complex ecosystems in a deceptively simple way, carbon reporting and verification can simplify the complexity of a company's carbon emissions. These practices offer significant benefits, such as reducing environmental impact and operating costs. Similarly, just as peatlands play a crucial role in absorbing carbon, companies can improve their reputation and stakeholder relationships by demonstrating a commitment to sustainability. Clarity in communication about emissions reduction efforts, environmental performance and sustainable practices can increase market access and company competitiveness.

Ter um relatório de carbono divulgado publicamente mostra a transparência do negócio o que pode ser muito benéfico para a marca. Um negócio que mostra sua pegada de carbono e que foi auditada passa credibilidade para os clientes, investidores, reguladores e parceiros.

Many companies struggle to have accurate carbon reporting. The reasons? ?? Complex supply chains ?? Different measurement methodologies ?? Define the boundaries of emissions can be ambiguous, especially in global supply chains ?? Inconsistent reporting methods due to a lack of standardized verification procedures globally ?? Verification processes can be resource-intensive and costly for organizations.

To tackle data challenges in carbon reporting, particularly in emerging countries, three key strategies can be employed. Firstly, it is important to prioritize efforts on major emission sources or 'carbon hotspots' (20/80 rule). Secondly, when actual emission data is unavailable, estimations can be used provided they are accompanied by clearly documented assumptions, ensuring transparency and the potential for future refinement. Lastly, it is crucial to continually work towards enhancing GHG reporting by expanding coverage and improving calculation methods, aiming for more accurate and comprehensive data over time.

Challenges in carbon reporting and verification include managing diverse data sources, defining clear scope boundaries, and adhering to measurement standards. Best practices involve meticulous data collection, adherence to reporting standards like CDP and TCFD, and selecting competent verifiers for accuracy and transparency. Clear, comprehensive reporting and robust evidence provision further enhance credibility and accountability in carbon footprint disclosures.

Here are some challenges that can be partially addressed by installing a robust continuous emission monitoring system: Data accuracy and quality. Incomplete data and data gaps. Scope and boundary definitions. Changing emission factors and standards. Global variability in regulations. Technological challenges. Verification and assurance. Resource constraints. Dynamic nature of emissions sources. Public disclosure concerns. Many companies struggle with accurate carbon reporting. Complex supply chains.

Here are best practices for carbon reporting : 1-> Disclose your GHG emissions data transparently, providing details on the accounting and calculation methodologies, data sources, and any relevant assumptions used. 2-> Align the disclosure / reporting with the principles of relevance, completeness, consistency, transparency, and accuracy as outlined in the GHG Protocol and ISO 14064 standards. 3-> Consider using a carbon accounting platform that is compliant with the GHG Protocol to facilitate accurate reporting and benchmarking

Fuel combustion emissions are determined by Continuous Emission Monitoring Systems (CEMS), fuel composition data, or default emission factors. CEMS excel for heterogeneous fuels; site-specific data measures HHV, carbon content, and molecular weight. Process emissions rely on CEMS, mass balance, or emission factors. Allocation challenges arise in combined stacks emitting both combustion and process CO2. Mass balance tracks carbon flow, while site-specific or default factors gauge emissions. Default factors provide averages per unit of raw material or output. Each method aligns with source category dynamics, ensuring accurate GHG reporting.