Define your GHG inventory’s scope and boundaries by using the GHG Protocol Corporate Standard. This framework helps classify emissions into scope 1 (direct), scope 2 (indirect from energy), and scope 3 (other indirect). Set organizational and operational boundaries to determine which entities or facilities' emissions are included.

Defining the scope and boundaries of GHG emissions is a crucial first step in ensuring accurate reporting and verification. The GHG Protocol Corporate Standard provides a globally recognized framework that helps companies like those in the Nordic region, including Finnish firms, to categorize emissions into three scopes (direct, indirect, and value chain). In Finland, companies like Fortum have adopted this approach to address emissions across their entire value chain. This comprehensive strategy ensures accountability while aligning with global sustainability standards like the Paris Agreement.

Establishing Clear Scope and Boundaries for GHG Inventory Verification Before verifying your GHG inventory, defining clear scope and boundaries is essential. Utilize the GHG Protocol Corporate Standard, which outlines three emission scopes: Scope 1 (direct emissions), Scope 2 (indirect emissions from purchased energy), and Scope 3 (other indirect emissions from your value chain). Determine organizational and operational boundaries to account for emissions from entities or facilities you own, control, or influence.

When considering scope 3, ensure that there is a firm understanding of what the company supply chain looks like. This means having a clear view of stock-supply and inventory. This is driven through forward and backward integration.

A multinational corporation may start by defining the scope of its GHG inventory to include direct emissions from owned or controlled sources (Scope 1), indirect emissions from the generation of purchased electricity (Scope 2), and other indirect emissions that occur in the value chain (Scope 3).

Choose your verification approach and level, incorporating new regulatory frameworks When choosing your verification approach and level, consider the new regulatory requirements. These regulations emphasise the transition from limited to reasonable assurance, reflecting a move towards more rigorous sustainability reporting. For US firms, this involves mandatory verification of Scope 1 and Scope 2 GHG emissions, with a phased approach for different filer types. The EU's broader CSRD encompasses environmental, social, and governance aspects, requiring comprehensive sustainability reporting. Thus, your verification approach should align with these emerging standards, offering credibility and meeting regulatory expectations.

Reasonable assurance is likely to become the go to standard for providing financial participants more confidence on quality of environmental claims. This is particularly driven by the difference with limited assurance where the negative externality caused is the center of focus.

Optimal GHG Verification Approach and Level After defining scope and boundaries, choose your verification approach: internal for management insight or external for stakeholder assurance. Select a verification level: reasonable assurance for robust reporting, limited assurance for public disclosure, or verification for learning for internal projects. Tailor your approach and level to align with your goals and audience, ensuring credible and transparent GHG verification.

A regional manufacturer may opt for a third-party verification at a reasonable level of assurance for its Scope 1 and Scope 2 emissions, while initially conducting an internal verification for Scope 3 emissions to allow the company to build internal capacity and progressively enhance the rigor of its verification processes.

Choose your verification approach based on your GHG inventory's purpose and audience. Internal verification aids management, while external verification offers credibility for stakeholders. Select a verification level: reasonable assurance (highest), limited assurance (intermediate), or verification for learning (lowest).

Prepare your verification plan by outlining objectives, scope, criteria, methods, and schedule using the GHG Protocol Verification Standard. Organize your documentation, including the GHG inventory report, calculation worksheets, policies, and supporting data, to ensure a thorough verification process.

Crafting a Comprehensive GHG Verification Plan Prepare your verification plan and documentation meticulously to ensure clarity and effectiveness in the GHG verification process. Utilize the GHG Protocol Verification Standard for guidance, detailing objectives, scope, criteria, methods, and schedule. This standard offers best practices for planning, conducting, reporting, and addressing verification findings. Organize essential documentation such as GHG inventory reports, calculation worksheets, data sources, policies, and procedures. Thorough preparation and adherence to standards bolster credibility and transparency in your GHG reporting efforts.

An international logistics firm might develop a detailed verification plan that includes timelines, roles and responsibilities, and required documentation to ensure all relevant data is collected and organized, facilitating a smooth verification process. The documentation includes emission factors, activity data, and calculation methodologies, ensuring transparency and traceability.

Executing GHG Verification and Review Execute thorough verification activities to ensure the quality and reliability of your GHG inventory, adhering to the GHG Protocol Verification Standard for guidance. Utilize methods like data sampling, site visits, interviews, document review, recalculations, and risk assessment to identify errors, gaps, and inconsistencies. Evaluate your GHG inventory against verification criteria such as relevance, completeness, consistency, accuracy, transparency, and conservativeness. Follow stringent review processes to uphold credibility and transparency in your GHG reporting, ensuring compliance with standards and enhancing stakeholder trust.

If you do not use a third party for limited or reasonable assurance, your internal audit team can be especially helpful. So can using software with an audit trail for inventory and calculations. An example of this is Persefoni.

The fourth step is to conduct verification activities and review your GHG inventory for quality and reliability. Use the GHG Protocol Verification Standard for methods like data sampling, site visits, and document review. Ensure your inventory meets criteria such as relevance, completeness, and accuracy.

A tech company engages an accredited verification body to conduct site visits and review data collection processes. The verification body assesses the accuracy of emissions data, the robustness of the data management system, and the adherence to reporting standards such as ISO 14064 or the GHG Protocol to review areas for improvement and strengthens the credibility of the reported data.

Reporting plays a vital role in allowing capital flows in markets. While creativity is important in creating a unique selling point to investors and clients, associating with tried and tested standards is crucial. Verification of claims by an external party is a strong signal to markets but also requires internalization of reporting standards. The easier firms make data alignment and categorization, the easier automation of reported data becomes as well.

Communicating GHG Verification Findings and Recommendations Report your GHG verification findings and recommendations systematically to communicate the outcomes effectively. Utilize the GHG Protocol Verification Standard for structured guidance and templates: Clearly state verification objectives, scope, criteria, level, and approach. Detail verification activities and review methods employed, such as data sampling and document review. Present verification findings objectively, highlighting errors, gaps, and inconsistencies identified.

Following the verification, a food and beverage company receives a detailed report outlining the findings and recommendations to highlight any discrepancies in the data, provides recommendations for improving data accuracy, and suggests enhancements to the overall GHG management system. The company can then communicate these findings to stakeholders, demonstrating its commitment to transparency and continuous improvement.

The fifth step is to report your verification findings and recommendations. Use the GHG Protocol Verification Standard for guidance and templates. Include objectives, scope, criteria, methods, findings, recommendations, statements, and any limitations. This ensures transparency and completeness in your verification process.

Implementing GHG Verification Actions and Improvements Execute comprehensive actions to address identified issues and enhance GHG inventory quality based on the GHG Protocol Verification Standard. Corrective Measures: Correct errors, update data, and revise calculations to ensure accuracy and reliability. Methodology Enhancement: Improve methodologies for better transparency and consistency in GHG reporting. Documentation and Action Plans: Document changes made and develop action plans to address gaps and improve future verifications. Monitoring Progress: Monitor progress regularly to track implementation effectiveness and maintain continuous improvement.

The final step is to implement verification actions and improvements, addressing issues from your verification process to enhance GHG inventory quality. Use the GHG Protocol Verification Standard for guidance. Correct errors, update data, improve methods, and document changes. Communicate results and actions to stakeholders, ensuring transparency and progress monitoring.

A utility company acts on the verification recommendations by implementing an advanced data management system and training staff on best practices for data collection and reporting. These improvements not only enhance the accuracy of future GHG inventories but also streamline the verification process, reducing costs and time.

Be careful of greenwashing risk. Increasingly, there will be more focus on the role it plays in reducing information asymmetries in financial markets. Not all greenwashing is done on purpose but regardless is a disclosing firm’s responsibility. This can be done by identifying data quality vs data quantity. Not all data is good. While it’s important to provide information prudent to carbon footprints, social inclusion, biodiversity, and financial stability, be mindful on the data reliability. Transparency is essential. Even if a firm doesn’t know parts of their business’ data universe, it’s best to just disclose that.