Summary of ISO 14064-3
ISO 14064-3 is a standard that provides guidance for the verification and validation of greenhouse gas (GHG) assertions. It outlines the principles, requirements, and procedures for conducting GHG verifications and the roles and responsibilities of verifiers, as well as the requirements for GHG assertions and the processes for verifying them.
The standard includes guidance on materiality and risk assessment, types of risks to consider, risk assessment considerations, information sources for risk assessment, and the uses of risk assessment information. It also provides guidance on evidence-gathering activities, analytical procedures, and the use of expert judgment in the verification process.
ISO 14064-3 emphasizes the importance of the verifier’s independence, competence, and ethical behavior, and requires that the verification process be systematic, documented, and transparent. The standard also emphasizes the importance of continuous improvement and the communication of verification results to stakeholders.
Impartiality
Design and execute the verification/validation engagement so that it is objective and does not introduce bias.??
Impartiality is a critical principle in the context of verification and validation of greenhouse gas (GHG) inventories or related data. The principle of impartiality requires that verification and validation activities are conducted objectively and without bias. This means that the verifier or validator must not have any conflict of interest or any undue influence over the verification/validation process, and should apply a balanced and neutral approach in their work.
To achieve impartiality, verification and validation engagements should be designed and executed in a way that ensures objectivity and avoids any potential sources of bias. This can be achieved through various measures, such as:
Maintaining independence: Verifiers and validators should be independent of the organization or entity being verified/validated, and should not have any direct or indirect financial or other interests in the outcome of the verification/validation engagement.
Using standardized methodologies: Verification and validation activities should be conducted in accordance with standardized methodologies or protocols, such as those established by the International Organization for Standardization (ISO).
Applying a risk-based approach: Verification and validation engagements should be designed based on a thorough understanding of the potential risks and uncertainties associated with the GHG inventory or related data being verified/validated, and the activities should be tailored to address those risks and uncertainties.
Transparency: The verification and validation process should be transparent, and the verifier or validator should communicate openly with the organization or entity being verified/validated throughout the engagement.
By adhering to the principle of impartiality, the verification and validation process can ensure that the reported GHG emissions and related data are accurate and reliable, and can be trusted by stakeholders.
Evidence-based approach – Ensure the verification/validation engagement employs a rational method for reaching reliable and reproducible verification/validation conclusions and is based on sufficient and appropriate evidence.
The evidence-based approach is an essential element of the verification/validation process for greenhouse gas (GHG) inventories or related data. The principle of the evidence-based approach requires that the verification/validation engagement employs a rational method for reaching reliable and reproducible verification/validation conclusions and is based on sufficient and appropriate evidence.
To ensure an evidence-based approach in the verification/validation process, the verifier or validator should follow a systematic and transparent process that includes the following key steps:
Planning: The verifier or validator should develop a verification/validation plan that includes a clear definition of the scope, objectives, and criteria for the engagement. The plan should also identify the methods and procedures to be used for collecting and analyzing data, and for reaching verification/validation conclusions.
Data collection: The verifier or validator should collect sufficient and appropriate evidence to support the verification/validation conclusions. This may include reviewing documentation, conducting interviews, and collecting samples, among other methods.
Analysis: The verifier or validator should analyze the data collected in a systematic and transparent manner to ensure that the conclusions reached are reliable and reproducible. This may include statistical analysis, modeling, or other analytical methods.
Conclusions: The verifier or validator should draw conclusions based on the evidence collected and analyzed, and should clearly document the reasoning and rationale behind the conclusions reached.
By following an evidence-based approach, the verification/validation process can ensure that the conclusions reached are reliable, reproducible, and based on sufficient and appropriate evidence. This helps to ensure that the reported GHG emissions and related data are accurate and reliable, and can be trusted by stakeholders.
Fair presentation
Ensure the verification/validation activities, findings, conclusions and opinions are truthfully and fairly presented. Report significant obstacles encountered during the process, as well as unresolved, diverging opinions among verifiers or validators, to the responsible party and the client.
The principle of fair presentation is a critical component of the verification and validation process for greenhouse gas (GHG) inventories or related data. The principle of fair presentation requires that the verification and validation activities, findings, conclusions, and opinions are truthfully and fairly presented.
To ensure fair presentation, the verifier or validator should ensure that their findings, conclusions, and opinions are based on the evidence collected and analyzed during the verification/validation process. Any significant obstacles encountered during the verification/validation process should be reported to the responsible party and the client, along with any unresolved, diverging opinions among verifiers or validators. This allows for a transparent and open communication process, and helps to ensure that the reported GHG emissions and related data are accurate and reliable.
Fair presentation also requires that the verification/validation report is clear and transparent, and that any limitations or uncertainties associated with the verification/validation process are clearly documented. This helps to ensure that the report is a true and fair account of the verification/validation activities and the conclusions reached.
Overall, the principle of fair presentation is critical for ensuring that the reported GHG emissions and related data are accurate, reliable, and can be trusted by stakeholders. By following this principle, the verification and validation process can provide a transparent and objective assessment of the GHG inventory or related data, and help organizations to demonstrate their commitment to addressing climate change.
Documentation
Document the verification/validation and ensure it establishes the basis for the conclusion and conformity with the criteria.?
The documentation principle is a fundamental aspect of the verification and validation process for greenhouse gas (GHG) inventories or related data. The documentation principle requires that the verification/validation is documented in a clear and transparent manner, and that the documentation establishes the basis for the verification/validation conclusions and conformity with the criteria.
To ensure that the verification/validation is properly documented, the verifier or validator should keep detailed records of all activities and findings during the verification/validation process. This may include records of data collection, analysis, and verification/validation conclusions, as well as any significant obstacles encountered during the process.
The documentation should be organized and presented in a manner that is clear and easy to understand. The verifier or validator should provide a comprehensive and transparent explanation of the methods and procedures used, and how the verification/validation conclusions were reached.
The documentation should also establish the basis for the verification/validation conclusions and conformity with the criteria. This means that the documentation should clearly demonstrate how the verification/validation activities and findings support the verification/validation conclusions and conformity with the criteria.
Overall, the documentation principle is critical for ensuring that the verification and validation process is transparent, objective, and reliable. By following this principle, organizations can demonstrate their commitment to addressing climate change and provide stakeholders with accurate and reliable GHG emissions and related data.
Conservativeness – When assessing comparable alternatives, use a selection that is cautiously moderate.
The conservativeness principle is an important aspect of the verification and validation process for greenhouse gas (GHG) inventories or related data. The principle of conservativeness requires that, when assessing comparable alternatives, the verifier or validator should use a selection that is cautiously moderate.
This means that, in cases where there are multiple alternatives or options available, the verifier or validator should select the alternative that is most moderate and conservative in terms of GHG emissions. This helps to ensure that the reported GHG emissions and related data are not overstated and are a conservative estimate of the actual emissions.
By following the conservativeness principle, the verifier or validator can ensure that the GHG emissions and related data are accurate, reliable, and can be trusted by stakeholders. This can help organizations to demonstrate their commitment to addressing climate change and to promote transparency and accountability in their reporting.
Overall, the conservativeness principle is a critical component of the verification and validation process for GHG emissions and related data. By using a selection that is cautiously moderate, the verifier or validator can ensure that the reported GHG emissions and related data are conservative and accurate, and can be trusted by stakeholders.
Example of conservativeness principle?
Here’s an example of how the conservativeness principle can be applied in the verification and validation of greenhouse gas (GHG) emissions data:
Let’s say that a company has two options for transporting goods to a customer: Option A involves shipping the goods by truck, while Option B involves shipping the goods by rail. The company is required to report the GHG emissions associated with transporting the goods to the customer.
In this scenario, the verifier or validator should select the transportation option that is most conservatively estimated in terms of GHG emissions. For example, if the GHG emissions associated with truck transportation are estimated to be 10 metric tons, while the GHG emissions associated with rail transportation are estimated to be 8 metric tons, the verifier or validator should select Option A (truck transportation) as more conservative estimate.
This conservative estimate helps to ensure that the reported GHG emissions data are not overstated and provides a more accurate and reliable representation of the company’s GHG emissions associated with transporting goods to the customer.
Overall, the conservativeness principle can help to promote transparency and accuracy in GHG emissions reporting, which is important for addressing climate change and meeting sustainability goals.
Pre-engagement activities
In the context of greenhouse gas (GHG) emissions verification or validation, the pre-engagement activities are an important step that the verifier or validator must undertake to ensure that the engagement is carried out effectively and efficiently. The following are some of the key aspects that the verifier or validator must confirm during the pre-engagement activities:
a) Type: The verifier or validator must confirm the type of engagement, which can be either verification or validation. Verification is the process of checking the accuracy and completeness of GHG emissions data, while validation is the process of assessing the overall reliability of GHG emissions data.
b) Objectives: The verifier or validator must confirm the objectives of the engagement, which can be either verification or validation. The objectives will help to guide the scope and criteria of the engagement.
c) Scope: The verifier or validator must confirm the scope of the engagement, which includes the boundary and period of the GHG emissions data to be verified or validated. The boundary refers to the physical or organizational limits of the emissions data, while the period refers to the time period covered by the data.
d) Criteria: The verifier or validator must confirm the criteria that will be used to evaluate the GHG emissions data, which can include materiality, level of assurance, and other relevant factors.
It is important for the verifier or validator to confirm these aspects of the engagement to ensure that the verification or validation is carried out effectively and efficiently. By doing so, the verifier or validator can ensure that the GHG emissions data is accurately reported and can be trusted by stakeholders. Annex C of the verification and validation document describes an additional engagement type called “agreed-upon procedures,” which may also be confirmed during the pre-engagement activities.
Objectives
The verifier/validator and client shall agree on the verification/validation objectives at the beginning of the verification/validation engagement.
Verification objectives shall include reaching a conclusion about the accuracy of the GHG statement and the conformity of the statement with the criteria.
Validation objectives shall include an assessment of the likelihood that implementation of the GHG- related activities will result in the achievement of GHG outcomes as stated by the responsible party, if included in the validation scope.
During the pre-engagement activities, the verifier or validator and the client must agree on the verification/validation objectives. The objectives will guide the verification/validation process and help to ensure that the engagement is carried out effectively and efficiently. The following are the objectives that must be agreed upon:
a) Verification objectives: The objective of verification is to reach a conclusion about the accuracy of the GHG statement and the conformity of the statement with criteria. This means that the verifier must check the GHG emissions data to ensure that it is accurate and complete, and then evaluate the data against the relevant criteria to determine if it meets the specified requirements.
b) Validation objectives: The objective of validation is to assess the likelihood that implementation of the GHG-related activities will result in the achievement of GHG outcomes as stated by the responsible party, if included in the validation scope. This means that the validator must evaluate the GHG emissions data to determine if the GHG-related activities are likely to result in the expected outcomes.
It is important for the verifier or validator and the client to agree on the objectives of the engagement to ensure that everyone is on the same page and working towards the same goal. This can help to ensure that the verification/validation is carried out effectively and efficiently, and that the results are reliable and useful to stakeholders.
Criteria
The verifier/validator and client shall agree on the criteria taking into account the principles and requirements of the standards or GHG programme to which the responsible party subscribes. The verifier/validator shall assess the suitability of the criteria proposed by the client, considering:
a) the method for determining engagement scope and boundaries;
b) the GHGs and sources, sinks and reservoirs (SSRs) to be accounted for;
c) the quantification methods;
d) requirements for disclosures.
Criteria shall be relevant, complete, reliable and understandable. It shall be available to the intended
user. The criteria shall be referenced in the opinion. ?
In the pre-engagement activities, the verifier/validator and the client must agree on the criteria to be used in the verification/validation engagement. The criteria should be in accordance with the principles and requirements of the applicable GHG programme or standard. The following are the criteria that must be agreed upon:
a) Scope and boundaries: The method for determining the scope and boundaries of the engagement must be agreed upon, to ensure that the GHG emissions data is accurately captured and analyzed.
b) GHGs and SSRs: The GHGs and sources, sinks and reservoirs (SSRs) to be accounted for must be agreed upon, to ensure that all relevant emissions data is captured and analyzed.
c) Quantification methods: The methods used to quantify the GHG emissions data must be agreed upon, to ensure that the data is accurate and reliable.
d) Disclosures: The requirements for disclosures must be agreed upon, to ensure that the GHG emissions data is transparent and useful to stakeholders.
The criteria must be relevant, complete, reliable and understandable, and should be available to the intended users of the verification/validation report. The criteria should also be referenced in the opinion to provide transparency and clarity about the criteria used in the engagement. The verifier/validator should assess the suitability of the proposed criteria and ensure that they are appropriate for the engagement.
Example of Criteria
Here are some examples of criteria that may be used in a verification/validation engagement for GHG emissions:
The criteria for calculating the GHG emissions should be in accordance with the applicable GHG protocol or standard, such as the Greenhouse Gas Protocol or ISO 14064.
The scope of the engagement should include all relevant sources, sinks, and reservoirs of GHG emissions, as well as any relevant processes or activities that contribute to those emissions.
The quantification methods used to calculate the GHG emissions should be consistent with the applicable GHG protocol or standard and be appropriate for the specific emission sources being measured.
The data used in the quantification should be accurate, complete, and reliable, and should be based on appropriate measurement and estimation methods.
The verification/validation report should disclose any limitations or uncertainties in the data or methodology used in the engagement, as well as any assumptions or estimates made.
The report should provide a clear and understandable summary of the GHG emissions data and any conclusions or recommendations resulting from the engagement.
5.1.7 Materiality thresholds
The verifier/validator shall confirm the materiality threshold required by the intended users. If no materiality threshold has been specified by intended users, the verifier/validator shall set (a) materiality threshold(s) and communicate them to the client.
Quantitative materiality refers to error in value in the GHG statement. Examples include misstatements, incomplete inventories, misclassified GHG emissions or misapplication of calculations.
Qualitative materiality refers to intangible issues that affect the GHG statement. Examples include:
a) control issues that erode the verifier’s confidence in the reported data;
b) poorly managed documented information;
c) difficulty in locating requested information;
d) noncompliance with regulations indirectly related to GHG emissions, removals or storage. ?
The materiality threshold refers to the level of error or uncertainty in the GHG statement that is considered significant enough to influence decisions made by the intended users. The verifier/validator must confirm the materiality threshold required by the intended users, and if not specified, they must set a materiality threshold and communicate it to the client. Materiality can have both quantitative and qualitative components, such as errors in the GHG statement or control issues that erode confidence in the reported data. The concept of materiality is used in designing the verification/validation and in assessing the evidence to come to a conclusion.
Materiality can quantitative component?
Yes, materiality can have a quantitative component. In the context of greenhouse gas reporting, quantitative materiality refers to the magnitude of the error or misstatement in the reported greenhouse gas emissions or removals that is considered material. This can be determined through various methods, such as percentage thresholds, absolute value thresholds, or a combination of both, depending on the specific reporting requirements or standards being followed. The materiality threshold helps to determine the level of assurance required for the verification/validation engagement and helps to ensure that the GHG information presented is accurate and reliable.
Example of Materiality can quantitative component?
Yes, materiality can have a quantitative component. Here’s an example:
Let’s say a company reports its total greenhouse gas emissions for the year to be 100,000 metric tons of carbon dioxide equivalent (CO2e). The verifier determines that there is an error in the calculation resulting in an overstatement of 5,000 metric tons of CO2e. This error represents 5% of the reported emissions.
In this case, the materiality threshold for the verifier might be set at 5% of reported emissions. The verifier would likely determine that the overstatement of 5,000 metric tons of CO2e is material because it exceeds the threshold.
Example of materiality can have qualitative component?
Here is a sample of how materiality can have a qualitative component:
Suppose a company reports a relatively small amount of greenhouse gas emissions in its inventory, but the emissions are from a highly publicized and controversial source, such as the use of fossil fuels extracted from a protected area. In this case, the issue may have significant qualitative materiality, as the public perception of the source of emissions could impact the reputation of the company and its ability to do business.
A team shall be selected that has the necessary skills and competences to undertake the verification?
Yes, selecting a team with the necessary skills and competences is an important part of the verification process. The team should have the expertise to understand the technical and operational aspects of the organization’s GHG management system and emissions inventory, as well as the knowledge to verify the data and information provided by the organization. The team should also have experience in conducting verifications in accordance with relevant standards or programs, and have a good understanding of the principles and requirements of the verification process.
what are the necessary skills and competences to undertake the verification?
The necessary skills and competencies for a team to undertake verification may vary depending on the type and scope of the verification engagement. However, some general skills and competencies that a team may need include:
- Understanding of relevant standards, protocols, and methodologies related to greenhouse gas accounting and reporting
- Knowledge of the industry or sector being verified
- Data analysis and interpretation skills, including the ability to use relevant software and tools
- Communication and interpersonal skills to engage with the responsible party and other stakeholders
- Technical writing skills to produce clear and concise verification reports
- Attention to detail and the ability to identify errors or inconsistencies in data and reporting
- Project management skills to ensure the verification engagement is completed on time and within budget.
It’s important for the team to have a combination of skills and expertise to ensure a comprehensive and robust verification process.
Verification/validation activities and techniques
Verifiers/validators shall use one or more of the following evidence-gathering activities and techniques in the verification/validation:
a) observation;
b) inquiry;
c) analytical testing;
d) confirmation;
e) recalculation;
f) examination;
g) retracing;
h) tracing;
i) control testing;
j) sampling;
k) estimate testing;
l) cross-checking;
m) reconciliation.
These are the verification/validation activities and techniques that can be used by verifiers/validators:
a) Observation: Directly observing the activities or processes being verified.
b) Inquiry: Obtaining information from interviews, questionnaires, or other means of collecting information.
c) Analytical testing: Using data analysis techniques, such as statistical or trend analysis, to verify the accuracy and consistency of the reported data.
d) Confirmation: Obtaining written or oral evidence from third parties to confirm the accuracy of the reported data.
e) Recalculation: Re-performing calculations or other data manipulation to verify the accuracy of the reported data.
f) Examination: Detailed examination of supporting documentation, such as invoices, receipts, and contracts, to verify the accuracy of the reported data.
g) Retracing: Following the flow of data from its original source to the reported data to verify its accuracy and completeness.
h) Tracing: Following the flow of data from the reported data to its original source to verify its accuracy and completeness.
i) Control testing: Testing the effectiveness of internal controls, such as processes or systems, to ensure the accuracy of reported data.
j) Sampling: Testing a representative portion of the reported data to draw conclusions about the accuracy and completeness of the entire set of data.
k) Estimate testing: Testing the accuracy of estimates used in the reported data.
l) Cross-checking: Comparing data from different sources to verify its accuracy and consistency.
m) Reconciliation: Comparing different sets of data to verify their accuracy and consistency.
Verifier/validator communication
The verifier/validator, as soon as practicable, shall communicate requests for clarification, material misstatements and nonconformities to the responsible party. If there is a material adjustment to be made to the GHG statement, the verifier/validator shall communicate the need for the adjustment to the responsible party.
If, in the verifier’s/validator’s judgement, the responsible party does not respond appropriately within a reasonable period, the verifier/validator shall inform the client, if different from the responsible party.
If, in the verifier’s/validator’s judgement, the client does not respond appropriately within a reasonable period, the verifier/validator shall:
a) issue a modified or adverse verification/validation opinion; or
b) withdraw from the verification/validation.
The verifier/validator should communicate non-material misstatements to the responsible party.?
The principle described in section 5.4.1 is related to the communication between the verifier/validator and the responsible party/client during the verification/validation process. The verifier/validator is required to communicate requests for clarification, material misstatements, and nonconformities to the responsible party, as well as the need for any material adjustment to the GHG statement. If the responsible party does not respond appropriately within a reasonable period, the verifier/validator should inform the client or issue a modified or adverse opinion or withdraw from the verification/validation. Non-material misstatements should also be communicated to the responsible party.
Sufficiency of evidence
If the verifier/validator determines that there is insufficient information to support the GHG statement, the verifier/validator shall request additional information. If sufficient information cannot be obtained and the information is necessary for the verifier/validator to form a conclusion, the verifier/validator shall not proceed with the verification/validation and shall disclaim the issuance of an opinion.?
Correct, if the verifier/validator determines that there is insufficient evidence to support the GHG statement, they shall request additional information. If sufficient information cannot be obtained and it is necessary for the verifier/validator to form a conclusion, they shall not proceed with the verification/validation and shall disclaim the issuance of an opinion.
Example ?
Sure, here’s an example of a situation where a verifier may determine that there is insufficient evidence:
During a verification engagement, the verifier requests documentation from the responsible party related to the quantification of emissions from a particular source. The responsible party provides some documentation, but the verifier determines that it is not sufficient to support the emissions reported in the GHG statement. The verifier then requests additional information from the responsible party, but the responsible party is unable to provide any further documentation. In this case, the verifier may determine that there is insufficient information to support the reported emissions and may disclaim the issuance of an opinion.
lntentional misstatement – If a matter comes to the verifier’s/validator’s attention that causes the verifier/validator to believe in the existence of intentional misstatement or noncompliance by the responsible party with laws and regulations, the verifier/validator shall communicate the matter to the appropriate parties as soon as practicable.?
An example of a situation where intentional misstatement or noncompliance by the responsible party could occur is if the verifier/validator discovers evidence that the responsible party has knowingly misrepresented data or provided false information in the GHG statement. In such a case, the verifier/validator would be required to report the matter to the relevant parties, which could include the client, the appropriate regulatory authorities, or other stakeholders as appropriate. The objective of this requirement is to ensure that intentional misstatement or noncompliance is identified and addressed promptly to maintain the credibility of the GHG statement and the verification/validation process.
Example ?
An example of an intentional misstatement could be a company deliberately underreporting its greenhouse gas emissions to meet regulatory targets or to present a more positive image to stakeholders. Another example could be the misclassification of emissions or the use of incorrect calculation methods in order to achieve a lower emission figure. If the verifier becomes aware of such intentional misstatements, they must communicate this matter to appropriate parties as soon as practicable.
Documented information
The verifier/validator shall maintain the following records:
a) engagement terms;
b) verification/validation plan;
c) evidence-gathering plan;
d) who performed the evidence-gathering activities and when they were performed;
e) collected evidence;
f) requests for clarification, material misstatements and nonconformities arising from the verification/validation and the conclusions reached;
g) communication with the responsible party on material misstatements;
h) the conclusions reached and opinions by the verifier/validator;
i) the name of the independent reviewer, the date of review and comments of the reviewer.
This section specifies the records that the verifier/validator is required to maintain. The records include the engagement terms, verification/validation plan, evidence-gathering plan, evidence collected, requests for clarification and nonconformities, communication with the responsible party, the conclusions and opinions reached, and the name of the independent reviewer, the date of review, and comments of the reviewer. These records are important for ensuring the integrity and transparency of the verification/validation process and for providing evidence of the work performed.
Strategic analysis
General
The verifier shall perform a strategic analysis to understand the activities and complexity of the organization, project or product, and to determine the nature and extent of the verification activities.
The strategic analysis shall consider:
a) relevant sector information;
b) the nature of operations of the facility(ies) or project or product;
c) the requirements of the criteria, including applicable regulatory and/or GHG programme requirements;
d) the intended user’s materiality threshold, including the qualitative and quantitative components;
e) the likely accuracy and completeness of the GHG statement;
f) the scope of the GHG statement and related boundaries;
g) the time boundary for data;
h) emissions SSRs and their contribution to the overall GHG statement;
i) changes in GHG emissions, removals and reservoir quantities from the prior reporting period;
j) appropriateness of quantification and reporting methods, and any changes;
k) sources of GHG information;
l) data management information system and controls;
m) management oversight of the responsible party’s reporting data and supporting processes;
n) the availability of evidence for the responsible party’s GHG information and statement;
o) the results of previous verifications;
p) the results of sensitivity or uncertainty analysis (see ISO 14067);
q) allocation approach;
r) the type of GHGs (e.g. only CO2 or also other gases);
s) the applied monitoring methodology (i.e. direct measurement of GHGs or calculation of GHGs with indirect measurement of activity and calculation data);
t) other relevant information.?
The verifier is required to perform a strategic analysis to understand the activities and complexity of the organization, project or product, and to determine the nature and extent of the verification activities. The strategic analysis should consider various factors, including relevant sector information, nature of operations, regulatory and/or GHG program requirements, intended user’s materiality threshold, scope of the GHG statement and related boundaries, and availability of evidence for the responsible party’s GHG information and statement. Other factors to be considered include data management information system and controls, management oversight, results of previous verifications, and the results of sensitivity or uncertainty analysis.
Example?
Sure, here’s an example of how the strategic analysis might be applied in practice:
A verifier has been engaged to verify the GHG emissions of a manufacturing facility. In order to perform the strategic analysis, the verifier would need to gather information about the facility, its operations, and its GHG emissions data. This might include:
Relevant sector information: The verifier would need to research the manufacturing sector and understand the typical sources of GHG emissions, as well as any relevant regulations or industry standards.
Nature of operations: The verifier would need to understand the specific processes and activities of the facility, including any inputs, outputs, or emissions.
Criteria and materiality threshold: The verifier would need to review the criteria for the verification, including any applicable regulatory or GHG program requirements, as well as the materiality threshold set by the intended user.
Accuracy and completeness: The verifier would need to assess the likely accuracy and completeness of the GHG statement based on the available data and information.
Scope and boundaries: The verifier would need to understand the scope of the GHG statement (e.g. which emissions sources are included) and the boundaries of the system being assessed (e.g. whether upstream or downstream emissions are included).
Data management and controls: The verifier would need to assess the responsible party’s data management systems and controls to ensure that the data is reliable and accurate.
Evidence availability: The verifier would need to assess the availability and quality of evidence to support the GHG statement.
Previous verifications: The verifier would need to review any previous verifications and the results of those verifications.
Sensitivity or uncertainty analysis: The verifier would need to review any sensitivity or uncertainty analysis performed by the responsible party to identify areas of potential risk or uncertainty.
Other relevant information: The verifier would need to consider any other relevant information, such as changes in the organization or operations, new technology or processes, or other factors that may impact the GHG emissions data.
Based on this strategic analysis, the verifier would be able to determine the nature and extent of the verification activities that will be required to ensure the accuracy and completeness of the GHG statement.
Example of Sensitivity analysis
An example of sensitivity analysis in the context of GHG emissions verification could be varying the assumptions and parameters used in the GHG emissions calculation to determine how sensitive the final emissions estimate is to changes in those assumptions or parameters. For instance, an emissions factor for a specific activity could be adjusted to reflect the uncertainty associated with that factor, and the resulting emissions estimate could be compared to the estimate obtained with the original emissions factor. Other parameters, such as activity data or measurement equipment calibration, could also be varied to assess the potential impact of these factors on the emissions estimate. By conducting sensitivity analysis, the verifier can better understand the reliability and accuracy of the GHG emissions estimate and identify areas where additional data or improvement in data quality could be beneficial.
How to conducting sensitivity analysis
Sensitivity analysis is conducted by varying one or more input parameters of a model or calculation to observe how the output changes. The steps for conducting sensitivity analysis can include:
Identify the input parameters: These are the variables in the model or calculation that can be varied to observe their impact on the output.
Determine the range of values: For each input parameter, determine a range of values to vary it over. The range should include the expected value and extreme values that could reasonably occur.
Set up the analysis: Vary each input parameter over its range of values and record the corresponding output for each variation. This can be done manually or through automated software.
Analyze the results: Examine the output data to identify how changes in the input parameters impact the output. This can include creating graphs or charts to visualize the relationships.
Interpret the results: Determine the significance of the changes and their potential impact on the overall conclusions or decisions that will be based on the analysis.
Example?
An example of a sensitivity analysis for a GHG statement might involve varying one or more input parameters to the GHG inventory calculation model (e.g. emission factors, activity data, or conversion factors) and observing the resulting changes to the calculated emissions. This can help identify which inputs are most sensitive to changes and which have the greatest impact on the overall results.
For instance, one might vary the emission factor for a particular process by ±10%, ±20%, or ±30% and compare the resulting changes to the total GHG emissions. Or, one might test the impact of different conversion factors for energy use or transportation on the overall results. By analyzing the sensitivity of the results to different inputs, the verifier can identify the areas where the GHG statement is most vulnerable to errors and uncertainties, and prioritize efforts to improve data quality and accuracy in those areas.
Risk assessment
General
The verifier shall perform a risk assessment of the GHG statement to identify the risk of a material misstatement or nonconformity with the criteria. The risk assessment shall consider the results of the materiality assessment.
The verifier shall assess the risk of misstatement and determine the nature and extent of evidence- gathering activities. The verifier shall determine performance materiality taking into account the intended user’s quantitative materiality threshold. The verifier shall identify qualitative matters that may be material.?
The following is an example of conducting a risk assessment for a GHG statement:
Assuming a company’s GHG statement reported emissions from their manufacturing processes and supply chain. The verifier would perform a risk assessment by evaluating the processes and data used in reporting emissions. They would consider the risk of inaccurate data, missing data, or bias in the calculations used to estimate emissions.
They would also consider the risks associated with changes in the organization’s operations or the reporting criteria, as well as the risks of noncompliance with applicable regulations or standards.
The verifier would then determine the nature and extent of the evidence-gathering activities needed to address identified risks. They would determine the sample size and select which data sets to evaluate. The verifier would use the intended user’s quantitative materiality threshold to identify which matters are most significant to report.
The verifier would identify any qualitative matters that may be material, such as management’s estimation methods or the data management system used to prepare the GHG statement. Based on the risk assessment, the verifier would also determine the performance materiality level, which represents the maximum amount of misstatement that the verifier would tolerate before they would conclude that the GHG statement is materially misstated.
Types of risks
Inherent risks, control risks and detection risks shall be identified and assessed for the GHG statement. These risks shall be identified:
a) for emissions and removals: occurrence, completeness, accuracy, cut-off and classification;
b) for storage: existence, rights and obligations, completeness, and accuracy and allocation.?
The standard requires that for the GHG statement, the verifier must identify and assess three types of risks: inherent risks, control risks, and detection risks. These risks should be identified for emissions, removals, and storage. For emissions and removals, the following risks should be assessed: occurrence, completeness, accuracy, cut-off, and classification. For storage, the following risks should be assessed: existence, rights and obligations, completeness, accuracy, and allocation. By assessing these risks, the verifier can determine the nature and extent of evidence-gathering activities and determine performance materiality.
Risk assessment considerations
The risk assessment shall consider the following:
a) the likelihood of intentional misstatement in the GHG statement;
b) the relative effect of emission sources on the overall GHG statement and materiality;
c) the likelihood of omission of a potentially significant emission source;
d) whether there are any significant emissions that are outside the normal course of business for the responsible party or that otherwise appear to be unusual;
e) the nature of operations specific to an organization, facility, project or product;
f) the degree of complexity in determining the organizational or project boundary or product system boundary and whether related parties are involved;
g) any changes from prior periods;
h) the likelihood of non-compliance with applicable laws and regulations that can have a direct effect
on the content of the GHG statement;
i) any significant economic or regulatory changes that might impact emissions and emissions reporting;
j) selection, quality and sources of GHG data;
k) the level of detail of the available documentation;
l) the nature and complexity of quantification methods;
m) the degree of subjectivity in the quantification of emissions;
n) any significant estimates and the data on which they are based;
o) the characteristics of the data management information system and controls;
p) the apparent effectiveness of the responsible party’s control system in identifying and preventing errors or omissions;
q) any controls used to monitor and report of GHG data;
r) the experience, skills and training of personnel.
The risk assessment for a GHG statement should consider the likelihood of intentional misstatement, the relative effect of emission sources, the likelihood of omitting a significant source, the nature of operations, complexity in determining boundaries, changes from prior periods, non-compliance with laws, quality and sources of GHG data, level of detail in documentation, subjectivity and complexity of quantification methods, significant estimates and data, characteristics of data management information systems, control systems effectiveness, monitoring and reporting controls, and personnel experience, skills and training.
lnformation sources for risk assessment
The verifier may perform an initial site visit to obtain data and information for the risk assessment.
The verifier may perform high-level analytical procedures to determine other areas of risk. These high- level analytical procedures may include:
a) evaluation of changes in GHG emission intensity;
b) evaluation of changes in GHG emissions, removals and storage over time;
c) evaluation of expected GHG emissions, removals and storage against reported emissions.
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Additional information sources for risk assessment may include the following:
a) documentation of previous verifications, if available;
b) technical and scientific reports and studies;
c) information about the operation of the facility(ies) or project or product;
d) applicable laws and regulations;
e) any other relevant information available to the verifier.
6.1.2.7 Uses for risk assessment information
The risk assessment shall be used in developing the verification and evidence-gathering plans. Any
input into the risk assessment shall be recorded.
The risk assessment output may address how the verification is planned with respect to the following:
a) GHG emissions SSRs;
b) boundaries;
c) data management details;
d) management controls.
The information obtained from the risk assessment is used to develop the verification and evidence-gathering plans. The results of the risk assessment help in determining the areas of high risk and focus the verification activities on those areas. The risk assessment output may be used to plan the verification with respect to GHG emissions, boundaries, data management details, and management controls. The input into the risk assessment should be recorded to provide transparency and facilitate future audits or reviews.
The verifier shall design evidence-gathering activities to collect sufficient and appropriate evidence upon which to base the conclusion. The verifier shall obtain more persuasive evidence the higher the risk of misstatement. The verifier shall consider inherent risk and detection risk in designing the evidence-gathering activities.
Irrespective of the risks identified, the verifier shall design and perform analytical procedures and tests for each type of material emission or removal.
The verifier shall develop evidence-gathering activities that determine whether the GHG statement conforms to the criteria, taking into account the principles of the standards or GHG programme that apply to the GHG statement.?
This passage outlines the steps that the verifier must take to design evidence-gathering activities in order to collect sufficient and appropriate evidence to base their conclusion on. The verifier should obtain more persuasive evidence if the risk of misstatement is higher, and consider inherent risk and detection risk when designing evidence-gathering activities. The verifier must also perform analytical procedures and tests for each type of material emission or removal, regardless of the risks identified. Finally, the verifier must develop evidence-gathering activities that determine whether the GHG statement conforms to the criteria, taking into account the principles of the standards or GHG programme that apply to the GHG statement.
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