The global climate crisis has heightened the need for accurate reporting and disclosure of greenhouse gas (GHG) emissions. As organisations worldwide strive to reduce their carbon footprints and achieve sustainability targets, stakeholders require increased confidence in the data and information presented in GHG emissions disclosures. NUS explores the concepts of limited and reasonable assurance in relation to GHG emissions disclosure and how they contribute to enhanced reporting and corporate accountability.
Types of Assurance
Assurance engagements provide stakeholders with an independent and objective opinion on the reliability and credibility of GHG emissions disclosures. There are two primary types of assurance: limited and reasonable.
Limited Assurance
A lower level of assurance that involves the assurance provider expressing a conclusion about whether they are aware of any material modifications that should be made to the disclosure for it to be in accordance with disclosure requirements. It is equivalent to the assurance provided in an interim review of financial statements.
Limited assurance engagements are less rigorous than reasonable assurance but still provide a meaningful level of confidence in the GHG statement. This approach is a more cost-effective option, but stakeholders should be aware that they do not offer the same level of confidence as reasonable assurance.
Reasonable Assurance
involves the assessment body expressing an opinion about whether the subject matter is in accordance with relevant criteria in all material aspects and free from material misstatement. This level of assurance is equivalent to that provided in a full and final audit.
While reasonable assurance is more rigorous and provides higher confidence in the GHG statement, it is also more costly and time-consuming.
| Limited Assurance | Reasonable Assurance |
|---|---|
| Audit emission sources that cover 80 -90% of the total GHG emissions. | Audit emission sources that cover 90 – 95% of the total GHG emissions. |
| Negative – form of conclusion is provided. "found no evidence that suggests GHG emissions statement is not materially correct and not a fair representation…" | Positive – form of conclusion is provided "GHG emissions statement is materially correct and a fair representation… " |
|
Less evidence required and smaller sample size used for testing. Select emission sources sampled based on a cut of the data (not 100% of each source). |
More evidence required and pursued in more depth. Larger sample size used to audit the selected emissions sources. |
| Underlying assumption that the data control system is reliable | Assesses the design, existence, and effectiveness of data control system. |
The role of Limited and Reasonable Assurance
Limited and reasonable assurance plays a vital role in improving the quality and credibility of GHG emissions disclosures. Assurance engagements help increase stakeholder confidence and trust in the reported GHG emissions data. These standards also lead to enhanced quality and comparability of GHG statements across organisations. Furthermore, assurance engagements promote corporate accountability and drive sustainability efforts by ensuring accurate and reliable reporting of GHG emissions data.
Why Assurance is Important for Sustainability Credibility
To ensure that a company’s externally reported carbon emissions are credible and follow the GHG Protocol, a third-party independent review and assessment is required. This approach ensures that companies are communicating stated emissions and carbon reductions in an accurate and transparent manner.
Limited and Reasonable assurance can also play a key role in supporting external sustainability standards which require assurance as part of the verification / reporting process, including GHG Protocol, SBTi, B Corp and the Corporate Sustainability Reporting Directive (CSRD).
The overall requirements and expectations for companies to demonstrate precise and assured carbon data is only expected to increase as more companies showcase their progress to customers, suppliers and the wider supply-chain.
Assurance Readiness Assessment
Companies seeking assurance often require a readiness assessment in order to understand the suitable level of assurance to pursue, alongside Scope 1, 2 and 3 coverage. A readiness assessment can incorporate an assurance expert to assess current data, methodologies, internal processes and traceability in order to detail a company’s suitability for third-party assurance in alignment with ISO 14064.
This approach can be key in developing a realistic short- to long-term approach for data assurance which considers the quality and evidence of current carbon data sets.
How NUS Can Help
NUS’ Sustainability team are able to support clients all aspects of limited and reasonable assurance under the ISO 14064 standard. Our team of data experts and approved verifiers can guide clients through the process, carrying out readiness assessments, and independently assuring all Scope 1, 2 and 3 data.
To discuss how NUS can support your company in meeting best-practice standards for Scope 1, 2 and 3 carbon emissions reporting assurance, get in touch at contact@nusconsulting.com.