Carbon accounting and verification are necessary to achieve sustainability goals

What is carbon accounting?
Carbon accounting refers to the process of quantifying an organization's greenhouse gas (GHG) emissions by measuring the amount of carbon dioxide and other GHGs emitted through its operations and activities. It involves calculating Scope 1 direct emissions from owned or controlled sources, Scope 2 energy indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the reporting company, and Scope 3 all other indirect emissions that occur in a company's value chain. Accurate carbon accounting provides a baseline to track emission reductions over time and verify progress toward climate targets.

Importance of third-party verification
While internal carbon accounting may seem sufficient, third-party Carbon Verification provides credibility and trust in reported emissions data. Independent verification follows standardized GHG accounting and reporting protocols to check if the methodology, calculations, and documentation used to compile the carbon footprint adhere to best practices. Verifiers review source data, validate assumptions, recalculate figures, and check for omissions to ensure a high level of assurance in the inventory. This gives stakeholders confidence that published results have undergone rigorous review by an impartial body.

Protocols for verification standards
The two most commonly used voluntary standards for carbon verification are the ISO 14064 series from the International Organization for Standardization and the Greenhouse Gas Protocol Corporate Standard. Verifiers are accredited to these standards to ensure they have the technical competence and quality processes to perform reviews. ISO 14064-3 provides requirements and guidelines for validating and verifying GHG assertions while the GHG Protocol Corporate Standard outlines principles and requirements for GHG accounting and reporting at the corporate level. Compliance with internationally recognized protocols lends legitimacy to reported emissions data.

Scope of third-party verification
A verification audit checks all aspects of the GHG accounting process. This includes reviewing the organizational and operational boundaries selected, identifying GHG sources and sinks, collecting activity data, selecting and justifying emission factors, undertaking calculations, managing uncertainties, and compiling the final carbon footprint report. Verifiers also evaluate the quality of records and trace data back to primary sources to independently validate the results. They issue a verification statement confirming if there are any material misstatements in the reported emissions, and the level of assurance - reasonable or limited - on the figures.

Benefits of the verification process
Third-party verification brings several important benefits for companies pursuing carbon neutrality and net zero goals. It ensures robust GHG data management systems are in place to quantify, record and report emissions accurately over time. The independent checks identify gaps or errors in the inventory for continuous improvement of carbon accounting practices. Verified emissions data is critical to support climate commitments and actions. It gives confidence to stakeholders - investors, customers and policymakers - that published results are credible for monitoring progress against science-based targets. Verification also helps future-proof climate reporting as regulatory frameworks tighten in many jurisdictions.

Challenges with verification
While third-party verification strengthens climate reporting, it also presents challenges that need to be addressed. The process can be expensive, time-consuming and complex depending on the size and diversity of operations. Significant effort is required to collect, quality check and consolidate activity and emissions data across multiple facilities, geographies and scopes. Selecting an accredited verifier, defining the scope and planning the audit takes careful preparation. Data gaps or uncertain factors may require conservative assumptions, potentially diluting the assurance level. But overcoming these hurdles through robust data management systems helps streamline future verification cycles.

Role of digital technologies
New digital solutions are helping to automate carbon accounting and reducing the effort required for third-party reviews. Continuous emissions monitoring technologies provide real-time raw data to calculate Scope 1 figures. Cloud-based GHG reporting platforms pull activity information directly from operational systems to compile multi-scope inventories more efficiently. Digital records and receipts simplify verification of certain Scope 3 categories. Blockchain offers opportunities to securely track emissions data throughout complex value chains. Artificial intelligence tools can analyze large datasets, flag outliers and identify errors to cut down verification cycles. As technologies evolve, they will make the carbon accounting and verification process more accurate, transparent and cost-effective for organizations worldwide.

Third-party verification plays a crucial governance role for companies striving to achieve science-based emission reduction goals and net zero targets through robust carbon accounting practices. While presenting some compliance challenges, the benefits of independent reviews in boosting the credibility of reported climate performance far outweigh the costs. Adopting digital solutions can streamline verification processes over time. As climate policies continue to tighten, carbon verification will become increasingly important for organizations across sectors to demonstrate progress toward sustainability.

Get more insights, On Carbon Verification