How Corporate Footprint Verification Works

Verification is the step that turns a corporate carbon footprint from an internal calculation into a claim that others can rely on. In Thailand the process is described in the TGO Guideline for Verification of the Carbon Footprint of an Organization (แนวทางการทวนสอบคาร์บอนฟุตพริ้นท์ขององค์กร), second printing, January 2017. This article follows the guideline's structure so that an organization preparing for its first verification knows what to expect. Page numbers are the printed page numbers of the guideline.

#The four principles

The guideline starts from the five principles of the assessment framework (relevance, completeness, consistency, accuracy and transparency) and then states four principles that the verification itself must uphold to reach a credible result (TGO Verification Guideline, 2017, p.18):

• Independence: verification activities must remain free of bias and of any conflict between personal and collective interests, so that findings and conclusions rest on the factual evidence (TGO Verification Guideline, 2017, p.18).
• Ethical conduct: the process must demonstrate honesty, professional confidentiality and judgment free from any undue influence (TGO Verification Guideline, 2017, p.19).
• Fair presentation: findings, conclusions and reports must be factually correct and must report significant obstacles encountered, unresolved deficiencies and differences of opinion between the verifier, the responsible party and the client (TGO Verification Guideline, 2017, p.19).
• Due professional care: the verifier must exercise professional care and judgment with regard to the objectives and confidence of the client and intended users, and must have the skills and expertise the verification requires (TGO Verification Guideline, 2017, p.19).

#Who verifies

A verification team should consist of a team leader and an appropriate mix of verifiers and independent experts for the agreed scope, with at least one member holding detailed, experience-based knowledge in each of a list of areas (TGO Verification Guideline, 2017, p.19). The list includes the legal conditions for verification work; the principles of international standards and the TGO assessment guideline; accreditation requirements for the verifier's role; the processes that generate emissions and the associated calculation, monitoring and reporting techniques; biological systems affecting removals; methods used by the registration and certification body; boundary setting; data assessment and sampling methods including assurance level, materiality and the verification plan; and risk assessment methods (TGO Verification Guideline, 2017, pp.20-21).

Individual verifiers must be personnel assigned by a verification body registered and certified by TGO, must be competent and professional, independent of any undue influence, free of conflicts of interest with the responsible party and intended users, ethical, and must conclude and report accurately on the facts found (TGO Verification Guideline, 2017, p.21). Where the team lacks a needed skill, external independent experts may support the work under the supervision of the team leader, and their expertise, relevance and independence must be assessed (TGO Verification Guideline, 2017, pp.22-23).

#Agreeing the terms: assurance, objectives, criteria, scope, materiality

Before starting, the verifier and the client must agree on several matters (TGO Verification Guideline, 2017, p.23). The first is the level of assurance. The guideline is explicit that absolute assurance cannot be given, because of judgment, testing, inherent limits of controls and the qualitative nature of some evidence; the verifier assesses the evidence gathered and issues a statement at one of two levels (TGO Verification Guideline, 2017, p.23). Reasonable assurance can be given only when the materiality conditions of the TGO registration criteria are met, and even then does not amount to absolute assurance. Limited assurance places less emphasis on the detail of testing GHG data and information, and the verifier must not lead intended users to mistake it for reasonable assurance (TGO Verification Guideline, 2017, p.24).

The objectives the verifier should consider are conformity with the assessment guideline and the registration criteria, the organization's emission and removal inventory, any significant changes since the previous report, and the organization's GHG-related operational controls (TGO Verification Guideline, 2017, p.24). Criteria must be consistent with the registration and certification criteria, the assessment guideline, or the rules of another voluntary reporting scheme (TGO Verification Guideline, 2017, p.25). The scope must cover the organizational boundary including legal, financial, operational and geographic aspects, the physical infrastructure, activities, technologies and processes, the sources, sinks and reservoirs included, the gases included, and the time period (TGO Verification Guideline, 2017, p.25).

Materiality has a number attached. TGO sets the materiality threshold for certifying a corporate footprint, for both limited and reasonable assurance, at 5 percent of the organization's total emissions, with reasonable assurance involving stricter checking and review of the data (TGO Verification Guideline, 2017, p.26). The guideline defines materiality as an error, omission or misstatement that would affect the GHG assertion and consequently the decisions of intended users, and notes that materiality considerations are used to design the verification and the sampling plan (TGO Verification Guideline, 2017, p.16). Both qualitative and quantitative aspects count, and several individually small errors can together exceed the threshold (TGO Verification Guideline, 2017, pp.26-27).

#The verification process

The process begins with a review in which the verifier assesses the nature, size and complexity of the engagement, the credibility and completeness of the GHG information and assertion, and the qualifications of the responsible party; the verifier must not proceed if the information provided is insufficient (TGO Verification Guideline, 2017, pp.27-28). The verifier must also assess the causes and severity of potential errors, omissions and misstatements in terms of three risks: inherent risk from the data itself, control risk where the organization has not put controls in place, and detection risk that the verifier fails to find an uncorrected misstatement (TGO Verification Guideline, 2017, p.28).

A written verification plan must record at least the assurance level, objectives, criteria, scope, materiality, and the activities and schedule; it may be adjusted during the engagement and must be communicated to the client and the responsible party (TGO Verification Guideline, 2017, pp.28-29).

Sampling is risk-based. The verifier must prepare a sampling plan covering the agreed assurance level, scope, criteria, the amount and type of evidence needed, how representative samples will be chosen, and the risk of error, and must be ready to revise it when new information appears (TGO Verification Guideline, 2017, p.36). Because complete access to all information is not normally possible, the guideline recommends identifying the main reported risks, understanding the controls that manage them, finding areas whose risk is not controlled, and directing the sampling plan at those areas (TGO Verification Guideline, 2017, p.37). Examples of risks include incompleteness such as an unreported significant source or a boundary error; inaccuracy such as double counting, wrong data transfer or an inappropriate emission factor; inconsistency such as an undocumented change in method from the previous year; and weak data controls such as inadequate checks on transfers from raw data to spreadsheets, no internal review, and uncalibrated instruments (TGO Verification Guideline, 2017, p.38).

The verifier then evaluates the organization's GHG information system and controls, looking at how data is selected and managed, how it is collected, processed, aggregated and reported, the systems that ensure accuracy, the design and maintenance of the information system, and the results of any previous assessments (TGO Verification Guideline, 2017, pp.39-40).

#The verification statement

At the end of the engagement the verifier must issue a verification statement to the responsible party. The statement must identify the intended users of the GHG assertion, state the level of assurance, describe the objectives, scope or criteria, describe the type of data and information supporting the assertion (theoretical calculation, estimation or recorded data), be used together with the responsible party's GHG assertion, and include the verifier's conclusion on the assertion together with any limitations and exclusions (TGO Verification Guideline, 2017, pp.57-58). A common format is recommended, including a statement that the verification followed the TGO assessment guideline (TGO Verification Guideline, 2017, p.58).

#What the organization should do

The general requirements add the organization's side. An organization that decides to be verified should prepare a verification plan in line with the TGO guideline and choose the assurance level that fits the needs of its intended users and the TGO registration criteria (TGO CFO Requirements, 2022, p.34). In CarbonBiz, an engagement records the reporting year, scope and target assurance level, a readiness gate checks evidence coverage before submission, the data set is frozen with a hash so it cannot change during the review, and findings raised by the verifier are tracked to closure before the statement is uploaded. That structure mirrors the plan, sampling and statement stages the guideline describes.