The Importance Of Verification: Corporate GHG Reports Under ISO 14064
Commonly, one of the first steps that a company has to complete when it has to report on ESG is the corporate Green House Gas (GHG) quantification report.
Its purpose is to provide a standardized, credible, and transparent account of a company's greenhouse gas emissions. Beyond the internal benefits of GHG reporting for the companies, the external benefits are based on policy compliance, participation in GHG programs, enabling stakeholder engagement and gaining transparency and trust with investors, clients and regulators.
Now, both national and international mandatory regimes require GHG emissions accounting within the ESG reports. They already tell companies how to calculate them, what is the minimum needed and how to report it.
However, there are key questions that need an answer amid the necessity for real transparency, credibility and comparability. Who checks the numbers? What is the difference between a company that reports well and another that can prove it? Therefore, a key component in for the GHG reporting is verification, where an independent third party verifies the accuracy of the emissions calculations. This provides assurance to the customers, stakeholders and regulators that the company’s claim is true.
The GHG Report Standards
Before going deeper on verification, it is important to understand that there are two main standards worldwide used for GHG accounting, the GHG Protocol and the ISO 14064-1. The former was first published in 2001 and last revised in 2004.
The latter was first published in 2004 and its last revision was on 2018 (being this version reviewed and confirmed in 2024). Based on general terms, the standards have huge common ground. Both frameworks share the same categorization of emissions within scopes, and they keep the same core principles of accuracy, completeness, consistency, transparency, and relevance in the quantification and reporting.
Nevertheless, there are key differences between them. GHG protocol provides a comprehensive and detailed approach, while ISO 14064-1 suggests a procedural framework, where organizations may choose calculation methodologies. As well, third party verification is mandatory under ISO 14064-1 when an organization seeks public disclosure or certification, whereas the GHG protocol considers verification optional.
It is important to highlight that the discussion here is not whether which framework is the best and which is the worst. Companies may choose the framework that adapts better to their needs and goals.
It will depend on the company’s resources, the level of detail and disclosure reporting requirements, among other examples. In addition, it is possible to combine both standards. A company can use GHG Protocol methodology to calculate emissions, develop the report under ISO 14064-1 and verify under ISO 14064-3 (this is the ISO verification standard).
Compliance and Frameworks
Now, a company can decide the standard to calculate their carbon emissions. It depends on which ESG reporting framework they comply with, and whether it requires assurance. For example, Europe’s Corporate Sustainability Reporting Directive (CSRD) determines GHG emissions from scopes 1, 2 and 3 key for the European Sustainability Reporting Standards (ESRS) climate disclosures.
Because assurance is within the core architecture of the ESRS, they require actual GHG emission figures that must be subject to external assurance. Thus, the ISO 14064-3 standard is commonly used by assurance providers. On the other hand, reporting schemes such as EcoVadis or the Carbon Disclosure Project (CDP) do not require verification, but if the company has done it, they will score higher on their report, which will gain visibility.
In the United Kingdom, the Streamlined Energy and Carbon Reporting (SECR) declares GHG emissions Scopes 1 and 2 mandatory under the GHG Protocol methodology, via the directors report. This relates to the adoption of the Task Force on Climate-related Financial Disclosures (TCFD) in the UK, which makes this disclosure framework mandatory for listed companies, and made metrics (such as the GHG emissions) relevant for accountability and target progress. However, third party verification is not mandatory.
As part of the ongoing regulation changes, UK is adopting the International Sustainability Standards Board (ISSB) IFSR standards, and adapting them to the country’s needs under the name UK SRS S1/S2.
The climate related standard would be S2 series, and verification is initially proposed mandatory for listed companies from January 2027 under UK’s Financial Conduct Authority (FCA) consultation. As well, there is a new sustainability assurance standard known as UK ISSA 5000, which standardizes how assurance is done if/when procured. Even so, the consultation paper discusses on whether verification was obtained or not, but does not make it mandatory, but it is important to stay updated on any changes through the gov.uk Department for Business and Trade UK SRS pages, and FCA/FRC joint statements.
Key Steps
With the picture clear, the next step is to work through the key stages of the verification process. It begins with choosing a verifier, a decision that should rest on impartiality and competence to avoid conflicts of interest and safeguard transparency.
Once a verifier is in place, the report criteria, including the reporting framework, organizational boundaries and emissions list, need to be established and consistently represented throughout the report.
Professional opinions state that one of the most common non-conformities in a verification audit lies in emission identification and its justification.
These criteria then feed directly into a further decision, setting a materiality threshold, the maximum acceptable margin of error or omission in the reported data before a misstatement is considered significant. This is not a fixed figure. It is set in direct relation to the level of assurance being sought, since a higher level of assurance demands a tighter threshold to justify the greater confidence being claimed.
The level of assurance reflects how much confidence an independent third party audit can place in the GHG report, and there are two levels. Limited assurance offers moderate confidence, typically between 5.1% and 10%, expressed in negative terms, the verifier states that nothing came to their attention indicating the report is materially misstated, rather than actively confirming it is correct. Reasonable assurance offers a higher, though not absolute, confidence, typically between 0.5% and 5%, expressed in positive terms, the verifier actively states that the report is fairly presented. The stronger claim leaves less room for error, which is why its threshold is tighter, and why it demands more extensive evidence from the verifier to support that claim.
What lies ahead
Verification is not an easy job; it requires preparation, resources and justification of the procedure. Nonetheless, that effort is what converts a reported figure into a defensible one.
A company that has only calculated its emissions can describe what it did.
A company that has verified them can prove it, to a regulator, an investor, or a customer who has learned to ask the question first.
This is precisely where the current regulatory gap sits. Regimes such as SECR and, so far, the UK's own consultation on UK SRS S2 ask companies to disclose whether assurance was obtained, not to obtain it.
That is a low bar, but it is a public one. Every unverified figure now sits on the record as unverified, at the exact moment stakeholders are learning to look for the difference. Verification, in that sense, is no longer a compliance cost to be minimised. The credibility asset determines whether a GHG report is read as a claim or as evidence.
