Emissions assurance does not mean accurate.
Our team is witnessing companies overlooking foundational emissions governance while being fixated on larger decarbonisation opportunities.
These companies are overlooking the easy wins and low-hanging fruit. To CFO’s new to this game, getting your house in order is essential, as experience shows plenty of opportunities to make instant reductions by reviewing existing calculations in detail.
We just saved a company $34 million in carbon liabilities
Our team recently saved a company $34 million in carbon liabilities towards their 2030 target simply from a detailed look at their calculations, even though the emissions inventory had been recently ‘reasonably assured’. The volume of emission saved annually was equivalent to the required carbon reduction for that year, simply from a calculation error.
It begs the question, are your assurer’s competent given the money you are paying them?
We fully support the assurance process and the independence it brings. However, this issue has not been an isolated case. We are seeing this trend with the majority of clients we have worked with, and it often comes down to an absence of a comprehensive emissions governance process internally.
Over 100,000 t CO2 per annum from incorrect calculations
Over the previous 12 months, we have identified significant inaccuracies in emissions inventories accumulating to over 100,000 t CO2-e per annum. That is the equivalent of one whole safeguard facility! Scale this across all large emitters and imagine the reductions achieved purely from refining emission calculations.
Assurance is a challenging and meticulous job. In many instances, a simple scan of a company’s inventory and a couple of questions have quickly uncovered these outliers which have been passed off as immaterial. Sourcing companies with industry expertise is critical to refining your emissions inventory; plenty of boutique consultancies in Australia specialise in this.
Materiality of Emissions: depends on many factors.
Understanding the materiality of emissions is a pivotal aspect often overlooked. The onus lies on the company, not the auditor, to decide the significance. The trap is that materiality is viewed in the context of an annual inventory, not as part of the broader decarbonisation strategy.
Overlooked factors include:
- cumulative savings until 2030 targets,
- the percentage contribution towards these targets, and
- the mitigation of long-term carbon liabilities.
This holistic approach ensures a comprehensive understanding of materiality.
At what point do assurer’s become liable?
With increasing corporate and regulatory scrutiny, simple oversights can lead to significant liabilities over the long term.
This raises the question: At what point do assurers become liable for these oversights?
With the AASB standards and the mandate for increasing levels of assurance, what safeguards can you put in place to address this issue?
Assessing the Value of Assurance
As the cost of assurance providers rises, how much is assurance truly worth, mainly when conducted annually? Companies paying a premium for these services must scrutinise contractual clauses.
In many cases, assurers absolve themselves of any liability. Reviewing these clauses to ensure alignment between the value of assurance provided and the contractual commitments made is imperative.
Companies must safeguard their interests and hold all parties accountable for their roles in emissions governance.
For CFOs New to the Game
It’s important to understand that assurance is only one tool in your decarbonisation and reporting journey; proper emissions governance unfolds internally throughout the year. If you want to increase the accuracy of your company’s inventory, plenty of boutique and specialist emission consulting firms around Australia can provide a wealth of expertise.
Don’t overlook the importance of a robust emissions governance framework.
If you would like to know more