Preparing for third-party climate assurance

📢 New guidance out: GHG emissions, uncertainty and data quality If you’re preparing or assuring climate disclosures, you’ll want to read the latest release from the External Reporting Board in New Zealand. New Zealand is quickly becoming a honeypot of examples and insights for Group 1 reporters. This guidance tackles two of the most anxiety-inducing parts of Scope 3 reporting: uncertainty and data quality. It offers practical info, clear examples, and a refreshing dose of clarity. Some key points: "All GHG emission disclosures contain high levels of estimation and uncertainty. This is a normal part of GHG emissions measurement and disclosure. It is important to remember that one of the main reasons for measuring and disclosing GHG emissions information is to identify areas of risk and opportunity, rather than providing absolute precision." "An entity should work towards obtaining better quality data over time. An entity should prioritise improving areas with high or significant emissions and low data quality, to meet the decision-making needs of its users." "An entity should have the same systems and controls over information to meet their reporting obligations, regardless of whether it is intending to obtain limited or reasonable assurance." "There is a high degree of inherent uncertainty involved in measuring GHG emissions. The GHG emissions disclosures should make the nature and extent of uncertainty clear, and the assurance practitioner may draw attention to relevant disclosures." "The entity’s choice of emission factors is a source of estimation uncertainty. An entity should choose the emission factors that best represent its emission sources, based on considerations such as technology, time, geography, peer review, global warming potential (GWP) and alternate sources. An entity must disclose the source of emission factors used to calculate its GHG emissions. The assurance practitioner will evaluate whether the methods are appropriate and have been applied consistently." "An entity using data from third parties (including suppliers) should understand the method the third party used to calculate that data... Where material, this information should be included in an entity’s methods and assumptions disclosures." "The entity should develop its own systems and controls to ascertain that the supplier data is appropriate to be used as a basis for its disclosures... More material sources of emissions should be subject to a greater level of scrutiny by the entity." Heaps of good stuff to read through - and this is exactly why Sumday asks more questions of suppliers than most, so you can actually disclose the right information if you're using their data. We're also a tech company full of CPAs and ex auditors, for a reason.

🌍 Is Your Audit Committee Ready for ESG’s New Frontier? I just read the superb “ESG Guide for Audit Committees (2025)” from KPMG’s Board Leadership Centre. It’s hands-down one of the most practical and timely resources for any governance professional navigating ESG today. 🔍 Here’s why this guide is a game-changer: 🌐 1. Global Standards Are Colliding. ISSB, SEC, EFRAG, CSA… The guide brilliantly breaks down how different sustainability disclosure frameworks overlap (and clash), so Audit Committees can cut through regulatory noise and focus on what matters most. ➡ Did you know? The SEC may soon require companies to quantify climate risks directly in financial statement line items if impacts exceed just 1% of that line item. Talk about raising the bar! 📊 2. Climate Change is Financial Risk. Climate disclosures aren’t just sustainability fluff—they’re starting to reshape financial statements: Impairments of non-financial assets Going-concern risk assessments Expected credit losses for financial assets Provisions for environmental obligations 🔎 Key takeaway: Audit Committees need to ask management hard questions about how climate assumptions impact cash flows, valuations, and asset lives. 🛡 3. ESG Assurance is No Longer Optional. Stakeholders want assurance that ESG numbers are solid. KPMG’s guide demystifies: Limited vs. reasonable assurance Assurance standards like CSAE 3000 & CSAE 3410 Why companies need a “readiness assessment” BEFORE inviting the auditors in 📌 Many companies simply aren’t ready for reasonable assurance on ESG—internal controls, systems, and data still lag behind. 💼 4. ESG Controls ≠ Financial Controls. Unlike financial data, ESG data often comes from: Sustainability teams Supply chain managers HR or legal Third-party data sources The guide urges Audit Committees to challenge: Data definitions Consistency across systems Documentation of estimates and assumptions Governance over who owns ESG reporting 🎯 5. Greenwashing is a Legal Risk. With litigation around “greenwashing” rising globally, Audit Committees must oversee how ESG claims are made to avoid: Reputational fallout Legal penalties Loss of social license to operate 🚨 A single exaggerated ESG claim could now lead to regulatory investigations and investor lawsuits. 💡 My Take: This guide is pure gold. It’s no longer enough for Audit Committees to simply “oversee ESG.” They need to: Connect ESG with financial reporting. Understand emerging regulations. Scrutinize ESG data with the same rigor as financials. Audit Committees are the new front line for ESG credibility—and this KPMG guide is the perfect roadmap to get started. #ESG #AuditCommittee #Governance #Sustainability #RiskManagement #ESGReporting #GRC #ClimateRisk #CorporateGovernance #InternalAudit #Assurance #SustainabilityReporting #KPMG #BoardLeadership #Greenwashing #CSRD #ISSB #SECDisclosures #FinancialReporting #SustainableFinance #DataGovernance

ISSB IFRS S2: The New Standard for Climate-Related Financial Disclosures As organizations prepare for mandatory climate reporting, understanding the quantitative requirements of IFRS S2 is critical for effective implementation. Key Metrics Framework: • Scope 1 & 2 Emissions: Absolute gross GHG emissions in metric tonnes CO2 equivalent, disaggregated by constituent gases (CO2, CH4, N2O, HFCs, PFCs, SF6, NF3) • Scope 3 Emissions: Categories 1-15 under GHG Protocol, with materiality assessment determining disclosure scope. Focus on upstream/downstream value chain emissions • Climate Scenario Analysis: Quantitative assessment using at least one scenario aligned with limiting warming to 1.5°C. Disclose key assumptions, time horizons, and financial impacts • Transition Plans: Quantitative targets with interim milestones, capital allocation for climate initiatives, and progress metrics against science-based targets Practical Implementation Considerations: 1. Data Infrastructure: Establish robust data collection systems for activity data across operations and value chain 2. Governance Integration: Climate risks embedded in enterprise risk management with board-level oversight and executive accountability 3. Financial Quantification: Climate-related risks and opportunities reflected in financial planning, with sensitivity analysis on key assumptions 4. Third-Party Assurance: Limited or reasonable assurance over GHG emissions data and climate-related metrics Regulatory Alignment: IFRS S2 builds on TCFD recommendations while providing specific disclosure requirements. Organizations should prepare for jurisdiction-specific adoption timelines and potential additional requirements. The standard represents a significant step toward standardized, comparable climate-related financial information that enables informed capital allocation decisions. What implementation challenges are you seeing in your organization's climate disclosure preparation?

After months of anticipation from the corporations mandated to disclose through California’s Climate Corporate Data Accountability Act (SB 253) and Climate-Related Financial Risk Act (SB 261), as well as the investors and consumers of this information, we have to get comfortable operating strategically in a dynamic landscape. In this ESG Today article I summarize the current status of the laws, following CARB's May public workshop. The takeaway is clear: deadlines are firm, reporting requirements are coming, and companies must prepare now. 🗓️The Clock is Ticking: Despite ongoing development of prescriptive reporting rules expected by year-end, core reporting requirements begin in 2026 for FY2025 data. Companies should already be deep in the stakeholder collaboration, data collection, and analysis required to meet reporting requirements. ✅"Good Faith Effort" Requires Concrete Action: While CARB is not enforcing compliance penalties for SB 253 in 2026, this allowance is only for companies that demonstrate good faith efforts to meet reporting requirements.  This means scope 1 & 2 emissions inventories must obtain limited assurance. 📈Beyond Compliance, It's Strategic Imperative: This isn't just about ticking boxes.  Market demand for climate disclosure is high, with investors increasingly incorporating climate considerations into their risk assessments and capital allocation decisions. Similar business advantages exist for companies to de-risk and decarbonize supply chains.  So what should companies do over the next 6 months ahead of reporting deadlines? Make "No-Regret" Decisions Today: The smartest move is to focus on foundational work that aligns with current requirements and global best practices. This includes: 📊Building audit-ready, GHG Protocol-aligned emissions inventories  🔐Preparing for assurance from day one with transparent documentation  💻Investing in robust data systems that can adapt ⚖️Incorporate climate into core governance, risk and resilience infrastructure The market is already demanding this level of transparency. California isn't backing down, and organizations that lead with proactive preparation will be the ones to thrive in this dynamic landscape. What proactive steps has your organization taken to navigate these non-negotiable deadlines? Let me know in the comments! 👇 https://lnkd.in/ekGhT_kq Workiva #climatedisclosure #climaterisk #GHGemissions

CA SB 219 isn't about reporting. It's about survival. Here's a 5-step survival guide 👇 1️⃣ Work backwards from 2027. It sounds like a long time from now, but it's not. In 2027 you'll be required to report Scope 3 emissions, which for most reporters will be the first time they measure, let alone report, their Scope 3 emissions. YMMV but for my money it doesn't make sense to measure and report the first year, so consider measuring in 2026. 2️⃣ Define business needs and tech stack. Too many teams are working off of spreadsheets, outsourcing to consultants, or engaging grad students. Technology can handle your calculations and manage your data, so engage early in the tech stack you need for reporting. 3️⃣ Identify your executive sponsor. Starting early and building your tech stack costs money, but it can also be a lever for business strategy moving forward. Find an executive sponsor who already believes in that vision and can navigate the bureaucracy. Ideally this person is a C or VP level executive in sustainability, finance, legal, or IT. 4️⃣ Find your external vendors and options. Your measurement and climate risks require third party assurance. I'd bet that many firms will be completely sold out of spots to help out if you wait until 2026. You may also want to identify vendors for help with climate risk assessment, SBTis (if you plan to do this), report design and communications, and more. 5️⃣ Build a timeline and identify all needed roles on your team. Your measurement and reporting continue to grow in complexity and rigor. You'll need particular people to execute parts of the project, even with the right tech stack and external partners in place. The key takeaway? 2025 is nearly here, and you're starting to run out of time to get all of the pieces in place. Tell me in the comments: What else should be on this list?

🌍 Scope 1, Scope 2 & Scope 3 Emissions — Do You Really Know the Difference? With climate regulations tightening and net-zero commitments accelerating, accurate GHG emissions accounting is no longer optional—it’s a compliance requirement. Whether you’re preparing for CSRD in Europe, SEC climate disclosures in the US, or aligning with the Saudi Green Initiative (SGI), understanding Scope 1, 2, and 3 emissions is now essential for business resilience and regulatory alignment. Let’s break it down and clear up some common confusions: 🔥 Scope 1: Direct Emissions — Owned & Controlled 💨 What it is: Emissions from sources directly owned or controlled by your organization. ➡️ Think fuel combustion, company vehicle fleets, and refrigerant leaks. ⚠️ Common confusion: It’s NOT just fuel use! It also includes: ✅ Fugitive emissions (e.g., refrigerant leaks) ✅ Process emissions (e.g., CO₂ from cement production) 🔍 What’s new: The CSRD and SEC climate rules will require third-party assurance on Scope 1 data—demanding higher accuracy and better internal controls. ⚡ Scope 2: Indirect Emissions — Purchased Energy 🔌 What it is: Emissions from the electricity, steam, heating, or cooling that your company purchases. ⚠️ Common confusion: ✅ Scope 2 only covers purchased energy. ❌ It does NOT include emissions from energy you generate on-site—those are Scope 1. 🔍 What’s new: Companies are using PPAs & RECs to reduce Scope 2, but under CSRD and ISSB standards, transparency is key—location-based vs. market-based accounting must be disclosed. 🌐 Scope 3: Indirect Value Chain Emissions — Upstream & Downstream 🔄 What it is: All other indirect emissions across your value chain—from suppliers to product end-use. ⚠️ Common confusion: ✅ Scope 3 is NOT optional if you’re serious about net zero. ✅ It includes: Purchased goods & services (supplier emissions) Business travel & commuting Product use & disposal 🔍 What’s new: Investors and frameworks like SBTi & CDP are pushing for Scope 3 reduction targets, as it often accounts for 70-90% of a company’s emissions. 🚀 Key takeaway: ✅ Scope 1 = Direct emissions from owned/controlled sources. ✅ Scope 2 = Indirect emissions from purchased energy. ✅ Scope 3 = Indirect emissions across the value chain. 💡 As regulations tighten, how is your company preparing for accurate Scope 1, 2, and 3 reporting? Let’s discuss in the comments! 👇 #GHGEmissions #Scope1 #Scope2 #Scope3 #NetZero #ClimateDisclosure #Sustainability #CSRD #ESG #CarbonAccounting #ClimateAction #SupplyChainSustainability #EnergyTransition

Mastering GHG Accounting Principles: A Strategic Must for Climate-Conscious Organizations Accurate greenhouse gas (GHG) accounting isn't just a regulatory need — it’s a strategic enabler for climate resilience, regulatory compliance, and stakeholder trust. The GHG Protocol, the world’s most widely used framework for corporate GHG accounting and reporting, is grounded in five fundamental principles. These ensure that the data reported is not only credible but also comparable, transparent, and decision-useful. Here’s a deep dive into each principle: 🔍 1. Relevance Your GHG inventory should reflect the actual emissions and risks of your organization. ➤ Include emission sources, activities, and boundaries that are most significant to your business operations and stakeholders. ➤ Align disclosures with your business goals and ESG commitments. 📘 2. Completeness Leave no critical data behind. ➤ Account for all relevant Scope 1, Scope 2, and applicable Scope 3 emissions within your selected boundary. ➤ If certain sources are excluded (due to data gaps or materiality thresholds), disclose and explain the exclusions clearly. ♻️ 3. Consistency Track performance with clarity over time. ➤ Apply consistent methodologies, emission factors, and boundaries year-on-year. ➤ Any changes (such as business acquisitions, divestitures, or methodology updates) should be transparently documented for valid comparisons. 🧾 4. Transparency Reporting is only as good as its clarity. ➤ Provide a clear audit trail — document methods, assumptions, exclusions, and sources of data. ➤ Transparency is key for internal audits, third-party assurance, and investor confidence. 📊 5. Accuracy Ensure that reported data is a reliable basis for action. ➤ Minimize uncertainties wherever possible through quality data collection, proper estimation techniques, and internal validation processes. ➤ While perfection isn’t expected, significant over- or under-estimations must be avoided. 📌 Why this matters: Whether preparing your first sustainability report, undergoing ESG assurance, or aiming for Net Zero targets, aligning with these principles builds credibility, investor trust, and operational excellence. Want to implement these principles effectively in your GHG reporting or ESG journey? Let's connect — we help organizations embed accuracy and integrity in every emission disclosed. #GHGAccounting #GHGProtocol #SustainabilityReporting #ESG #NetZero #ClimateDisclosure #CarbonAccounting #GHGEmissions #ESGStrategy #EnvironmentalImpact #Scope123 #GreenhouseGas #SustainabilityLeadership #ClimateAction #CorporateSustainability

Avoiding Common Pitfalls in GHG Inventories: A Guide to Credibility and Compliance:   As climate disclosures become central to ESG reporting, group companies with multiple operational units face mounting pressure to develop accurate and credible greenhouse gas (GHG) inventories. However, the complexity of consolidating emissions data from diverse units often leads to common mistakes that can result in misleading disclosures, reputational risks, and accusations of greenwashing.   One of the most frequent issues is inconsistent boundary definitions. Different subsidiaries may employ varying approaches, such as operational control in one and equity control in another, which can lead to aggregation errors. Another common mistake is the misclassification of emissions scopes, particularly the confusion between direct (Scope 1), indirect energy (Scope 2), and value chain emissions (Scope 3). This often stems from inadequate training or a lack of clear guidance.   Data completeness is another challenge. Smaller units or remote sites may fail to report energy or fuel consumption, leading to gaps in inventory coverage. Additionally, inconsistencies in emission factors, particularly when using outdated or non-standard sources, can skew results and impair comparability.   Double-counting emissions, especially from inter-unit energy transfers, and poor documentation of assumptions and methodologies further compromise inventory reliability. Perhaps most concerning is the absence of internal review mechanisms or third-party assurance, which creates room for intentional or unintentional manipulation.   To overcome these issues, companies, especially SMEs, must adopt a unified GHG accounting protocol across all units, assign clear data ownership at each level, and establish centralized data systems with QA/QC checks. Integrating external verification adds a layer of credibility and helps identify blind spots.   A robust GHG inventory is more than a compliance tool; it is a strategic asset. It not only supports effective decarbonization planning but also enhances investor trust and long-term resilience. For group companies, consistency, transparency, and accountability are the pillars of a credible climate disclosure journey.     Reach out to us for a compelling business case on climate action and practical strategies to simplify and strengthen your climate-related disclosures for better stakeholder trust: Sai Bhaskar Veluri, vsb@bsenvitech.com, mktng@bsenvitech.com Mob: +91 9677003778   #GHGemissions #Emissioninventory #Greenwashrisk #Climatedisclosures #Climateaction #NetZero #Bluegreen #BSENVITECH #Saibhaskarveluri