ESG

What triggers ESG reporting requirements in the EU

Companies listed in the EU required to comply

What triggers ESG reporting in Cali?

Businesses operating in Cali with over 1 billion in revenue must comply with state ESG disclosures

What is the difference between limited and reasonable assurance?

limited assurance: less rigorous; auditor expresses that nothing has come to their attention to indicate misstatement

reasonable assurance: higher level of confidence based on more extensive procedures

What are Scope 1, Scope 2, and Scope 3 emissions?

Scope 1: Direct emissions (e.g., from company vehicles or facilities).

Scope 2: Indirect emissions from purchased energy (e.g., utility provider).

Scope 3: All other indirect emissions (upstream and downstream), including supply

chain and product use.

What is the challenge of limited assurance in ESG?

Few numbers, low data reliability- users may not have enough faith in reported ESG data

What types of ESG data exist

Primary data: Direct measurements from the company

Secondary data: estimates, benchmarks, or external databases

How many steps are there in identifying and calculating a company's emissions? What is the first step?

1. 5 Steps

2. Identify Sources

What are the 4 source categories for GHG emissions?

1. Stationary Combustion

2. Mobile Combustion

3. Process Emissions

4. Fugitive Emissions

Combustion of fuels in transportation devices such as automobiles, trucks, buses, trains, airplanes, boats, ships, barges, vessels, etc.

Mobile Combustion

Emissions from physical or chemical processes such as CO2 from the calcination step in cement manufacturing, CO2 from catalytic cracking in petrochemical processing, PFC emissions from aluminum smelting, etc.

Process Emissions

Combustion of fuels in stationary equipment such as boilers, furnaces, burners, turbines, heaters, incinerators, engines, flares, etc.

Stationary Combustion

Intentional and unintentional releases such as equipment leaks from joints, seals, packing, gaskets, as well as fugitive emissions from coal piles, wastewater treatment, pits, cooling towers, gas processing facilities, etc.

Fugitive Emissions

Direct emission sources in each of the four source categories

Scope 1 Emissions

Indirect emission sources from the consumption of purchased electricity, heat, or steam.

Scope 2 Emissions

This optional step involves identification of other indirect emissions from a company's upstream and downstream activities as well as emissions associated with outsourced/contract manufacturing, leases, or franchises not included in scope 1 or scope 2.

Scope 3 Emissions

What is the most common approach for calculating GHG emissions?

Application of documented emission factors, which are calculated ratios relating GHG emissions to a proxy measure of activity at an emissions source

How are scope 1 GHG emissions calculated?

Based on the purchased quantities of commercial fuels (such as natural gas and heating oil) using published emission factors

How are scope 2 GHG emissions calculated?

From metered electricity consumption and supplier-specific, local grid, or other published emission factors.

How are scope 3 GHG emissions calculated?

From activity data such as fuel use or passenger miles and published or third-party emission factors

True or False: The emissions of each GHG (CO2, CH4, N2O, etc.) are calculated separately and then converted to CO2 equivalents on the basis of their global warming potential.

True

For internal reporting what reporting format should be used?

Standardized Reporting Formats

What are two basic approaches for gathering data on GHG emissions from a corporation's facilities?

1. Centralized

2. Decentralized

Individual facilities report activity/fuel use data (such as quantity of fuel used) to the corporate level, where GHG emissions are calculated.

Centralized

Individual facilities collect activity/fuel use data, directly calculate their GHG emissions using approved methods, and report this data to the corporate level.

Decentralized

Who is generally responsible for initial data collection under both approaches (Centralized and Decentralized)?

Facility-Level Staff

What are the 4 main aspects of an inventory program framework?

1. Data

2. Methods

3. Inventory Processes and Systems

4. Documentation

These are the technical aspects of inventory preparation. Companies should select or develop methodologies for estimating emissions that accurately represent the characteristics of their source categories

Methods

This is the basic information on activity levels, emission factors, processes, and operations. Although methodologies need to be appropriately rigorous and detailed, data quality is more important.

Data

These are the institutional, managerial, and technical procedures for preparing GHG inventories

Inventory Processes and Systems

This is the record of methods, data, processes, systems, assumptions, and estimates used to prepare an inventory. It includes everything employees need to prepare and improve a company's inventory

Documentation

Where should inventory quality measures be implemented?

1. Multiple levels within the company

2. Places where errors are most likely to occur (data collection, calculation, and aggregation)

What are the 2 types of uncertainty with GHG inventories?

1. Scientific Uncertainty

2. Estimation Uncertainty

When does scientific uncertainty arise?

When the science of the actual emission and/or removal process is not completely understood.

When does estimation uncertainty arise?

Any time GHG emissions are quantified

How are reductions in corporate emissions calculated?

By comparing changes in the company's actual emissions inventory over time relative to a base year

How should project reductions that are to be used as offsets be quantified?

By using a project quantification method, such as the forthcoming GHG Protocol Project Quantification Standard

What are the 2 important issues that the GHG Protocol Project Quantification Standard should address?

1. SELECTION OF A BASELINE SCENARIO AND EMISSION

2. CONSIDERATION OF REVERSIBILITY

This represents what would have happened in the absence of the project. They are the hypothetical emissions associated with this scenario. The selection of a this always involves uncertainty because it represents a hypothetical scenario for what would have happened without the project. The project reduction is calculated as the difference between the baseline and project emissions.

SELECTION OF A BASELINE SCENARIO AND EMISSION

Some projects achieve reductions in atmospheric carbon dioxide levels by capturing, removing and/or storing carbon or GHGs in biological or non-biological sinks (e.g., forestry, land use management, underground reservoirs). These reductions may be temporary in that the removed carbon dioxide may be returned to the atmosphere at some point in the future through intentional activities or accidental occurrences— such as harvesting of forestland or forest fires, etc.2 The risk of reversibility should be assessed, together with any mitigation or compensation measures included in the project design.

CONSIDERATION OF REVERSIBILITY

How should the emissions data for all six GHGs be reported?

1. Separately

2. In metric tonnes

3. Tonnes of CO2 equivalent

What are the 6 GHG?

1. CO2,

2. CH4,

3. N2O,

4. HFCs,

5. PFCs,

6. SF6

True of False: A public GHG emissions report should include, when available, emissions attributable to own generation of electricity, heat, or steam that is sold or transferred to another organization

True

Information is considered to be ______ if, by its inclusion or exclusion, it can be seen to influence any decisions or actions taken by users of it

Material

An error (for example, from an oversight, omission or miscalculation) that results in a reported quantity or statement being significantly different to the true value or meaning

A Material Discrepancy

An error is considered to be materially misleading if its value exceeds _____% of the total inventory for the part of the organization being verified.

5%

Companies should select organizations based on the knowledge and qualifications of:

Their actual verifiers