Cdp webinar slides understand cdp's verification requirements and how to meet them, feb 2012
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Transcript of Cdp webinar slides understand cdp's verification requirements and how to meet them, feb 2012
February 2012 Understand CDP’s verification requirements
Understand CDP’s verification requirements and Understand CDP s verification requirements and how to meet them
Why is verification important for your business? Why is the right standard a fundamental tool for your company and what guidance is available from CDP.
February 2012 Understand CDP’s verification requirements
Today...
Importance of verification snapshot from 2011 data and CDP requirements now and going Importance of verification, snapshot from 2011 data and CDP requirements now and going forward: Michelle Cox, CDP
Standards at a glance: Standards at a glance:
1. ISO 14064-3: Danny Kil, TÜV NORD2 EU ETS & other ETS examples: Andrew Ritchie LRQA Lloyd's Register Quality Assurance 2. EU ETS & other ETS examples: Andrew Ritchie, LRQA Lloyd s Register Quality Assurance
Questions
3. ISAE 3000: Atul Patel, PricewaterhouseCoopers LLP4. AA1000AS: Murray Sayce, Bureau Veritas
Questions
Q&A - Expert panel: Bureau Veritas, LRQA Lloyd's Register Quality Assurance, PricewaterhouseCoopers LLP and TÜV NORD
February 2012 Understand CDP’s verification requirements
Why is verification important?
Meeting market demand • institutional investors, global prospective
buyers, • market mechanisms: EU ETS, Californian Air
Resources Board, Tokyo’s metropolitan trading scheme, Australia’s Clean Energy Package
I i t l ti Improving external perceptions• Recognition through CDP scoring methodology, and Dow Jones Sustainability
Indexes. C ti d i t h i d i i titi d t Continued improvements: enhancing processes and gaining competitive advantage
February 2012 Understand CDP’s verification requirements
CDP approach to verification
Verification is not mandatory in order to report to CDP.
CDP scoring methodology allocates a noteworthy percentage of the scores to verification:
9% -13% of total points under the disclosure score and 15% - 17% of total possible points under the performance score.
In addition, companies must verify their Scope 1 and 2 emissions data to qualify for entry to the Carbon Performance Leadership Index (CPLI).
February 2012 Understand CDP’s verification requirements
CDP verification requirements
• Attach third party verification/assurance statement (e g PDF Scoring Tips:• Attach third party verification/assurance statement (e.g. PDF, letter from verifier, CDP verification template available on Guidance webpage).
Note: website links will NOT be taken into account (in certain
- Make sure the documents for the reporting year are attached.
Note: website links will NOT be taken into account (in certain circumstances screenshots will be accepted – e.g. EU ETS database)
CDP Verification Template:
CDP produced a CDP verification template to be completed by the
• Documentation needs to:1. relate to the relevant scope;2. clearly state the type of verification/assurance that has
b i d th t d d d ( t lid )
template to be completed by the verifiers as a replacement for the standard verification statement as evidence of verification completed. This is to allow for verifiers whose been given and the standard used (see next slide);
3. cover the current reporting year.
This is to allow for verifiers whose standard assurance statement does not cover the points requested by CDP to demonstrate how the reporting company has
Note: CDP accepts verification underway; full points are available so long as the previous verification/assurance statement is attached as proof of process.
how the reporting company has met those requirements and allow them to gain appropriate credit.
V ifi ti t d d i t f CDP ti
February 2012 Understand CDP’s verification requirements
Verification standards appropriate for CDP reporting
Verification standards criteria:
Relevance: The standard should specify that it relates to a 3rd party audit or verification process; for a program related standard, 3rd party verification should be specified as part of the program compliance.
Top reported standards for Scope 1 and 2 in 2011:
Competency: The standard should include a statement regarding competency of verifiers; where it is a program and verification parties are stipulated, competency is assumed to be determined by the 2nd party and therefore need not be explicit in the standard.
AA1000, AT101, EC Directive, ISAE3000 and ISO 14064-3
and therefore need not be explicit in the standard.
Independence: The standard should contain a requirement that ensures that impartiality is maintained in cases where the same external organization compiles and verifies a responding company’s inventory. Scoring Tips:
Terminology: The standard should specify the meaning of any terms used for the level of the finding (e.g. limited assurance; reasonable assurance).
Methodology: The standard should describe a methodology for the
- Documents should be referencing a verification protocol, NOT a GHG calculation protocol.
Methodology: The standard should describe a methodology for the verification that includes the verification of the process and/or system controls and the data.
Availability: The standard should be available for scrutiny.y y
February 2012 Understand CDP’s verification requirements
https://www.cdproject.net/en-US/Respond/Pages/verification-standards.aspx
February 2012 Understand CDP’s verification requirements
Resources on verification
Visit https://www.cdproject.net/verification for all verification related information
Read CDP’s Verification of climate data paper available from
the CDP website
Watch the Verification of climate data webinar
Read about verification standards at
https://www.cdproject.net/en-US/Respond/Pages/verification-
standards aspxstandards.aspx
Find the full CDP guidance and scoring documentation at
htt // d j t t/ US/P / idhttps://www.cdproject.net/en-US/Pages/guidance.aspx
February 2012 Understand CDP’s verification requirements
Thank youThank you
Michelle CoxTechnical Manager, Carbon Disclosure Project
February 2012 Understand CDP’s verification requirements
ISO 14064-3
Danny KilEnvironmental Services, TÜV NORD
February 2012 Understand CDP’s verification requirements
Insight -- ISO 14064-3
Main use of standard ISO 14064 was developed with the aim of being applicable across all the existing schemes, from the EU ETS to the CDM under Kyoto.
Part 3: Specification with guidance for the verification of corporate greenhouse gas assertions.
B d th F V ifi ti P i i lBased on the Four Verification Principles:
1. Independence2. Ethical Conduct3. Fair Presentation4. Due Professional Care
Figure A.1 from ISO 14064-3:2006
“Systematic, independent, and documented process for the evaluation of a greenhouse gas assertion against agreed verification criteria” (def ISO 14064 3 Clause 2 36)agreed verification criteria (def. ISO 14064-3, Clause 2.36)
February 2012 Understand CDP’s verification requirements
Insight -- ISO 14064-3Verification requirements
Step 1Determine
FundamentalsPLAN
PHASE 1
Agreement on- Level of assurance - Objectives- Criteria - Scope- Materiality
PROPOSAL
Step 2Develop
Approach
PHASE 1Development of Verification approach:
- Verification plan- Sampling plan n
PROPOSAL
Step 3Conduct Fieldwork EXECUTE
PHASE 2
Assessment of the GHG information system
controls
Assessment of the GHG data and information
Step 4Assessment
against Criteria
PHASE 2
Assessment against the criteria
Step 5Evaluate
Assertions
Step 6
COMPLETEPHASE 3
Evaluation of the GHG assertions
Step 6Issue a
StatementIssuance of the verification statement
February 2012 Understand CDP’s verification requirements
Insight -- [ISO 14064-3]
Advantages Framework & tools agreed by all countries to facilitate GHG activities while building on compatibility with existing good practice (e.g. GHG Protocol)
Common ‘building block’ for use by different companies and programs; general process standard including
International Recognition & Compatibility
and programs; general process standard including ‘technical’ requirements without program rules
For independent verification to improve consistency
Program & Policy Neutral
Auditable Structure and credibility for emissions trading, compliance
Limitations/common issues Sole focus on GHG emissions (expressed in CO2e)S d b d i d t i d b th Cli t /
Auditable Structure
Scope and boundaries are determined by the Client / Intended User and can be as wide or as narrow as desired (see: step 1 - Determine Fundamentals)
Other/similar standards Program neutral and number of regulatory and voluntary schemes based on ISO 14064-3 (e.g. EU ETS, TCR Verification Protocol) , )
February 2012 Understand CDP’s verification requirements
European Union Emissions Trading Scheme (EU ETS)&T k E i i T di S h (T k ETS)Tokyo Emissions Trading Scheme (Tokyo ETS)
Andrew RitchieClimate Change & Sustainability, LRQA Lloyd's Register Quality Assurance
February 2012 Understand CDP’s verification requirements
Insight -- EU ETS
Main use of standard • EU ETS is the largest multi-national regulated emissions trading scheme in the world From 1 January 2005 participating organisations under the EU in the world. From 1 January 2005, participating organisations under the EU ETS have been obliged to have their annual greenhouse gas (GHG) emissions independently verified and to surrender an equivalent number of allowances. • The EU ETS has been structured into three clearly defined phases to drive The EU ETS has been structured into three clearly defined phases to drive compliance across existing and emerging sectors:
• Phase 1. 2005-2007; covering sectors such as energy, metals, minerals, and pulp and paper
• Phase 2 2008-2012; expanded to sectors such as gypsum Phase 2. 2008 2012; expanded to sectors such as gypsum, petrochemical crackers and aviation
• Phase 3. 2013-2020; agreement to include carbon capture and storage (CCS) and potentially other sectors and gases
f S ti 10 4 f C i i D i i 2007/589/EC d t d 18 J l 2007 Verification requirements Section 10.4 of Commission Decision 2007/589/EC dated 18 July 2007 describes the verification of an annual emissions report:
• Strategic analysisRi k l i• Risk analysis
• Verification• Carry out Validation Plan• Confirm validity of information
V if i l t ti f d it i l• Verify implementation of approved monitoring plan• Internal verification report• Verification report
February 2012 Understand CDP’s verification requirements
Insight -- EU ETS
Advantages EU ETS verification publicly demonstrates compliance against regulatory obligations and delivers credibility obligations and delivers credibility.
• Identification of deficiencies against stated requirements at the earliest possible opportunity
• Finding opportunities for improvement in the accuracy and completeness of your datacompleteness of your data
• Cost savings and benefits from the avoidance of penalties and the allocation of allowances
Li it ti / i Some examples of common verification issues include: Limitations/common issues Some examples of common verification issues include: • Reporter emphasis on output rather than data
gathering/compilation process. • Complexity of data acquisition and/or handling • Multiple data sources available to report same parameter how to • Multiple data sources available to report same parameter - how to
choose?• Incomplete or outdated written management system
Other/similar standards There are other regulated ETS schemes which use a similar approach to Other/similar standards There are other regulated ETS schemes which use a similar approach to MRV. Some of these are operational and some are under development e.g. China, Australia, India and South Korea. Potentially the emergence of perhaps not a common standard, but at least an international understanding of what MRV should be to enable an international international understanding of what MRV should be to enable an international market to emerge in the future.
February 2012 Understand CDP’s verification requirements
Insight -- Tokyo ETS
Main use of standard A mandatory ‘cap and trade’ scheme aimed at achieving emission reductions in office buildings within Tokyoreductions in office buildings within Tokyo.Scheme commenced on April 1st 2010 and covers approx 1,400 installations (1,100 business facilities and 300 industrial facilities)
Verification requirements As defined in the TMG Verification GuidelinesVerification requirements As defined in the TMG Verification GuidelinesThe verification includes data and relevant information specified in a verification checklist developed by the Tokyo Government. Verification must satisfy all scheme requirements listed in the checklist (which is open to different interpretations by different verifiers).open to different interpretations by different verifiers).Building / facility based not organizational type accounting. There are also six categories of verification depending on the type of verification program.
February 2012 Understand CDP’s verification requirements
Insight -- Tokyo ETS
Advantages Boundary setting and verification scope is made easier because the ETS is based on building plans/constructionETS is based on building plans/construction.
Limitations/common issues Although, it was developed in consideration of lessons learnt from other ETS th T k ETS i i h ith i t l 1 000 ETSs, the Tokyo ETS is a unique scheme with approximately 1,000 page guidelines for its six categories. There are six categories of verification depending on the type of verification program. Verifiers are required to pass an exam for each of th i t i i d t b i t d th i d ifi f the six categories in order to be registered as an authorized verifier for each category.
J VETSOther/similar standards J-VETSKorean GHG and Energy Target Management Scheme+ others
February 2012 Understand CDP’s verification requirements
Any questions?
ISO 14064-3
andand
European Union Emissions Trading Scheme (EU ETS)&
Tokyo Emissions Trading Scheme (Tokyo ETS)
Submit your questions via the Q&A function on your y q yWebEx control panel
February 2012 Understand CDP’s verification requirements
International Standard on Assurance Engagements (ISAE) 3000
Atul PatelPerformance Assurance, PricewaterhouseCoopers (PwC) LLP
February 2012 Understand CDP’s verification requirements
Insight -- International Standard on Assurance Engagements (ISAE) 3000, “AssuranceEngagements Other than Audits or Reviews of Historical Financial Information”
Main use of standard
The purpose of this standard is to establish basic principles and essential procedures, and to provide guidance, for the performance of assurance engagements other than audits or reviews of historical financial information – such as carbon performance of assurance engagements other than audits or reviews of historical financial information such as carbon emissions and other sustainability and climate change data/ information reported by organisations in corporate responsibilityreports and/or reporting to regulatory bodies.
The ISAE is premised on the basis that:The ISAE is premised on the basis that:
(a) The assurance provider is subject to Parts A and B of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants (the IESBA Code), or other professional requirements, or requirements inlaws or regulations that are at least as demanding; andlaws or regulations, that are at least as demanding; and
(b) The assurance provider is subject to International Standard on Quality Control (ISQC) 1, or other professional requirements, or requirements in laws or regulations, regarding the firm’s responsibility for its system of quality control, that are at least as demanding as ISQC 1at least as demanding as ISQC 1.
International Standard on Quality Control (ISQC) 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements
February 2012 Understand CDP’s verification requirements
Insight -- International Standard on Assurance Engagements (ISAE) 3000, “AssuranceEngagements Other than Audits or Reviews of Historical Financial Information”
Assurance requirements
This Standard sets out 4 things that must be in place for assurance to be performed:
1. Three party relationshipClear segregation of responsibilities for preparation and ultimate accountability for the data.
2 Suitable subject matter2. Suitable subject matterContent that is capable of objective evaluation and testing and is relevant to the users of the information.
3. Appropriate criteriaC i t t l d fi iti f d t d t t t hi h id it bl b i f d t i i li bilitConsistent, clear definitions for data and statements which provide a suitable basis for determining reliability.
4. Sufficient, appropriate evidenceDocumented and electronic materials that support the preparation of the data and statements.
February 2012 Understand CDP’s verification requirements
Insight -- International Standard on Assurance Engagements (ISAE) 3000, “AssuranceEngagements Other than Audits or Reviews of Historical Financial Information”
Challenges in using ISAE3000
Based on experience from first time assurance exercises, typically we see varying level of challenge in addressing the key requirements as set out below:
1. Three party relationship
Clear segregation of responsibilities for preparation and ultimate accountability for the dataContent that is capable of objective evaluation and testing and is relevant to the
requirements as set out below:
2. Suitable subject matter Content that is capable of objective evaluation and testing and is relevant to the users of the information
3. Appropriate criteria Consistent, clear definitions for data and statements which provide a suitable basis for determining reliability
4. Sufficient, appropriate evidence
Documented and electronic materials that support the preparation of the data and statements.
Key: Green – straightforward, Yellow – possible, Orange – challenging, Red - difficulty g , p , g g g,
February 2012 Understand CDP’s verification requirements
Insight -- International Standard on Assurance Engagements (ISAE) 3000, “AssuranceEngagements Other than Audits or Reviews of Historical Financial Information”
Advantages
ISAE 3000 is a framework that can be applied to a variety of data sets.
A b d t ifi ti d t d d b d ISAE3000A number data specific reporting and assurance standards are based on ISAE3000.
A number of regulators require organisations to report using ISAE3000 or use the underlying framework.
The key stages y g
FIRST STAGE READINESS
SECOND STAGEREADINESS
FINALASSURANCE
Planning & scoping
Walkthrough of data process
Initial controls & data testing
Final controls & data testing
Objective: to understand if the basics are in place to enable assurance to commence
Objective: to determine if there is going to be sufficient evidence to support the data for the full year
Objective: to obtain the final evidence to support an assurance conclusion
The second decision point on whether to proceed with assurance.
The first decision point on whether to proceed with assurance.
February 2012 Understand CDP’s verification requirements
The AA1000 Assurance Standard (AA1000AS)
Murray SayceSustainability Services, BUREAU VERITAS
February 2012 Understand CDP’s verification requirements
Insight - AA1000AS (2008)
Main use of standard AA1000AS is used for:
• assurance for sustainability and CR reporting that focuses on what is materialto the organisation and its stakeholders
• provide assurance on the nature and extent of adherence to principles of materiality, inclusiveness, responsiveness, and
• assessing the quality of disclosed information on sustainability performance g y y
Verification requirements Corporate reporting boundary – principles driven to include control/influence, operations, stakeholders, wider society
T 1 l ti f t t f dh t AA1000 P i i lType 1 assurance = evaluation of extent of adherence to AA1000 Principles
Type 2 assurance = Type 1 + evaluation of reliability of specified performance(data, assertions, processes or performance)
Evaluation of position, policy and performance for which access to key personnel and stakeholders, underlying systems/processes, internal and external information is required
Moderate and high levels of assurance apply
February 2012 Understand CDP’s verification requirements
Insight – AA1000AS (2008)
Advantages • 2 Levels of Assurance to ensure that different providers do a similar type and amount of work to conduct assurance at each level, ,
• but to either Type 1 or Type 2 assurance, so…
• AA1000AS provides a means to capture and place in context other verification / certification schemesverification / certification schemes
• Can include systems and performance data across the sustainability spectrum (ISO, OHSAS, SA and especially carbon)
Limitations/common issues Can be cited for CDP verification IF :Limitations/common issues Can be cited for CDP verification IF :• the GHG element is adequately covered in the scope of work • and has comparable reporting boundaries to that of the CR reporting (and
therefore the AA1000 assurance)• it is conducted in accordance with other data specific principles (such as • it is conducted in accordance with other data specific principles (such as
those for ISO14064) that attest to the reliability of the GHG assertions** relevance, completeness, accuracy, consistency, transparency..
AA1000AS d t ISO t d d f HSES ISAE t d d Other/similar standards • AA1000AS can accommodate ISO standards for HSES, ISAE standards for non-$ reporting and regulatory standards for GHG emissions for eg
• Provided work with such standards relates to aadherence to common principles &/or ‘specified sustainability performance information’
February 2012 Understand CDP’s verification requirements
Wider sustainability assurance
Addresses what is ‘material’ assurance that the GHG assertion reflects actual Stakeholder focussed
Can (& does) incorporate GHG
scope of ork
assurance that ..the GHG assertion reflects actual performance, supported by complete, consistent, accurate and transparent GHG information …it may entail (and probably should) the application of scope of work
Adherence to principles
‘specified sustainability performance
y ( p y ) ppcriteria from other ‘GHG specific’ standards/guidance /schemes, depending on end use
information’
Level: Moderate or high
CDP Integration potential: Goodg p
February 2012 Understand CDP’s verification requirements
Any questions?
ISAE 3000
andand
AA1000AS
S b it ti i th Q&A f ti Submit your questions via the Q&A function on your WebEx control panel
February 2012 Understand CDP’s verification requirements
Q&AQ&AS bmit o r q estions ia the Q&ASubmit your questions via the Q&A
function on your WebEx control panel
Expert panel:p p
February 2012 Understand CDP’s verification requirements
Thank you for attending:U d t d CDP’ ifi tiUnderstand CDP’s verification
requirements and how to meet them
https://www.cdproject.net/verification