The recently passed Securities and Exchange Commission (SEC) climate disclosure rule and California Senate Bills, are just two of the many regulatory calls for carbon audit. For companies that are not subjected to these regulatory requirements, a third-party carbon audit gives internal and external stakeholders confidence that your emissions data is accurate, reliable and prepared in accordance with recognized reporting standards and guidelines.

In this article, written by BPM team members Su Rim and Raffaella Pate-Forti, you’ll discover that the best way to prevent greenwashing your business is to foster transparency and accountability.  

What are the different types of carbon audits?  

There are two levels of assurance commonly associated with carbon audits: Limited Assurance and Reasonable Assurance. Drawing parallels from the world of financial accounting, these levels offer distinct perspectives on historical data and information reliability. 

• Limited assurance – provides a reduced level of assurance on historical data and information 
• Reasonable assurance – provides a high but not absolute level of assurance on historical data and information 

What to expect from the carbon audit process 

As individuals and businesses worldwide increasingly prioritize sustainability, understanding the carbon audit process is paramount. Whether you’re a seasoned sustainability advocate or just embarking on your green journey, it’s crucial to unravel the complexities for the carbon audit process.

The typical steps you can expect during the carbon audit process include 

1. Planning: the auditor and the client agree on scope and objectives and develop a plan with activities and related timelines. 
2. Data review and analysis: data is collected by the auditors to ensure it is accurate, complete, and in accordance with recognized standards and guidelines.  
3. On-site assessment: for reasonable assurance only, an on-site visit is performed by the auditor to observe and/or test internal controls over carbon emissions reporting
4. Reporting: a final report is provided by the auditor with their assessment, which also includes any findings or recommendations for improvement. 
5. Follow-up: the client implements the recommendations, and the auditor may conduct a follow-up to ensure the improvements were incorporated into the process. 

How to prepare for a carbon audit?  

Before delving into the carbon audit process, it’s crucial to take specific steps to prepare effectively. This preparation phase not only ensures a smoother audit experience but also lays the foundation for more accurate and comprehensive carbon emissions assessments. Here are some crucial steps you must take before embarking on the carbon audit journey:

Gather and organize data

Carbon accounting requires data sources from teams across your company, including facilities, human resources, and finance.  This data may include monthly utility bills, fuel receipts, or spending data from the accounting department.  As data collection can be time-consuming and labor-intensive, ensure there is a streamlined process.

Implement and test internal controls

Companies must have a systematic process for implementing and testing internal controls over carbon accounting, which includes:

• Identifying the key risks associated with the carbon accounting process 
• Designing and implementing control activities to mitigate the identified risks 
• Regularly testing the effectiveness of the internal controls 
• Monitoring and reporting to track the performance of the internal controls 

BPM has partnered with Sustain.Life, a comprehensive sustainability software and management system to drastically simplify the carbon accounting and audit process. For companies looking to streamline carbon emissions accounting and prepare for carbon audits, BPM can help.  To learn more, visit BPM’s ESG practice on its website.