5 Percent Materiality Of Greenhouse Gas (GHGs) Reporting

As part of the general verification protocol (GVP) under the Climate Registry materiality definition

. This allows for a 5% threshold over or under for direct or indirect greenhouse gas emissions. Emissions that occur on site at the source are direct, such as refrigerant gas leak discharges. Indirect emissions are such which are discharged during production of goods or resources.Greenhouse gases lead to global warming, which will cause an adverse change in our climate. There are six main gases being tracked by The Climate Registry. They are hydrofluorocarbons and perfluorocarbons, which are commonly found in refrigerants, carbon dioxide, methane, sulfur hexafluoride and nitrous oxide.When the greenhouse gases registry first released its materiality definition, there was a great deal of confusion with the term absolute value basis in defining the threshold. But in the most recently released clarification, the term has been removed and replaced with a 5% overstatement or understatement threshold leeway.The materiality definition in The Climate Registry's verification standards addresses emissions reported by entities located in North America. Since the worldwide emissions reports are geographically different from that of North America's, this registry is requiring a separate verification statements for both. Documents should include materiality threshold including emissions threshold which are calculated through simplified methods.The 5 percent materiality definition threshold is standard within financial accounting practices and represents the amount of insignificant emissions allowed. Entities have the flexibility to specifically define which greenhouse gas emissions would be classified as insignificant within the scope of their operations.Materiality defined will address errors in reporting by a company when it comes to GHG emissions. An inaccuracy occurs when a company's stated direct or indirect emissions differs from its true emissions, give or take five percent. Under the registry, these inherent uncertainties can be a result of rounding errors, numerical mistakes, uncertain emission factors, or other miscalculations.The Climate Registry was established in 2007 to provide a standardized method for companies in the United States, Canada and Mexico to voluntarily report greenhouse gas emissions. The aim of the nonprofit agency is to get a better understanding of the harmful effects greenhouse gases are having on the environment by asking companies to report their emissions. The registry supports policies that involve voluntary and mandatory reporting and regulatory oversight of greenhouse gas emissions.The materiality definition is just one aspect of the registry's reporting requirements. Other reporting protocols include types of direct and indirect emissions calculated on a geographical, company, operational and facility level. Greenhouse Gas Emissions reporting is made annually. As such, many facilities, especially those equipped with refrigeration and air-conditioning (RAC) systems or heating, ventilation and air conditioning (HVAC) systems, have contracted with vendors of refrigerant management programs. Software and other web-based applications now exist to automatically track and report emissions information, ensuring accuracy and compliance.


5 Percent Materiality Of Greenhouse Gas (GHGs) Reporting

By: Daniel Stouffer

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