best practice series volume 5 october 2005 iema st ... · management and assessment, an iema...

iema

Best Practice Series Volume 5 October 2005

T H E I N S T I T U T E O F E N V I R O N M E N TA L M A N A G E M E N T A N D A S S E S S M E N T

iema St. Nicholas House, 70 Newport, Lincoln LN1 3DP UKTel: 01522 540069 Fax: 01522 540090

£15free to members

Environmental D

ata Managem

ent: for emissions trading and other purposes

Volume 5

O

ctober 2005

Environmental Data Management:for emissions trading and other purposes

PRACT 5 COVER.indd 1 19/9/05 15:04:07

• Future Perfect provides advisory, support and other

services in relation to the management and reporting

of environment, health & safety, social accountability,

climate change and information security.

• We work closely with clients to align these

sustainability aspects of their businesses with the

fi nancial and legal aspects of enterprise management.

• Our services include – policy, strategy, management

systems (formal and certifi ed to ISO Standards),

training and coaching, internal and external assurance,

data management and reporting, and interim

management.

Future Perfect LtdJohn Eccles HouseRobert Robinson AvenueThe Oxford Science ParkOxfordOX4 4GP01865338058

[email protected]@fpsustainability.commark.miller@fpsustainability.comwww.fpsustainability.com

Ecology - E� ciency - Economy - Enterprise

PRACT 5 COVER.indd 2 19/9/05 15:04:12


October 2005

Prepared by Future Perfect Ltd on behalf of the IEMA

Published by:

INSTITUTE OF ENVIRONMENTALMANAGEMENT & ASSESSMENTiema

PRACT 5.indd 1 19/9/05 15:05:54

ii

The Institute of Environmental Management and AssessmentSt Nicholas House70 NewportLincolnLN1 3DPwww.iema.net

Future Perfect LtdJohn Eccles HouseRobert Robinson AvenueThe Oxford Science ParkOxfordOX4 4GPwww.fpsustainability.com

AuthorsPeter Barden – Future Perfect Ltd Lucy Candlin – Future Perfect LtdMark Miller – Future Perfect Ltd

EditorJohn Brady – Consilience [email protected]

Design and ProductionDan Brady – Consilience MediaDavid Mallon – Consilience Media

ISN 1473-849XPrinted on Lumi Silk

© World copyright by the Institute of Environmental Management and Assessment and Future Perfect Ltd, 2005.

PRACT 5.indd 2 19/9/05 15:05:55

iii

Introduction

We live in an ‘information age’. New and faster forms of communication seem to arrive with increasing frequency. Where once there was the telephone, and before that the telegram, now we have email, we speak over computers and what happens on the other side of the world is filmed on a mobile phone and beamed via a satellite into our homes almost instantly. And yet, there is another side to all this information. Data overload, too much information, too much ‘spin’. For what are we to believe? We are bombarded with facts, statistics, opinions stated with a conviction that might suggest that they alone can be correct. The contrary view is so easily drowned in the clamour of repeated ‘certainty’.

With all this information at our fingertips one might think that the increasingly complex decisions we have to make would become better. After all, the whole purpose is to aid ‘informed decision making’. Yet this does not seem to be borne out by experience.

We have perhaps forgotten some simple truths in this rapidly developing world. In order to guide us we need the building blocks of information ‘data’. What is ‘data’? The Oxford English Dictionary (OED) defines it as the plural of datum, a thing given or granted, something known or assumed as fact and made the basis of reasoning or calculation. It goes back to Hammond 1646. ‘Assumed as fact’ might cause us to raise an eyebrow, but Priestly 1777 is nearer ‘we have no data to act upon’. It is this idea that data ought to be based on something measured. In the environmental field we have Smith 1869 also quoted by the OED ‘Datum water levels…the level at which water was first struck in a shaft sunk on a reef or gutter’.

So data should come from measurement, but what about quality? How good is the data? Heisenberg taught us to question the very idea of certainty, but not probability and reliability. Good data should be reliable, it should be trustworthy. The fact that it is oft repeated does not make it reliable; indeed it might suggest completely the opposite.

At the heart of good data then, are the concepts of measurement and scientific principle. Even here we can find some difficulty. It is possible to be accurate and precisely wrong. After all, a broken analogue watch is extremely accurate, twice a day – pretty useless but very accurate. So there is a lesson here as well: good data will be of use, but we have to understand its limitations. We have to know the assumptions made and context in which the data was obtained.

Data then can be obtained, but to be of use it has to be recorded. Record is another problem. We know a little about this; we record on ‘tablets of stone’. Except that we do no such thing. We record in numerous ways, all flawed. Who

PRACT 5.indd 3 19/9/05 15:05:55

iv

Introduction (cont)

today has a computer that will read a 5 ¼ inch floppy? Have you tried to read a medieval manuscript? It is something else we have to live with; the data we wish to use have been recorded. Just how reliable is it?

Yet we need to use this data, we need to seek its guidance. The environment is a complex place yet we need to try and understand it. We need to make decisions and the only guidance we have beyond faith, is data. How then are we to proceed? That is the purpose of this book; to lead us through the complexities, to ask the right questions. I hope it will go some way to help us appreciate the true value of our data.

Allen NorrisChairThe Institute of Environmental Management and Assessment

PRACT 5.indd 4 19/9/05 15:05:55

v

The Authors

Peter Barden is a founding director of Future Perfect. Peter has over 25 years of experience (both nationally and internationally) in the management of environmental and sustainability issues. He spent three years with KPMG working as both a project manager and Lead Verifier on greenhouse gas and climate change issues and was responsible for obtaining UKAS accreditation for the UK ETS and CCA verification services offered by KPMG Certification Services. He has conducted EU ETS, UK ETS and Climate Change Agreement (CCA) and related GHG verifications for many clients including BP, British Sugar, Chevron Texaco, Ford Motor Co , Mitsubishi Corporation, National Grid Transco, and Sainsbury Supermarkets. Peter has also been involved in the Emissions Trading Group (ETG) and SES/1/-/5 – the BSI Committee looking at the development of the ISO 14064 Series on GHG Management Standards. Prior to joining KPMG, Peter worked for SGS where he was involved in developing a range of environmental and sustainability services including early work on the verification of carbon sequestration by forestry.

Peter has an MSc in Forestry from Oxford University and an MBA from Warwick Business School, and is a Chartered Environmentalist, a Full Member of the Institute of Environmental Management and Assessment, an IEMA Membership Peer Assessor, a Chartered Environmentalist Peer Assessor and a Registered Principal Auditor.

Lucy Candlin is a founding director of Future Perfect. Lucy has over the last fifteen years worked with companies, both SME and multi-national, in a wide range of sectors to design, develop and audit systems and processes for the management of environmental and sustainability performance; covering all stages of EMS development and certification, including helping to establish an accredited ISO14001 certification system for a major Asian national certifier. More recently this work has evolved into a broader approach to assurance, both internal and external to companies, in particular in relation to non-financial performance reporting. Since 2000, Lucy has been involved in high level assurance of greenhouse gas emissions for the purposes of Emissions Trading, including establishing UKAS accredited verification systems for CCA, UK ETS and EU ETS for a number of organisations; training and mentoring verifiers for some 50 per cent of the UK accredited verification companies and leading GHG audits of nearly 100 installations.

Lucy has an MSc in Land Management from Imperial College at Wye and is a Chartered Environmentalist, a Fellow of the Institute of Environmental Management and Assessment, an IEMA Membership Peer Assessor, a Chartered Environmentalist Peer Assessor and a Registered Principal Auditor.

PRACT 5.indd 5 19/9/05 15:05:55

vi

Mark Miller is a founding director of Future Perfect. Mark has extensive experience in the aerospace, electronics and information technology sectors in addition to sustainability. Prior to founding Future Perfect, Mark was a director for KPMG Sustainability Advisory Service in the UK and his responsibilities included the maintenance of external accreditations. This included ownership of the accredited UK ETS and CCL verification services. Mark has worked as both an EU ETS verifier and information security management systems advisor.

Previously Mark was responsible for business development projects globally within the SGS Group, with a specific remit for the management and implementation of global assurance schemes relating to sustainability.

Mark is a Member of the Institute of Incorporated Engineers, an Associate of the Institute of Occupational Safety & Health, and an Associate of the Institute of Environmental Management and Assessment.

The Authors (cont)

PRACT 5.indd 6 19/9/05 15:05:55

vii

I am grateful to Peter Barden, Lucy Candlin, and Mark Miller of Future Perfect Ltd for writing this Practitioner. They have shared a considerable body of emerging knowledge and techniques on data management with us and we are indebted to them for this. The authors would like to thank a number of organisations and individuals for their support and contributions to the development of this Guide and for their permission to use examples or material developed with or by them. In particular, thanks are due to: BP; the Department of Environment, Food and Rural Affairs, especially Claire Pitcher and Caroline Austwick; The Environment Agency, especially Rob Gemmell; John Miles and Steve Ross of SGS; KPMG LLP; The Scottish Environment Protection Agency; Shell UK Ltd; and The United Kingdom Accreditation Service (UKAS), especially Christine Cowley and David Shillito.

John BradyEditor

Apart from the purpose of private study, research or review under the Copyright, Design and Patents Act 1988, no part of this journal may be reproduced, stored in a retrieval system or transmitted in any form by any means without the prior permission of the copyright owners.

Whilst every effort has been made to ensure that this publication is factually correct at the time of going to press, the data, discussion and conclusions are not intended for use without substantiating investigations by the users. Readers are referred to the list of references and useful web sites at the back of the journal. No responsibility for loss suffered by any person acting or refraining from acting, as a result of the material contained in this publication, will be accepted by the Institute of Environ-mental Management and Assessment or Future Perfect Ltd or by any associated organisations.

Acknowledgements

PRACT 5.indd 7 19/9/05 15:05:55

viii

PRACT 5.indd 8 19/9/05 15:05:55

ix

Contents

1 Objectives of the Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2 Overview of data usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3 Practical data management . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

3.1 Identifying appropriate data sources . . . . . . . . . . . . . . . . . . . . . . 9- Simple activity data sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11- Complex activity data sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

3.2 Generating data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14- Correct installation and use of metering and measurement devices . . 16- Maintenance, calibration and checking of equipment . . . . . . . . . . . . 18- Accuracy and uncertainty associated with meters and measurement devices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19- Understanding an organisation’s instrument maintenance systems . . . 22- Appropriate reconciliation to independent data points . . . . . . . . . . . . 23- Consumption versus purchase data . . . . . . . . . . . . . . . . . . . . . . . . . . 23- Correct selection and application of approved calculation methodologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24- Design of spreadsheets, databases and other reporting tools . . . . . . . . 24- Consolidation and roll-up of data . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

3.3 Management of data, information and records . . . . . . . . . . . . 28- GHG accounting manual, inventory and source list . . . . . . . . . . . . . 29- Information process flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30- Critical equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30- Clear roles and responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33- Procedures and work instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . 33- Hard copy records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

3.4 Security of data in terms of accessibility, archive retention and retrieval . . . . . . . . . . . . . . . . . . . . . . . . . . 34

3.5 Quality control and internal assurance . . . . . . . . . . . . . . . . . . . 35

4 Integration with other management systems . . . . . . . . 39

4.1 Environmental management systems . . . . . . . . . . . . . . . . . . . . 39

4.2 Financial accounting systems . . . . . . . . . . . . . . . . . . . . . . . . . . 39

PRACT 5.indd 9 19/9/05 15:05:55

x

5 Data Verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

5.2 Preparing for verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43- Development of verification scope and objectives . . . . . . . . . . . . . . . 44- Define and review the verification criteria and requirements . . . . . . . 44- Review applicable organisational and data programme verification requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44- Determine the level of assurance required . . . . . . . . . . . . . . . . . . . . . 45- Ensure that roles and responsibilities are clearly defined, communicated and understood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46- Ensure that the organisation’s relevant non-financial information, data and records are complete and accessible . . . . . . . . . . . . . . . . . . . 46- Agree verification objectives, scope and criteria with the verifier . . . . . 46- Ensure that the verifier has appropriate competence and qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46- Consider the content of the verification statement . . . . . . . . . . . . . . 47

5.3 Verification management plan . . . . . . . . . . . . . . . . . . . . . . . . . . 48

5.4 Quality control and internal audit . . . . . . . . . . . . . . . . . . . . . . 50

6 Guidance for other data accounting and management systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

6.2 Reporting for regulatory purposes . . . . . . . . . . . . . . . . . . . . . . 52

6.3 Voluntary reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52- Reputation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53- Transparency and communication . . . . . . . . . . . . . . . . . . . . . . . . . . . 53- Risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53- Cost savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

6.4 The data reporting process . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54- Identification of the audience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54- Links to other reporting systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56- Avoidance of duplication of effort . . . . . . . . . . . . . . . . . . . . . . . . . . . 57- Assurance processes are applied equally . . . . . . . . . . . . . . . . . . . . . . . 57

Contents

PRACT 5.indd 10 19/9/05 15:05:56

xi

6.5 Assurance arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

6.6 Reporting required by company law . . . . . . . . . . . . . . . . . . . . . 59

6.7 Other useful sources of information . . . . . . . . . . . . . . . . . . . . . 61

Appendices

A Glossary and definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63B Key principles in GHG data accounting and reporting . . . . . . . . 69C Integration of GHG accounting into ISO14001 – clause by clause analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73D Sources of information on emissions factors . . . . . . . . . . . . . . . . 85E Standard unit conversion factors . . . . . . . . . . . . . . . . . . . . . . . . . 87F Bibliography and references . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Tables

2.1 Information categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.2 Information characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73.1 Examples of simple sources of data . . . . . . . . . . . . . . . . . . . . . . . . 123.2 Examples of complex sources of data . . . . . . . . . . . . . . . . . . . . . . 144.1 IFRIC 3 requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425.1 Key steps for verification preparation . . . . . . . . . . . . . . . . . . . . . . 435.2 Proposed information for evidence pack . . . . . . . . . . . . . . . . . . . . 496.1 Verification and assurance issues . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Figures

2.1 Information path for assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.2 Overview of information flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63.1 Simple inventory documentation . . . . . . . . . . . . . . . . . . . . . . . . . 103.2 Typical metering arrangement . . . . . . . . . . . . . . . . . . . . . . . . . . . 173.3 The difference between accuracy and precision . . . . . . . . . . . . . . . 213.4 True value and uncertainty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223.5 Stock reconciliation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253.6 Data process flow 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30/313.7 Data process flow 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324.1 Overview of GHG: EMS Integration . . . . . . . . . . . . . . . . . . . . . . 406.1 Representation of the data reporting process . . . . . . . . . . . . . . . . . 55

Contents

PRACT 5.indd 11 19/9/05 15:05:56

xii

PRACT 5.indd 12 19/9/05 15:05:56

1

Section 1

Objectives of the GuideThis guide is designed as a sequel to the Practitioner Guide published in June 2001 – ‘Managing Climate change emissions, a business guide’ – which provides a practical explanation of the UK Government’s climate change programme for business and sets it in the international context. Since this earlier Guide was published, the UK’s pilot Emissions Trading Scheme (UK ETS) has become operational; the EU Directive on Emissions Trading has come into force across Europe, creating the EU Emissions Trading Scheme (EU ETS); and the Kyoto Protocol has finally been ratified bringing with it the prospect of international emissions trading in the future.

Experience and learning gained from the UK ETS and from the baseline verification for the EU ETS in the UK, has highlighted the importance of the careful management and quality control of data, and also the need for the development of robust information management systems in order to minimise both uncertainty within reported information, and the consequential risks and liabilities associated with the trading of emissions’ credits based on the measurement and calculation of actual emissions.

This Practitioner Guide draws on the experiences of: organisations and companies, verification bodies and accreditation organisations – as well as views from the emissions trading marketplace – to provide good practice guidance on the handling of data for emissions trading purposes. In particular, it is designed to assist companies and organisations that have not previously been involved in regulated data reporting, or in the reporting of non financial data that has been subject to high levels of assurance such as might be applied for financial reporting purposes. In addition, where relevant to data management, this Guide draws upon existing reference material such as the World Business Council for Sustainable Development Greenhouse Gas Protocol (WBCSD, 2004) – such references are documented in Appendix F.

The primary focus of this Guide is at the installation level where, in practice, much of the base data related to activity and carbon composition is generated, and is located and maintained for record keeping purposes.

What this guide does not do is duplicate the wide range of existing protocols and methodologies for the actual calculation of emissions; examples of these can be found in the WBCSD Greenhouse Gas Protocol and the Department for Environment, Food and Rural Affairs list of approved methodologies for the UK ETS (Defra, 2004a) and in EU Guidance to the EU ETS (EC, 2004).

PRACT 5.indd 1 19/9/05 15:05:56

2

In particular, this document is to give guidance on:

• individual elements of data management processes;• quality of data capture and management processes;• reliability of data for trading and other decision making purposes;• resource management for data verification;• potential areas of risk and liability associated with data quality;• potential conflicts between data verifiers and the users of that verification;

and• information security as it pertains to data management for emissions trading

schemes.

It should be noted that the specific requirements for implementing the EU Directive on Emissions Trading (and the subsequent decision on monitoring and reporting) vary across EU Member States. This guidance document is based on the position in the UK but a significant proportion of the good practice identified is generically applicable to emissions reporting in all EU States and beyond where GHG emissions are required to be reported with a high level of assurance. In addition, the principles detailed are also directly applicable to other areas of non-financial data management such as that required for CSR, sustainability or other non-financial reporting purposes.

Objectives of the Guide

PRACT 5.indd 2 19/9/05 15:05:56

3

Overview of data usageThis section introduces the notion of information management as a critical element of any data, or information reporting and verification exercise. The following sections of the guide provide a specific example of this in the form of data reporting and verification as it applies to the EU ETS.

As part of their normal day-to-day activities, organisations will produce, store, communicate and use information. This should be familiar to anyone in an economic activity. In the past this process has been conducted on a human scale. Information and data creation and exchange depended on human creators and users. This could be synchronous, as in a conversation or a minuted meeting, or asynchronous, as with a letter, where the recipient had time to consider and craft a reply. The same was true of mathematical calculations – where the training and ability of humans were the governing factors in the extent and complexity of the calculations.

The end result from this process, in the past, was largely the same as it is at the present – a decision or a value. However, today the capabilities of information systems have expanded beyond the human interface with the advent of information technology and the dawn of the ‘information age’. The human start and end of the information chain is still governed by human capability; however the infrastructure, the plumbing that carries, stores, manipulates and presents the information has changed, and changed out of all recognition. The more organisations are able to create information, the more they are expected to do so. This has led to complex and often poorly understood information pathways and governing frameworks, within organisations.

Much of the responsibility for the management of information has been abdicated by the human users to electronic means with a reliance being placed on the output alone, for example a table of numbers comprising a spreadsheet has been generated.

Published or compliance status information is anything that tells a user about the legal or other compliance position of an organisation or discloses performance or other management information. When this type of information is used to make a decision, possibly by a third party, there is an implicit requirement that it should be true, accurate and fair. To be able to make a claim of truth and fairness (and the other requirements of a particular scheme such as transparency, accuracy and reliability) then the information pathway from data source to the external presentation (eg a report, licence application or audited

Section 2

PRACT 5.indd 3 19/9/05 15:05:56

4

account) must be of high quality and is likely to need to be assured. For the most part the independent verifi cation of the presented information, by the assurance of the information pathway, is the accepted method used.

Figure 2.1 shows an example of the information path that must be assured for the trading of carbon dioxide allowances to occur within the EU ETS.

In this example the data can be either a single value or a full data set. It also introduces the idea that information is data set within a context. In this case, the context is provided by the units of measurement and the requirements of the EU ETS. There are other contexts that will also need to be considered when a verifi cation is conducted, not least the competence of both the internal data coordinator(s), the independent auditor and the original use for which data may have been collected, if different.

Figure 2.1 Information path for assurance

knowledge

EU ETSPermit

It is the transit from single observed value, through the increasing contexts, aggregations, calculations, transformations, interpretations and frameworks to a point where there is the knowledge to make a trading decision that represents the system of interest that is to be assured.

information

NAP

Trading

Co

nte

xt

HIGH

LOW

MEDIUM

Singlevalue

Full data series

Data and information can be characterised in many ways. For the purposes of this guide, and any verifi cation activity, the categorisation in Table 2.1 is useful.

Overview of data usage

PRACT 5.indd 4 19/9/05 15:05:56

5

Table 2.1 Information categories

Structured Semi-structured Unstructured

Data in database tables

Calibration schedule Interview notes

Data in flat file database

GHG source inventory Emails

Data in a spreadsheet Intranet documents Digital images

Any organisation is likely to have a complex web of information types and the verification of a published statement or report may need to assure information from any of the types in Table 2.1 or indeed any combination of them.

In addition to the types listed in Table 2.1, information can also be considered in two other ways for management and assurance purposes. These are as:

• core information – key information that may be required to be verified, including the sources of data, together with data aggregations and any intermediary processes that produce it; and

• supporting information – information that supports the (verified) core information.

For example, the source data contribution to core information might be the output from a meter, whereas supporting information for this could be the calibration records and specification of the measurement system. Both pieces of information will be required to verify the data.

This overall view of the information flow in an organisation can be visualised as shown in Figure 2.2 (over page) which, although it refers to a computer based information system, is equally valid for any organisational information system.

An alternative way of considering information and data management is to use some of the frameworks developed for the management of information security. The definitions in Table 2.2 (over page) capture some of the factors or characteristics that can be applied to information for information security purposes.


PRACT 5.indd 5 19/9/05 15:05:57

6

Figure 2.2 Overview of information flows

Data transformation process

Procedures People

HardwareSoftware

Data Information

OrganisationalContext

OrganisationalContext

In addition, for information security purposes, procedures require that information assets are to be formally identified. An information asset is anything that carries or affects information that has a value to an organisation. For example, the sales forecasts or the production orders of a retailer are valuable information assets – if they get into the wrong hands they may affect the competitive position of that retailer. These assets may be in any form of media, eg paper-based procedures or electronic networked relational database applications. An inventory of these assets should be produced and a formal risk analysis carried out on them. In each case, as a minimum, confidentiality, integrity and availability must be considered.

These procedures may equally be considered alongside the underlying principles for high quality data accounting of reported information. Those given below are taken from the WBCSD GHG Reporting Protocol and the EU ETS (see Appendix B):

• Accuracy• Completeness


PRACT 5.indd 6 19/9/05 15:05:57

�


Table 2.2 Information characteristics

Characteristic Description

Confidentiality Ensuring that information is accessible only to those authorised to have access1

Integrity Safeguarding the accuracy and completeness of information and processing methods1

Availability Ensuring that authorised users have access to information and associated assets when required1

Accuracy Information is accurate when it is free from mistakes or errors. That is, it has the value that is expected2

Utility The information is available in a state that has a value as a purpose or an end. This means that it must be in a format meaningful to the user2

Authenticity Information is authentic when it is the original information that was created, placed, stored or transferred2

Possession This is the quality of having ownership or control – independent of any format or other externally imposed characteristic2

1) ISO, 2005a 2) Whitman and Mattord, 2003

• Consistency• Cost effectiveness• Faithfulness• Improvement of performance monitoring and reporting of emissions• Materiality• Relevance• Transparency

Management and verification of information within an organisation requires that the information systems which operate within that organisation are considered as a whole. The rest of this guide looks at some detailed instances of this, and considers areas where information needs to be considered with care, for example:

• The need to create a framework for information and data assurance that relies on systems designed for other data and information collection purposes, can lead to complexity and unreliable results.

PRACT 5.indd 7 19/9/05 15:05:57

�

• The limitations that apply to collection of the source data may be acceptable for the primary use but not acceptable for the secondary use (eg indication of flow rather than measurement of volumetric data).

• The primary reporting requirement will dictate the information pathways and information flows. These may not be the best fit for the assurance requirement for a secondary use of such data (eg purchase ledger as basis for mass balance).

• Technology also drives information collection, management and manipulation. This is likely to reflect the core business and primary reason for collection of the data, and the understanding of the developer of IT and technical solutions.

• Intermediation that creates information from data may add information that skews the presented data. Equally it may strip away information that is superfluous to the primary use but is of interest for a secondary use. This may be hidden by technology (eg rounding errors, embedded biasing or correction factors).

• Aggregation and dis-aggregation may be carried out automatically and hence be hidden by technology. This may prejudice the information being used outside of its primary intended purpose.

• Information is collected for the assurance of other information. The

frameworks to do this must be carefully constructed when they use data and information for uses other than which it was originally intended.

All the above may impact materially on the information in ways that are obscured and hence not detected (eg hidden aggregation and assumptions).


PRACT 5.indd 8 19/9/05 15:05:57

�

Practical data managementData management is the core of good quality GHG emissions data reporting (or any other non-financial data reporting for that matter). With quality controlled processes from source to final report, not only can managers, internally within organisations, have confidence in the decisions they make using the data, but externally regulators, emissions traders and purchasers of emissions’ credits can have confidence in the information and data they are receiving.

Good quality data management can also facilitate efficient third-party verification, and can be effective in helping to manage the potential risks and liabilities facing reporters, verifiers and users of emissions data.

Practical data management encompasses the following areas, all of which are essential for ensuring transparency of the process and enabling succession planning for key personnel:

• identification of appropriate sources of data for both activity and carbon factor calculation;

• generating data – including the identification of different sources and/or potential sources of error and uncertainty;

• management of both physical (hard) and electronic (soft) data;• quality control and assurance processes;• information security;• integration of GHG data management with other management systems;

and• preparing data and information management systems for verification.

These areas are discussed in more detail below.

3.1 Identifying appropriate data sources

Dependent upon the nature and complexity of the process that is generating GHG emissions, the identification of appropriate data for the calculation of emissions data may be simple or complex. The initial stage of any data identification process is to determine an organisation’s GHG emissions inventory; this is also the start of conforming to the principle of transparency.

This means identifying and documenting in an inventory (listing etc) all the sources of GHG emissions within the defined boundary of an organisation or

Section 3

PRACT 5.indd 9 19/9/05 15:05:57

10

installation, for example: direct point sources from technical units, and fugitive and indirect emissions. This may include sources of carbon dioxide emissions only or may include emissions of the full suite of Kyoto gases depending on the purpose of emissions reporting (full company environmental reporting, EMS monitoring, regulatory compliance, emissions trading etc).

Also, depending upon the purpose of emissions reporting, the ‘boundary’ of the installation or organisation may differ. Chapters 3 and 4 of the WBCSD GHG Protocol – see Appendix F – provide a detailed analysis of the setting of organisational and operational boundaries. Some emissions sources may be specifically included or excluded for different types of reports. Thus, an emissions inventory will need to be able to clearly identify which gases and which reporting purposes are applicable to which specific emissions sources. Documenting this information in a spreadsheet or equivalent will make the information transparent, readily accessible and sortable according to reporting needs – see the example in Figure 3.1.

Such an inventory may well perform the role of ‘source list’ for the purposes of data verification unless the format of this is otherwise specified by the rules of any particular scheme, eg EU ETS.

Having identified all the emissions sources applicable to an organisation or installation, it is then possible to identify where data may be obtained from in order to generate emissions information.

Figure 3.1 Simple inventory documentation

Practical data management

A B C D E F

12

Function Activity TechnicalUnit

EmissionType

Fuel GHG

3 ProcessArea 1

ProcessHeating

Gas Turbine 1

Combustion (stationary)

Natural Gas CO2

4 Combustion (mobile)

5 Process

Fugitive

PRACT 5.indd 10 19/9/05 15:05:57

11

In general, direct monitoring and measurement of emissions is expensive and may not be appropriate, in which case accurate data can be calculated on the basis of, for example, fuel consumption or activity data. Examples of both simple and complex data sources are provided below.

For the purposes of this Guide, we focus on the identification and generation of data in relation to carbon dioxide emissions, since this is the current focus of the mandatory forms of emissions reporting; however the principles outlined in the following sections are equally applicable to other types of emissions.

In many cases existing activity data is likely to have been generated for another purpose so care needs to be taken to ensure that the process by which the data is generated remains robust for the purposes of emissions reporting and does not accidentally get changed as a result of changes for some other (primary) purpose of data collection.

Simple activity data sources

Simple activity data sources are those that are easy to obtain; it does not mean however that they are necessarily easy to generate accurate and reliable GHG emissions data from – see issues to be aware of in Table 3.1 (over page).


G H I J K LMeasurement

methodA p p l i c a b l e r e p o r t i n g

Full Company Reporting

UK ETS EU ETS CCLA RegulatoryCompliance

Metered Y Y currently exempt N N

Estimate

Weighed

Mass Balance

PRACT 5.indd 11 19/9/05 15:05:58

12


Table 3.1 – Examples of simple sources of data

Data Source Issues to be aware of for data quality purposes

Electricity invoices

• Accruals over the year end (calendar or other reporting year)1

• Over/ under estimate by supplier• Incorrect meter reading by supplier• Incorrect reconciliation to site meter readings• Gaps or missing bills• Unit reported eg KWh, GJ, TJ etc and conversion to an

appropriate unit for reporting• Incorrect transfer of data to calculation spreadsheets etc• Incorrect reconciliation to site meter readings• Gaps or missing bills• Unit reported eg KWh, GJ, TJ etc and conversion to an

appropriate unit for reporting• Incorrect transfer of data to calculation spreadsheets etc• Apportionment of power usage where only one main

site meter is in place (ie validity of mass balance etc calculations)

• Provision of calorific values (CVs) and emissions factors that may differ from relevant scheme rules

Gas invoices • As outlined above for electricity bills• Is the supplied emissions/ carbon factor the correct one

for the specific reporting purpose

Diesel/ Oil invoices

• Over/ under estimate by supplier• Do invoices account for all deliveries to site (if not how

else is input data recorded)• Incorrect meter reading by supplier• Incorrect reconciliation to site meter readings• Gaps or missing bills• Incorrect transfer of data to calculation spreadsheets etc• Purchased amount vs consumed amount (ie a stock

reconciliation is required)• Calibration status of measurement device(s)

PRACT 5.indd 12 19/9/05 15:05:58

13


Solid fuels invoices

• Over/ under estimate by supplier• Incorrect meter/weighbridge reading by supplier• Purchased amount versus consumed amount• Wet versus dry weight of fuel (ie if weights are used,

weight and CV at time of use – not time of delivery – is the important data)

• Compaction of fuel if volume estimates used (ie volume at time of use is likely to be less than at time of delivery if it has been in storage for some time)

• Incorrect reconciliation to site weighbridge records (if appropriate)

• Validity of calorific value data from supplier• Batch sampling of calorific values vs average calorific

values• Calibration status of measurement device(s)

Direct metering/ weighing of fuel etc

• Maintenance, calibration and checking of meters, weighbridges etc (both main and sub)

• Apportionment of usage where only one main site meter etc is in place (ie validity of mass balance etc calculations)

Direct measurement of emissions concentration and flow rate

• Maintenance, calibration and checking of measurement equipment

1) The bill runs from the middle of one month to the middle of the next, one or other of which is outside the reporting period. Therefore the data needs pro-rating to the appropriate reporting period.

Complex activity data sources

Complex activity data sources are generally those that require derivation from other parameters; for example, are calculated according to a complex chemical formula (especially for process related emissions).

PRACT 5.indd 13 19/9/05 15:05:58

14

Table 3.2 – Examples of complex sources of data

Data Source Issues to be aware of for data quality purposes

Derivation of consumption from equipment run time data

• Recording of actual run time (as opposed to if it’s on it’s assumed to be on all day)

• Accurate and supported calculation of theoretical energy consumption per hour/day for specific technical units

Estimation of energy use from production throughputs

• Accurate and supported calculation of theoretical energy consumption per production unit

Derivation of emissions from chemical formulae

• Generally accepted calculation methodology• Correct taking of samples of, for example, gas for

laboratory analysis, to avoid contamination by air etc• Use of accredited laboratories for analysis

Derivation of carbon factors by stoichiometric calculation

• Generally accepted calculation methodology• Appropriate/correct standard conversion factors• Correct taking of samples of, for example, gas for

laboratory analysis, to avoid contamination by air etc• Use of accredited laboratories for analysis

Derivation of emissions by mass balance analysis

• Maintenance, calibration and checking of meters, weighbridges etc (both main and sub)

Dis-aggregation of data for two emissions streams from one data source1

• Accurate and supported basis of calculation/ estimate if metering is not in place

• Avoidance of double counting

1) For example, the removal of flare pilot and purge gas from main fuel gas volumes

3.2 Generating data

Having identified all the sources of data for the relevant emissions sources, a review should be undertaken to determine the reliability of each data source and the robustness of any information from third parties (eg invoicing data) on


PRACT 5.indd 14 19/9/05 15:05:58

15

which calculations might be based. In addition to the issues described in Table 3.2, this particularly relates to the following matters:

• correct installation of metering and measurement devices;• maintenance, calibration and checking of measurement equipment;• accuracy and uncertainty associated with meters and measurement devices;• appropriate reconciliation to independent data points;• correct selection and application of approved calculation methodologies;• design of spreadsheets and databases for ease of use, flexibility, audit trail

referencing, integral quality control and ease of update and roll forward;• consolidation and roll-up of data; and• security of data and IT systems in terms of accessibility of spreadsheets,

records etc and archive retention and retrieval.

Whilst a review of these types of issues is an absolute necessity for the first cycle of data generation and reporting, periodic reviews on an ongoing basis are essential to ensure that changes have not occurred (whether accidental or deliberate) that might affect the integrity and reliability of the generated data.

Two main types of measurement device are likely to be associated with the generation of data for emissions reporting; these are flow meters and weighbridges. There are many types of flow meters and this guide does not cover specific technical details which are obtainable from manufacturers’ specifications and any good manual on measurement and instrumentation. However, the key points to address in relation to flow meters are outlined in the sections below on installation, maintenance and calibration.

Weighbridges (or weighscales) are intended to measure the weight of a volume of matter. They have the advantage over volumetric flow meters in that they are not affected by variations in temperature, or density. They are used for products such as coal, petroleum gas, fuel oil, and similar fuels. The most common application is for loads on bulk trucks, tank trucks and rail cars.

It is important that the distinction between ‘weight in air’ and ‘weight in vacuum’ measurements is understood. When a volume is weighed at atmospheric pressure, in open air, it will be slightly less than the weight in a vacuum due to the buoyancy effect of air. Tables of factors are available to convert ‘weight in air’ to ‘weight in vacuum’ (eg API Short Table 56). LPG in pressurised vessels with no venting would be considered to be ‘weight in vacuum’ although the resulting weight over a weighbridge will not be precisely the same as the ‘weight in vacuum’ conversion.


PRACT 5.indd 15 19/9/05 15:05:58

16

There are two main types of weighbridge: mechanical weighbridges (use of which is in decline) using a lever-beam arrangement and electronic load-cell weighbridges. The load cell type is based on strain gauges and has very few moving parts compared with the mechanical type. Hysteresis and temperature effects are therefore much smaller once the working temperature has been reached.

Accuracy of weighbridges is expressed in terms of divisions rather than percentages. For instance a weighbridge with a legal accuracy of Class III, with a capacity of 50 tonnes and 20Kg divisions, has the following permitted errors:

• up to ten tonnes – one division (ie 0.2 per cent);• from ten tonnes to 40 tonnes – two divisions (ie 0.1 per cent); and• from 40 tonnes to 50 tonnes – three divisions (ie 0.06 per cent)

These levels of permitted error are smaller than for many other metering arrangements and there may be circumstances where liquid and gaseous fuels could be measured more accurately over a weighbridge than through a flow meter. For example, for fuel use where there is intermediate storage, it may be more accurate to weigh the fuel into the intermediate storage and to meter out any smaller uses (eg for standby generation or non-eligible uses) and then to calculate the main consumption by mass balance. Adopting this approach means that the degree of uncertainty associated with flow meters is applied to a much smaller source and therefore the uncertainty associated with the larger, eligible source is reduced.

Correct installation and use of metering and measurement devices

Key questions about meters used for generating activity data that the operator should know the answers to (and verifiers should be aware of ) include:

• What is the measurement device primarily used for?• Is this the original designed purpose for the device?• Is the device for indicative or measurement purposes?• Is the device being used within its design parameters, and then within its

linear range?• Where is the device located?• Who is responsible for it (is it contracted out to a supplier)?• What is the status of the measuring device (serviceability, calibration,

maintenance etc)?• How often does it collect data and is there a record of the data collection?• How does it totalise/interpolate etc to create the hourly/daily totals etc?


PRACT 5.indd 16 19/9/05 15:05:58

1�

• Is it used with a matched signalling system?• Are there local buffers for holding data if telemetry etc fails?• How is measurement handled if devices fail?

A typical metering arrangement is shown in Figure 3.2.

Figure 3.2 Typical metering arrangement

Meter

Connector Box

Signal processing

Sensor

BridgeAnalogue to

Digital Convertor

Metering application software

Changes to any element of a measurement system may introduce instability into the system. This can be viewed as another potential cause of uncertainty in the data generated. Although Figure 3.2 only shows a single meter, it is likely that the system will have other meters connected to it so issues of stability and uncertainty will apply to all. Any maintenance activity should apply to the system as a whole and where application software is used to make adjustments to the signals from a meter this must also be controlled and understood.

Whether a meter or measurement device has been correctly installed for the purpose for which it is now being used can have an impact upon the quality of the data that are generated. The following list shows examples of impacts that should be considered as part of data management:

• Some process gases and liquids (including steam) cause significant wear, fatigue and corrosion; and bubbles or sludge in the liquids can affect performance of some flow meters.

• Pipe bends, upstream or down steam of the meter, that are inappropriately close to a meter.

• Flow volume – is the current flow higher or lower than the design specification of the meter which will have a minimum and maximum flow range for which the meter is effective?


PRACT 5.indd 17 19/9/05 15:05:58

1�

• Orifice plate sizings and wear.

• Appropriate meter being used within specified range.

• Piping isometrics.

• Has anything changed upstream or downstream of the meter; has the flow volume or type changed from the original specification at the time the meter was installed?

For many installations, the meters that are essential for emissions calculations are not those that have previously had an essential function. Therefore it is probable that over time measurement devices have been neglected, altered or otherwise affected in ways that could affect data quality. The capability to identify this and to assess the extent of the impact is an important element of data management and verification.

Where meters are missing, for example a main gas meter feeds gas to a number of different technical units only some of which are eligible, then an appropriate regime of sub-meters and/or mass balances is required to correctly apportion gas between eligible and non-eligible technical units.

Maintenance, calibration and checking of equipment

In addition to correct installation and capacity for the current flow volume, it is essential that meters and measurement devices are appropriately calibrated to internationally recognised standards, checked on a regular basis, and that appropriate records are maintained to demonstrate this has been done. Key aspects to be aware of in relation to maintenance and calibration are:

• some devices can be adjusted to reduce error both in the physical meter and in the associated signal transfer systems (eg electronics/ analogue);

• some devices cannot be adjusted to reduce error (and so error is recorded and taken into account when device is used);

• zero error does not mean there is no error – it refers to the error that exists when the device should be reading zero but actually shows a reading;

• the frequency of calibration will vary according to device and usage – how this is managed should be made clear;


PRACT 5.indd 18 19/9/05 15:05:59

1�

• calibration should be traceable to national/international standards or the basis for calibration should be clearly stated if no recognised standard exists;

• calibration status should be indicated, ie when was the device last calibrated and is it serviceable; and

• what actions have been taken if the instrument is shown to have an error out of the calibration tolerance.

The following are examples of instrument elements that can have an impact on data quality if they are incorrectly maintained and calibrated:

• differential pressure transmitters;• pressure transmitters;• temperature transmitters;• density transducers (densitometers);• orifice plates; and• signal management (eg gain, noise suppression, application software).

Where an instrument has been used for indication purposes only, this may be because it is no longer able to operate within the linear range of its response characteristic (the way it reacts to the desired stimulus). If this is the case there may be little point in corrective action. If the meter is not appropriate for the measurement requirements of the emissions accounting system, due to previous usage and specification, then calibration may not make it appropriate. The economic case for replacing it may not exist and the contribution from this meter to the overall emission figures would be unreliable, though it may still be used for flow indication.

In addition, where relevant (eg for gas and liquids) data used for the calculation of emissions should always be adjusted to an agreed (or required) norm such as ‘standard temperature and pressure’ (STP) to allow for consistency and comparability.

Accuracy and uncertainty associated with meters and measurement devices

The EU Emissions Trading Scheme requires that emissions are calculated according to a range of tiers. These tiers describe the required level of accuracy of the methodology (and the meters) used to determine the emissions data. The EU monitoring and reporting guidance outlines the allowable uncertainties


PRACT 5.indd 19 19/9/05 15:05:59

20


associated with different measurement methods and tiers. A key consideration here is that the accuracy or uncertainty defined in the specification provided by the manufacturer of a meter will reflect ideal conditions, rather than those found under many normal operating conditions. In addition, in deriving any uncertainty figure, analysis needs to take account of both the data derived from a calibration process and also any additional variables and uncertainties in the calibration device itself.

The UK’s Environment Agency and Scottish Environment Protection Agency (SEPA) have provided detailed guidance on accuracy and uncertainty as part of the implementation guidance on meeting the requirements of the EU Decision on Monitoring and Reporting for the purposes of the EU Emissions Trading Scheme. The key elements of that guidance as interpreted by measurement and instrumentation engineers are summarised below, but the quoted reference materials should be studied and discussed with the relevant competent authority if your organisation relies on metering and measurement devices for specific emissions reporting purposes.

Uncertainty is not the same as error, nor is it the same as accuracy, although error and accuracy have a bearing on uncertainty. It is not possible to measure the true accuracy of a measurement device, only to calculate the uncertainty range within which it should lie. Uncertainty may be defined as the interval on the measurement scale within which the true value lies with a specified probability, when all relevant sources of error have been taken into account.

Components in relation to uncertainty are:

• error is the difference between a measurement and the true value of the quantity being measured (the measurand);

• accuracy can be described as how close a measurement is to the true value of the measurand – accuracy errors are generally systematic; and

• precision is, in simple terms, a description of its repeatability – a precise measuring device will give similar results measuring the same property over and over – precision errors are generally random.

Figure 3.3 illustrates the differences between each of these concepts. Accuracy and precision are two key concepts in calculating overall uncertainty and are definitely not to be regarded as synonymous in this context, as they sometimes are in the wider English language. Uncertainty is therefore the sum of accuracy and precision errors.

PRACT 5.indd 20 19/9/05 15:05:59

21


Errors in relation to meters and measurement devices consist of two components:

• The known ‘inherent uncertainty’ of the meter that results from its design specification etc – this is generally based on testing under ideal conditions and cannot be changed provided that the meter is installed correctly.

• The unknown ‘associated uncertainty’ related to the way in which the meter has been used, maintained and calibrated etc – this can be changed and therefore requires evaluation and action to reduce it as far as possible.

Figure 3.3 The difference between accuracy and precision

Accurate but imprecise

Precise but inaccurate

Inaccurate and imprecise

Accurate and precise

PRACT 5.indd 21 19/9/05 15:05:59

22

Uncertainty associated with a measurement, commonly expressed as a percentage, gives a range within which the actual quantity being measured (the measurand) is expected to lie. Dependent upon the rules of an emissions reporting or trading scheme, the acceptable associated uncertainty and inherent uncertainty of metering and measurement devices may be specifically defined.

Figure 3.4 True value and uncertainty

eg uncertainty range at 95% probability

Known errors

True value

However, in order to be able to verify data an internal or external auditor needs to understand the uncertainty associated with metering and measurement devices at the time of emissions reporting, since this will affect the calculation of materiality and determine whether or not an unqualified opinion can be given; furthermore, good quality data management processes should ensure that errors and associated uncertainties are reduced as far as possible through the design and application of appropriate operating and maintenance procedures, quality assurance and control processes.

Similar consideration should be given to the identification and management of uncertainty associated with the taking of fuel and other samples and the analysis of composition for the purposes of determining carbon content, calorific and other values that are required for the calculation of emissions factors.

Understanding an organisation’s instrument maintenance systems

When checking data management systems or carrying out data verification it may be necessary to audit the instrument maintenance function within an organisation. This may be a separate department or it may be divided across other functions. The following are useful questions and advice to begin this part of an audit.

• On what basis are instruments included in the planned maintenance system?


PRACT 5.indd 22 19/9/05 15:05:59

23


• How are the maintenance and calibration records kept?

• What instruments are outside the system? This may reveal that there are meters that do not appear to be ‘owned’ by any particular function.

• How often is the metering arrangement reviewed?

• Is there a priority status for metering and measurement systems – where do the ones used to provide source data fit in the order of priorities? The chances are that if they are not related to safety or process control, or directly related to the value of the production output, they will be a much lower priority. Is this factor recognised within the organisation?

• Explain to the instrumentation or measurement engineers what the meter output is being used for and elicit their view on the suitability of the instrument.

Appropriate reconciliation to independent data points

Wherever possible, data should be reconciled with an independent source to ensure that it is as accurate as possible. For example, if supplier invoices are being used as the basis for the calculation of activity data, the fuel consumption data recorded on them should be cross checked to meter readings taken by the installation. In this example, independent meter readings should ideally be taken on a weekly or monthly basis to enable timely tracking of trends and errors; but as a minimum, meter readings at the start and end of the reporting period will enable the annual figures to be cross checked.

In other circumstances the reconciliation may take the form of a sense check using an independent proxy. For example, if there is a direct relationship between the amount of production output and energy consumption, comparison between the two sets of data is likely to highlight any anomalies. For some organisations, more creativity may be required to identify independent proxies or sources against which emissions data can be compared for reconciliation purposes.

Consumption versus purchase data

Whilst it is tempting to calculate emissions on the basis of fuels purchase, for example in the case of diesel or other back-up fuels, this is not necessarily accurate as it does not allow for any intermediate storage or stockpiling of fuels; nor does it allow for fuel deliveries that may not yet have been invoiced. In such

PRACT 5.indd 23 19/9/05 15:05:59

24

circumstances a stock reconciliation should be performed in order to calculate actual consumption.

The formula for fuel stock reconciliation is:

Fuel combusted = fuel purchased + (fuel tank stock opening balance – fuel tank stock closing balance) - fuel used for other purposes

Figure 3.5 shows a stock reconciliation calculation (see opposite).

Correct selection and application of approved calculation methodologies

The methodologies selected for determining emissions should accurately represent the characteristics of the types of sources found in an installation’s inventory. A number of approaches have been developed. Appendix F provides references to a number of sources that start to identify some default and sector based methodologies. However, for the purposes of the EU ETS, the methodology specified in the approved monitoring and reporting plan is the one required for emissions calculations.

Design of spreadsheets, databases and other reporting tools

Data generation, collection and management tools may include spreadsheets, databases and hard copy records. In some cases data is entered manually, in others it is drawn automatically from plant information control systems. For corporate organisations or groups of reporting installations, data reporting tools may also include:

• secure databases available over the Intranet or Internet for direct data entry by individual installations;

• standardised spreadsheet templates filled out and emailed to head or divisional office where the data may be processed further; and

• hard copy reporting forms faxed or mailed to head or divisional office where data is then re-entered into a consolidating database.

These form a hierarchy of security whereby the greater the manipulation required at higher levels of an organisation, the greater the chance of error arising; particularly where manual transfers of data are concerned. The more


PRACT 5.indd 24 19/9/05 15:05:59

25


Figure 3.5 Stock reconciliationTe

chni

cal

unit

sD

ate

of

met

er

read

ing

Tank

leve

ls

(ton

nes)

Diff

eren

ce in

ta

nk le

vels

1To

nnes

fuel

co

mbu

sted

pe

r m

eter

ing

2

Fuel

de

liver

ies

to

site

(to

nnes

)

Tota

l fue

l co

mbu

sted

(t

onne

s)

Ker

osen

e

a) G

as tu

rbin

es01

.01.

04O

peni

ngba

lance

1062

31.1

2.04

Clo

sing

balan

ce13

08-2

46

b) A

ux. b

oile

r01

.01.

04O

peni

ngba

lance

316

31.1

2.04

Clo

sing

balan

ce20

411

2-1

3413

90.4

1256

.4

Die

sel

c) P

acka

ge b

oile

r01

.01.

04O

peni

ngba

lance

29.1

5839

31.1

2.04

Clo

sing

balan

ce28

.70.

4583

918

1.32

7

d) B

ulk

dies

el01

.01.

04O

peni

ngba

lance

109.

5

31.1

2.04

Clo

sing

balan

ce90

19.5

19.9

5839

440.

203

641.

4883

9

Not

es: 1

) Ope

ning

bala

nce

min

us c

losin

g ba

lance

- eq

uiva

lent

to to

nnes

com

bust

ed, 2

) Tot

al St

ock

balan

ce fo

r eac

h fu

el ty

pe

PRACT 5.indd 25 19/9/05 15:06:00

26

that ownership of data generation, manipulation and reporting is taken by an individual reporting installation the more focused the internal quality control and assurance processes can be.

Careful design of spreadsheets and databases at the beginning of the reporting process can significantly enhance the ease of use, flexibility and ease of updating calculation processes. In addition, it can facilitate internal quality control and checking of calculation processes and lead to a more efficient external verification.

Where existing tools are being adapted for emissions reporting purposes it is important to ensure that the manner in which they work is clearly understood and any assumptions that have been made during their development and use do not adversely impact on data subsequently used for emissions reporting. In general it is advisable to develop a fresh tool to ensure good quality control.

Regardless of the approach adopted, where databases, and in particular spreadsheets, are used, there are a number of key rules that should be considered to ensure that errors, omissions and mis-statements do not arise during the data gathering and reporting process; these include (in no particular order):

• Design of spreadsheets and databases should take account of the need for succession planning and an assumption of potential for minimal handover between successive data co ordinators.

• Standard templates should be established that are always the starting point of a new year’s calculation sheet, avoiding the potential for errors or omissions to creep in if one year’s spreadsheet is rolled forward into the new reporting year.

• Clear differentiation should be made between data that is entered into spreadsheets and that which is calculated by the spreadsheet.

• Data points on calculation sheets should be clearly linked back to the relevant emissions source (and meter identification number if relevant).

• Variables and standard conversion factors should not be ‘hard-wired’ into calculation formulae but entered on a variables sheet so that they can be checked and updated easily. In addition, for standard conversion factors, the source of the figures used should be clearly identified.

• Units and metrics should be clearly labelled.


PRACT 5.indd 26 19/9/05 15:06:00

2�

• Assumptions underpinning calculations, or any part of the data gathering process, that may affect how the calculation process is interpreted and used should be clearly documented.

• Where possible, automated links should be used within workbooks and individual spreadsheets rather than manual re-entry of data or ‘cut and paste’. However, care should be taken when automatically linking workbooks because name changes to files can affect links.

• Write access to spreadsheets, workbooks and databases should be controlled by means of passwords etc to ensure that calculations and data are not accidentally (or deliberately) altered.

• Version control should be maintained by the use of appropriate naming and file storage conventions.

• Audit trails should be created to track changes to calculation formulae, conversion factors, variables or data. These could be by means of a tracking sheet within a workbook, by cell notes within Excel type spreadsheets or by means of an automated facility within databases.

• Automated headers and footers should be switched on so that hard copy printouts automatically identify file name, tab name and print data, thus ensuring that electronic records can be referenced from hard copy records and the age and provenance of hard copy records can easily be identified.

Consolidation and roll-up of data

Whilst this guidance is primarily focused at the level of individual installations there are some additional data management considerations that must be taken into account if data are being consolidated for higher level reporting or calculations are coordinated at a group centre. The two key approaches to data gathering and consolidation may be defined as:

• Centralised – whereby individual installations report to the centre their data on activity, fuel use and fuel composition analysis etc, and where the actual emissions are then calculated (and reporting coordinated) centrally.

• Decentralised – whereby individual installations gather data and calculate emissions locally and then report the results to the group centre (and possibly also to individual regulators).


PRACT 5.indd 27 19/9/05 15:06:00

2�

The difference in approach is primarily where the actual calculation of emissions is undertaken; this impacts on: the perception of ownership of reported data, the quality controls required at each level of the data management process, and the requirement for local knowledge and understanding of operating requirements, performance and process chemistry that may have an impact on the level of emissions generated.

Where emissions calculations are straight forward and based on standard factors or calculations, a centralised approach may make sense. However, a decentralised approach can be useful in increasing awareness, understanding and ownership of emissions accounting and management. For effective decentralised emissions calculations, appropriate resources and training are required to ensure management of calculation processes, quality controls (including data verification), and risks and liabilities associated with reporting and trading.

For reporting for consolidation or central calculation purposes, a standardised reporting template is key to ensuring that consistent information is received from all relevant installations, regardless of whether such a template is in the form of an internet-enabled direct entry database or a spreadsheet, for example.

The more ‘hands’ that are involved in the consolidation process (eg if there are multiple levels of consolidation and coordination) and the more ‘manual’ the process then the greater the degree of quality control that needs to be applied to all stages of the process. The guidance on these topics provided elsewhere in this section are equally applicable to individual installations gathering and calculating emissions and to group centres consolidating or calculating individual installation data.

Whilst data for EU ETS purposes is not consolidated for reporting, care should be taken in other circumstances to avoid the double counting of emissions arising from shared installations, joint ventures and other boundary related issues.

3.3 Management of data, information and records

Ultimately, the success of emissions reporting and trading will come down to how well data are managed at installations. A formal information management system will be essential in order to clearly demonstrate that the potential risks associated with emissions data generation have been effectively managed and that the resulting data can be relied upon for the purpose for which it is intended. In addition, formal systems provide a more effective means of succession planning


PRACT 5.indd 28 19/9/05 15:06:00

2�

and handover of key stages as personnel move on. Such a system may be part of, for example, an ISO 14001 Environmental Management System (BSI, 2004). In any event it entails a number of key elements. These include the following, which are discussed in more detail below:

• GHG accounting manual, inventory and source list;• diagrammatic representation of the information process flow;• list of GHG critical measuring, monitoring and analytical equipment;• documented roles and responsibilities for key people at each stage of the

information process flow;• clear procedures and work instructions defining, for each stage, where data

are obtained from, how data are manipulated, what spreadsheets are used, and where data are reported to for the next stage;

• filing of hard copy logs, invoices and other relevant records;• records of assumptions, sources of standard variables and other common

data such as conversion factors;• records of changes and adjustments to data, processes and systems; and• records of internal checks, assurance, adjustments or error corrections etc.

GHG accounting manual, inventory and source list

In addition to listing and describing the technical units and other sources of emissions, such an inventory might also be seen as the ‘overview manual’ for an installation’s GHG accounting. It should also include descriptions of:

• the defined organisational and installation reporting boundaries, including any variations as a result of specific legal reporting requirements;

• technical and energy process flows;

• which sources are included and excluded from which types of emissions reporting and why, in particular the justification for excluding sources from accounting and reporting;

• any assumptions that have been made in generating the data, calculating primary or secondary data and final emissions calculations; and

• justifications for sampling and analysis regimes (for example the frequency of gas analysis and process chemical analysis), and the methods to be used by external contractors or analytical labs etc.


PRACT 5.indd 29 19/9/05 15:06:00

30

Information process flow

A clear diagrammatic representation of the information flow should be provided from original point of data generation to final reporting.. Flow charts are extremely useful in this respect for aiding understanding of the entire data flow for reporting, verification and succession planning purposes – see Figures 3.6 and 3.7.

Figure 3.6 Data process flow 1

MP+LP fuel from stage 2 Re-inj compressor

Fuel from separation

HP fuel from stage 3 compressor

Fuel gas

Ship dual fuel

3 x

Purge and pilot

steam

Notes• Fuel from separation not normally used. Frequency less than 1 day per annum• Export gas composition representative of fuel gas components• Fuel from separation is de minimis source• Fuel gas water content – dry gas• Disaggregation of non- EU ETS sources: - Purge/pilot – no robust method available - Steam generation - no robust method available

Critical equipment

An up-to-date record of equipment that is critical to the generation of emissions source data and the calculation of GHG emissions is a pre-requisite to being able to check and confirm that such equipment is being correctly operated, maintained and calibrated. Such a record should include a description of the equipment and identification numbers for all relevant components. For example, some meters may include pressure and temperature sensors that require separate maintenance or testing and may be logged in a maintenance database under their own unique


Meter MT-0052

Meter MT-0051

PRACT 5.indd 30 19/9/05 15:06:00

31


Figure 3.6 (cont)

Daily fuel gas consumption is the sum of 24 hour total from each meter. The data is captured manually from the Control System

‘Location Daily Report’ (word doc) e-mailed to main data co-ordinator

Data on daily report manually entered (copy-paste) to Location Production Report ‘Location.xls’

Data from Location Production Report spreadsheet goes to Holding area ‘Cental Account-ing Upload Area’

One electronic route communicates Main Database to the MP Report. The data is taken from specific locations on the database. The primary process load is daily, with the produc-tion figures from Locations, Analysts or Data Co-ordinators. At most, twice a month the information can be changed (usually once). Annually another reconciliation is performed. There are no specific dates for updating. The information on the MP Report is never consid-ered to be closed. A change in a previous month gets re-assured in the following months.

Monthly report (“Production Stocks & Export-## month.xls”) with monthly val-ues is e-mailed from Technical Accountant to Environmental Data Co-ordinator at the beginning of next month.

Data is trans-ferred to the Environment Database via an ‘import option from Excel’ within the database menu.

By the end of next month , Main Database corrects data, if necessary, and revised spreadsheet is e-mailed. Data is then manually corrected in the Environment Database

Anually, a validation is performed.

MT-0051MT-0052

From ‘Location Production Report’ a ‘Send Report Data’ button transfers the data to Main Database

Fuel gas measurement is manually updated to the location daily report

Technical Accountant select data and load to the Main Database using ‘Upload button’

Location Manager

Main Data Co-ordinator

Technical Accountant

Main Production Report

Environmental Data Co-ordinator

Manual processElectronic process

PRACT 5.indd 31 19/9/05 15:06:01

32


Plant control system

Daily print out of metering reports and average gas composition

Monthly technical accounting report printed and reconciled to monthly output from TA spreadsheets

Fuel gas main meter (ID: MT001A)

Secondary process sub-meter (ID: MT072Z)

Vent & flaring incident manual log in control room

Daily technical accounting spreadsheet. Contains calcs for daily CO2 for fuel gas (both meters).Daily venting and daily flaring

Daily records archived to monthly technical accounting archive (retention time uncertain)

Monthly CO2 totals calculated

Data manually extracted from KPI database and manually transferred to environmental database for emissions reporting

Transferred to KPI database

Vent & flaring spreadsheet

Transfer by Business

Administrator and QA’d daily by Process Engineer

Note –1) Fuel Gas emissions are calculated as Total CO2 emissions – Secondary Process CO2 emissions2) Fuel Gas calculated by daily composition analysis. Vents calculated on average daily composition. Flares calculated on average flare composition. Stoichiometric calculations used.

Transfer by Business Administrator (via Macro link) and QA’d daily by Process Engineer

Archived to Plant Information System Archive (retention time uncertain)

Figure 3.7 Data process flow 2

Process Engineer quantifies daily the mass released from vent & flare and the composition analysis

Manual transferAutomatic transfer

PRACT 5.indd 32 19/9/05 15:06:01

33

identification. The record should also include signposts to relevant procedures or work instructions related to operation, maintenance, calibration and testing.

Clear roles and responsibilities

For succession planning and legal purposes, a statement of roles and responsibilities for each person in the information process flow is essential. For some, such as the overall GHG data coordinator, this may be a new and specific description. For others such as site operatives, boiler staff and electricians elements of the data generation process may well already form part of their existing job description but may require emphasising in terms of the accuracy and reliability of the data being gathered and reported as part of normal work activity.

Procedures and work instructions

To ensure consistency, regardless of whoever needs to undertake the task, and for succession planning purposes, each stage of the GHG information process flow requires clear instructions as to how it should be performed. For example, where and from whom are data obtained; where is it transferred to and how; how are the data manipulated and what assumptions have been made; have other data sources been used; how has data and its manipulation been independently quality checked, how have error correction and adjustments been made and recorded; and how are the data outputted, in what format and where are they reported to next.

In some areas, for example the taking of gas samples or the reading of meters, there may be existing process instructions or training defining how tasks should be performed, so it may only be necessary to make minor modifications to ensure that the GHG specific requirements (eg accuracy, reliability and regularity) are met. However, for other areas such as the use of specific spreadsheets and the manipulation of data, step by step instructions may be required. In the case of spreadsheets consideration should be given to whether a specific work instruction or procedure needs to be written or whether the spreadsheet can be appropriately designed to integrate the relevant instructions or comments on where source data is obtained from – whether this be standard variables, constants or GHG source data from earlier in the information process flow.

Hard copy records

Where original information is in hard copy, for example control room logs, invoices, supplier metering logs and year-end stock reconciliation books, these should be carefully filed and stored so that they can be retrieved without difficulty


PRACT 5.indd 33 19/9/05 15:06:01

34

should internal or external auditors require them for verification purposes, or if it becomes necessary to recreate data as part of disaster recovery.

Where such records are held outside the control of the GHG data coordinator it becomes important that the record keepers are aware of the retention period (ten years for the EU ETS) and the importance of such records for conforming to legal requirements. In such cases, it is wise for the GHG data coordinator to make a periodic check that archive records have not been mislaid by their ‘owning’ function or as a result of organisational change.

3.4 Security of data in terms of accessibility, archive retention and retrieval

In the context of emissions data management and verification, security considerations are wider than simple considerations of security status – as indicated by access level controls such as passwords and licences. A broader appreciation of the management of information – including confidentiality, integrity and availability – must be applied and this includes the use of the framework outlined in the next section.

The concept of information assets should also be applied and once these assets are identified within the data management and verification context they can be assessed. A primary example would be the use of spreadsheets to record and calculate emissions data. The information assets in this case include:

• the network infrastructure;• the operating system;• the spreadsheet software;• the individual spreadsheets; and• the data in the spreadsheets.

The principle during verification is to understand how the information is secured at all stages from collection through to the final presentation of that information. The ‘garbage-in-garbage-out’ model is well understood when applied to computer based systems. Less well understood is the ‘good-data-in-garbage-out’ scenario and the ‘garbage-in-plausible-information-out’ situation. A high awareness of these possibilities should be maintained when working in EU ETS reporting and verification.

‘ISO17799 – Information Technology’, the code of practice for information security management, (ISO, 2005a) provides a thorough framework against


PRACT 5.indd 34 19/9/05 15:06:01

35

which to consider any organisation’s ability to manage its information in a way that enables robust levels of management and assurance to be applied. Although the standard has ‘information technology’ in the title, the principles it contains are equally applicable to whatever media in which information may be stored and presented. The main sections cover:

• security policy;• organisational security;• information assets;• personnel security;• physical and environmental security;• system development and maintenance; and• compliance.

Some examples of problems associated with a lack of information security management are:

• poor training leading to information being unsound due to ignorance;• impacts of changes in application software not being considered;• changes to the specification of the software (calculation and presentation

rules);• unprotected, open access to vital information;• inability to recover vital information;• recovery of incorrect information;• locally produced spreadsheets, used as productivity aids, becoming key

records without passing through any information management assurance; and

• assets are not identified and risk analysis is not applied to the information systems and the information pathways through the systems.

3.5 Quality control and internal assurance

In addition to the proper installation and calibration of meters, as has been discussed above, the quality checking of data is an important part of data management and is key for management control and the preparations for external verification.

Data checking should occur at all key stages of the information process flow from original source data all the way through to final calculation and consolidation. This ensures that error correction is timely and appropriate. Periodic data checking ensures that things are operating as planned, and that


PRACT 5.indd 35 19/9/05 15:06:01

36

anomalies and errors have not inadvertently entered the data calculation process. Errors and anomalies can arise through any of the following areas:

• metering and measurement inaccuracies and errors;• manual transfer and transcription errors on data entry or transfer;• formulae and function errors in spreadsheets and calculations;• duplicated and missing lines in spreadsheets, logs or other records;• double counting;• version control of spreadsheets and other records; and• incorrect conversion factors, conversion factor units, metrics and default

factors.

Simple data checks can be undertaken using one of two approaches. For vertical checks, comparisons are made between data from the same installation or technical unit in different years (or months) with analysis of differences in relation to changes in activity level, fuels or input materials, or process changes (eg energy efficiency improvements). For horizontal checks, comparisons are made between values resulting from different operational data collection systems, including:

• comparisons of data on fuel and other input materials consumed by a specific technical unit with relevant purchasing data and data on stock changes – eg compare meter readings taken by the site to readings provided by a gas supplier;

• comparisons of total data on fuel and other input materials consumed with relevant purchasing data and data on stock changes;

• comparisons of emissions factors that have been calculated or obtained from fuel suppliers with national or international reference emissions factors for comparable fuels;

• comparisons of emissions factors based on fuel analysis with national or international reference emissions factors for comparable fuels;

• comparisons of measured and calculated emissions; and

• where there is a direct relationship, comparisons of emissions generated with production throughput or other appropriate independent proxy.

Where anomalies are identified that cannot be explained then more detailed checks should be carried out on possible sources of error. Where errors are


PRACT 5.indd 36 19/9/05 15:06:01

3�

identified and corrected these should be documented in order to develop an audit trail for the purposes of formal (external) verification of data. In addition, any sources of uncertainty (such as might be associated with estimation) should be documented to allow for full and proper evaluation of data during formal (external) verification.


PRACT 5.indd 37 19/9/05 15:06:01

3�

PRACT 5.indd 38 19/9/05 15:06:02

3�

Integration with other management systems

4.1 Environmental management systems

Whilst there is no compulsion, within the rules of any of the current emissions trading schemes, for emissions data management to be incorporated within a formal ISO-based management system, there is logic to doing so where such systems already exist for environmental or quality management purposes. However, as a result of the legal basis of the EU-ETS it is arguable that for installations with an existing ISO14001 management system, conformance to the legal compliance requirements of the standard mean that it is necessary to incorporate GHG data management within its framework. Figure 4.1 (over page) outlines where elements of GHG accounting might fit into ISO14001. Appendix C contains a clause by clause analysis and examples of good practice.

4.2 Financial accounting systems

Until the advent of the EU Emissions Trading Scheme on 1 January 2005, the chief requirement for reporting of environmental data for direct financial purposes was the accounting for carbon dioxide under the Climate Change Agreements and for the 34 organisations that had entered the UK Emissions Trading Scheme as Direct Participants. In these circumstances, the direct impact upon profit and loss accounts and the balance sheets had been limited due to the structure of the schemes and the limited volume of trades conducted by most participants.

As from March 2005, organisations that are permitted under the EU Emissions Trading Scheme will be obliged to report their related financial performance under the requirements of the International Financial Reporting Standards and will be required to adopt the accounting treatment set out by the International Financial Reporting Interpretations Committee (IFRIC, 2004). This standard requires organisations to account for the free emission allowances they receive (ie in March 2005 and subsequently in February each year from 2006) as intangible assets, and to recognise a liability for the obligation to deliver allowances as emissions are produced. This will inevitably have an impact on the organisation’s balance sheet and, where trading occurs, on the profit and loss account.

Section 4

PRACT 5.indd 39 19/9/05 15:06:02

40


Figure 4.1 Overview of GHG: EMS Integration

Checking & corrective action

monitoring & measurementevaluation of compliancenon-conformance, corrective action & preventive actionrecordsinternal audit

•••

••

Implementation & operation

resources, roles, responsibility & authoritycompetence, training & awarenesscommunicationdocumentationcontrol of documentsoperational controlemergency preparedness & response

•

••••••

Review of data & performance Discussion of GHG performance, improvement & strategy Integration with overall business performance management & plans Commercial/financial implications of over/under achievement

••

•

•

Management review

MethodologiesCalculations Background dataFuel analysisMetering control Internal GHG data audit/ assuranceEmission trading linksThird-party verificationResponses to audit opinion

••••••

•••

PRACT 5.indd 40 19/9/05 15:06:02

41


Planning

environmental aspectslegal & other requirementsobjectives, targets & programme(s)

•••

Policy

Role & responsibilities eg of data/energy co-ordinator, emission trader, lab chemist etcIntegrating GHG awareness & responsibilitiesGHG reporting, within internal briefs and external reportsSources (& exclusions) inventoryFactors and calculations inventoryEquity share calculations & statements/ boundary statementInformation process flows & proceduresMetering control - calibration, maintenance, uncertainties etcStandard document control proceduresAccounting for GHG credits etc in financial systems

•

•••••••••

Scheme rules (eg EUETS, UKETS, CCA etc)Source identificationBoundary identificationGHG reporting protocolsGHG reduction objectivesGHG reduction/ management plans

•

•••••

CORPORATE COMMITMENTS,

REQUIREMENTS & GUIDANCE

LEGAL OBLIGATIONS

INTERNAL/EXTERNAL SITE/ CORPORATE LEVEL

REPORTING

REGULATORY REPORTING

PRACT 5.indd 41 19/9/05 15:06:02

42


Further details of the accounting treatment of EU Emission Trading Scheme Allowances can be found in Table 4.1 and also in the Fédération des Experts Comptables Européens Alert - Emissions Trading (FEE, 2005).

Inevitably, therefore, the finance departments of organisations will have a much greater interest in GHG data than hitherto and it is likely that the collation of related data will increasingly fall within the interest of internal financial audit departments, and ultimately external statutory auditors where this is relevant. In addition, where organisations decide to become active in the markets, be it to cover their potential exposure or to sell surplus allowances, this will very likely fall within the remit of the finance department.

Table 4.1 - IFRIC 3 requirements

The interpretation specifies that:

Emission allowances (rights) are intangible assets that should be recognised in the financial statements in accordance with IAS 38 ‘Intangible Assets’.

When allowances are issued to a participant by government (or government agency) for less than their fair value, the difference between the amount paid (if any) and the fair value is a government grant that is accounted for in accordance with IAS20 ‘Accounting for Government Grants and Disclosure of Government Assistance’.

IAS 20 specifies that this difference should be recognised initially as deferred income in the balance sheet, and subsequently recognised as income on a systematic basis over the compliance period for which the allowances were issued, regardless of whether the allowances are subsequently sold.

As a participant produces emissions, it recognises a provision for its obligation to deliver allowances in accordance with IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’. This provision is normally measured at the market value of the allowances needed to settle it. Usually this will be equal to the current market price of the allowances required to settle the obligation.

An entity may not offset the assets and liabilities or account only for its net exposure.

Source: IFRIC, 2004

•

•

•

•

•

PRACT 5.indd 42 19/9/05 15:06:02

43

Section 5

Data verification

5.1 Introduction

A key aspect of many forms of reporting of non-financial data is the process of independent review, audit or verification to give third-party assurance that the data presented in the report is accurate and free from significant, or ‘material’ error. Verification is defined as: “confirmation of the validity of an environmental claim using specific predetermined criteria and procedures with assurance of data reliability” (BSI 2002).

It is also defined in the Draft ISO 14064-Part 1:2005 ‘Greenhouse gases - Specification with guidance at the organization level for quantification and reporting of greenhouse gas emissions and removals’ as: “systematic, independent and documented process for the evaluation of a proposed GHG assertion against agreed verification criteria” (ISO, 2005b, ISO 2005c and ISO 2005d). Thus, the overall aim of the verification will be to impartially and objectively review the reported data against predefined criteria in order to give an independent opinion as to the validity of the statements made.

5.2 Preparing for verification

For a planned verification exercise to be as efficient and cost effective as practicable, it is important that the organisation is fully prepared. The key steps involved are given in Table 5.1.

Table 5.1 Key steps for verification preparation

a Development of verification scope and objectivesb Define and review the verification criteria and requirementsc Review applicable organisational or data programme verification requirementsd Determine the level of assurance requirede Ensure that the roles and responsibilities of appropriate staff are clearly defined,

communicated and understoodf Ensure that the organisation’s relevant non-financial information, data and

records are complete and accessibleg Agree to verification objectives, scope and criteria with the verifierh Ensure that the verifier has appropriate competence and qualificationsi Consider the content of the verification statement.

PRACT 5.indd 43 19/9/05 15:06:02

44

Development of verification scope and objectives

The organisation must consider the scope of the verification exercise and what it hopes to achieve from the process. For example, to what extent is the verification to be a validation of the process that has been followed, and to what degree is it required to be a confirmation of the reported data, or indeed a combination of both? For the purposes of the EU ETS, both aspects are required and the scope and requirements of verification are outlined in the Commission Decision of 29/1/04.

Consideration also needs to be given to whether the verification is being conducted simply for internal reasons, or whether the outcome is to become a public statement or affirmation that a non-financial report, that is to be published, is fair and accurate. A further consideration is whether the statement will ultimately have a concrete financial and potentially tradable value.

Define and review the verification criteria and requirements

The organisation must clearly define and understand the criteria and requirements of the scheme, regulation or other norm against which it is reporting, and against which any formal statement that has been made will be judged. Any data presented must be prepared in accordance with the requirements of the defined scheme and also in any prescribed format that may be required. Examples of the criteria used might be an international standard, such as ISO 14001, the European EMAS Regulation (EC, 2001), or the EU Emissions Trading Scheme Guidelines (EC, 2004).

Review applicable organisational and data programme verification requirements

Likewise, the organisation must fully understand its own internal organisational structures and processes that are associated with the preparation of the statement that is to be verified, and be fully confident that its own procedures, processes and methodologies have been followed in the compilation of the final report that is to be verified. Equally these processes need to be clear, transparent and understood at all relevant levels within the organisation. In practical terms, the organisation should instigate a process of quality control at key stages in the collation and manipulation of the data, and during the compilation and publication of the final report. This may be associated with an informal, or formal, quality assurance programme, and should ideally be subject to some form of internal audit.

Data verification

PRACT 5.indd 44 19/9/05 15:06:03

45

Data verification

Determine the level of assurance required

The organisation will need to define the appropriate level of assurance that it requires to be placed on the reported data. In practical terms the level of assurance required depends broadly on the intended use that the verified statement is to be put to. Three levels of assurance are generally defined:

• High – this is usually required where a financial value is attached to the statement or the determined values are for a commodity that is potentially tradeable. It may also be a requirement to use data with a high degree of certainty. For example, Directive 2003/87/EC concerning the EU Emissions Trading Scheme, Annex V, Para 3 states that reported emissions can only be validated for use in the EU ETS if reliable and credible data allow the emissions to be determined with a high degree of certainty. Here the business risks for a figure reported erroneously can be high and the financial consequences can equally be significant.

• Moderate – this term is usually applied where a reasonable degree of confidence is required that the reported figure is free from material errors but where the financial implications or degree of business or other risk associated with the reported data is lower.

• Low – is the lowest level of assurance and can often be associated with the verification of processes as opposed to the reported outcome or data.

In a financial auditing context, high level assurance is generally referred to as ‘reasonable assurance’ and denotes a positive opinion whereby it can be stated that “the data are accurate” or “are fairly stated”, meaning that sufficient work has been undertaken to derive such a positive opinion. Moderate and low levels of assurance are generally referred to as “limited assurance”, implying that the work undertaken has been limited and therefore a positive opinion cannot be asserted. Limited assurance therefore results in a negative opinion whereby it can be stated that “nothing came to the attention of the auditor to suggest that data are mis-stated”.

In general terms, therefore, the higher the level of required assurance the greater will be the associated verification costs and the greater will be the time that the appointed verifier will spend on the verification programme. This will in part be due to the greater levels of investigation and sampling associated with the verification at each of the levels and to the greater verification risks associated with the exercise that the verifier has to cover.

PRACT 5.indd 45 19/9/05 15:06:03

46

Ensure that roles and responsibilities are clearly defined, communicated and understood

As with any form of process, for it to be efficient, effective and complete it is crucial that those members of staff involved in the process are clearly defined and are all fully aware of their role within the programme and are competent and adequately trained to deliver the required outcomes. It may well be for emissions accounting purposes that the people involved in the generation and verification of data are not only the more senior and from centralised team(s) but are also people on the ‘front line’ such as process operators and lab staff.

Ensure that the organisation’s relevant non-financial information, data and records are complete and accessible

A verification audit will inevitably look in detail at the records, data trails and sources of data associated with the final reported figures. For this to be possible, the verification team will require ready access to all relevant sources, data, documents, records, spreadsheets and databases, be they hard copy or electronic. As a consequence, they must be readily accessible and retrievable. In addition, the verifiers will almost certainly require to see other materials, such as copies of documented procedures, data conversion processes, site plans, training records and other materials of relevance to the data collection, collation and reporting process and these too should be readily available.

Agree verification objectives, scope and criteria with the verifier

For the verification to be efficient and cost effective, it is vital that the organisation and its selected verifier fully understand and agree the terms of reference for the process.

Ensure that the verifier has appropriate competence and qualifications

The organisation should ensure that all personnel involved in the verification process are fully competent. This means that they:

• are aware of relevant data management issues;• fully understand the operations and processes they intend to verify;• have the necessary technical expertise to support the verification process;

and

Data verification

PRACT 5.indd 46 19/9/05 15:06:03

4�

• are familiar with the contents and intent of any relevant norms, regulations or other requirements relevant to the verification.

In practical terms and in most cases, it is likely that either the verification body itself or the individual verification personnel employed by the verification body will be required to carry a formal accreditation to carry out this work. Organisations employing verifiers are well within their rights to request formal evidence of this qualification before appointing the verifier. An example of this would be the United Kingdom Accreditation Service (UKAS) accreditation of verification bodies to carry out the annual verification of emissions statements (Emissions Reports) required by the EU Emissions Trading Scheme.

In practical terms and in most cases, it is likely that either the verification body itself or the individual verification personnel employed by the verification body will be required to carry a formal accreditation to carry out this work. Organisations employing verifiers are well within their rights to request formal evidence of this qualification before appointing the verifier. An example of this would be the United Kingdom Accreditation Service (UKAS) accreditation of verification bodies to carry out the annual verification of emissions statements (Emissions Reports) required by the EU Emissions Trading Scheme.

Accreditation entails the verification organisation demonstrating to UKAS that it has in place an appropriate quality management system that meets ISO specifications and that enables it to undertake verification work in a manner that is well controlled to manage all risks and avoiding conflicts of interest and confidentiality; that personnel are trained and competent; and that all work is subject to independent technical review. Accreditation also covers the ability of the verification organisation to operate its business as a ‘going concern’ and to maintain appropriate levels of professional indemnity and other insurances.

For the UK, UKAS publishes a list of the verifiers it has accredited or approved to operate in the UK; this is also available on the Defra website. Similar mechanisms operate in most (but not all) EU Member States, in relation to ETS verification work. In addition, an organisation should select a verifier and verification personnel who are administratively independent of the operations that are to be the subject of verification to ensure both objectivity and impartiality in the verification process.

Consider the content of the verification statement

In many cases the content of any verification opinion arising from the verification will be outlined or prescribed within scheme rules; however, where this is not the

Data verification

PRACT 5.indd 47 19/9/05 15:06:03

4�

Data verification

case the organisation would be advised to request from the verifier a statement that includes as a minimum the following:

• a description of the objectives, scope, and criteria of the verification activities;

• a description of the level of assurance; and• details of the verifier’s conclusion indicating any qualification or limitations

associated with the opinion.

5.3 Verification management plan

The successful completion of a verification exercise requires that an organisation develops and implements a structured plan to prepare for the audit visit, be it formal or informal. This plan might include:

• a definition of the verification process, scope, criteria, level of assurance and activities to be followed;

• a description of the roles and responsibilities for implementing and maintaining the plan and for hosting the verification team;

• a confirmation of the availability of all resources necessary, including key personnel and IT resources, to achieve an efficient outcome of the verification;

• a formal description of data sampling and custody procedures used in the preparation of the report to be verified, supported by relevant site plans;

• the maintenance and collation of all necessary documentation and records into an ‘evidence pack’ – see Table 5.2 for examples of materials to be included;

• a description of the processes for monitoring and reviewing the plan, and for any internal audit carried out in support of the plan; and

• the decision on the appointment of competent verifiers.

PRACT 5.indd 48 19/9/05 15:06:03

4�

Data verification

Table 5.2 Proposed information for evidence pack

To help ensure data accuracy and prepare for a possible independent audit it is strongly recommended that the following information be kept by each operator in an ‘evidence pack’, as appropriate:

Evidence of a formal appointment of a responsible project manager and a deputy.

Written procedures for data collection, handling, transfer, and error checking – plus any procedures for data calculations and definitions of conversion factors.

Copies of any formal data submissions to relevant authorities required by scheme or other rules.

A map or equivalent document indicating relevant areas, input and output energy flows and production. Any meters used in the monitoring process should be identified on the map or in the document.

Production records.

Energy records – copies of each invoice for energy streams, eg electricity, gas, and fuel oil, or if own metering is used instead of utilities metering then verifiable records of readings should be kept.

Meter readings, calculations and justifications for any other energy flow into and out of the facility (eg steam).

Where energy is split between eligible and non-eligible parts of facility, a descrip-tion of the method of apportionment should be written down and retained.

Descriptions of conversion factors used and related calculations carried out.

Copies of relevant spreadsheets used in the data gathering exercise.

Written evidence of data checking and any follow-up as a result of errors found.

Evidence of notification and agreement of any adjustments to data due for exam-ple to variations in gas calorific values and originally-estimated meter readings.

Internal audit reports.

Records of qualitative measures/progress on key performance indicators.

Any other information on specific discussions on related issues with relevant authorities or regulators.

Any other relevant internal documents.

The information for the ‘evidence pack’ could be kept in hard-copy or electronic format, or a combination of the two, and in a form that is readily accessible and retrievable. Appropriate archiving arrangements will need to be made in accordance with any scheme requirements and with due regard for information security issues and the provision of appropriate secure back-up for electronic records.

Source: Defra, 2002

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

PRACT 5.indd 49 19/9/05 15:06:03

50

Data verification

5.4 Quality control and internal audit

A key element of the preparation is the checks that the organisation makes on its own procedures, processes and the data. In general, the higher the level of internal scrutiny carried out by the organisation the higher the degree of confidence ascribed by the verifier to the reported data and information.

If data flows are adequately mapped by the organisation, then critical control points can be identified and checks applied to the processes and data verification can be concentrated at those points, ie at the points with the greatest potential for error. Examples of this might be at points subject to the manual transfer of data, where complex calculations are carried out manually, or where data is cut and pasted from one application to another.

A regular internal audit of the data collection, handling, manipulating and reporting processes can also highlight issues or process weaknesses that could potentially have a significant impact on the reported information at a point early in the reporting cycle, and at a point where issues can be easily addressed or corrected.

Thus both quality control checks and internal audits of the process and data are essential for confidence to be placed both internally and by the verifier on the reported information.

PRACT 5.indd 50 19/9/05 15:06:03

51

Guidance for other data accounting and management

systems

6.1 Introduction

Organisations have reported non-financial data for some considerable time and whilst the reasons are often very different and sometimes diverse, they can be broadly divided into the following categories:

• regulatory requirements such as process authorisations, eg IPC and IPPC;

• voluntary reporting for various purposes – reports produced may be subject to third-party review, audit and assurance (or a combination of these), but not necessarily so;

• reports for financial purposes, such as required under the Climate Change Agreements, UK ETS and EU ETS; and

• reports required by company law, most recently the introduction of the Operating and Financial Review (OFR).

In addition to the trend towards increased public disclosure of non-financial data, there has also been a move to increased breadth of the data made available. Initially, data on environmental and health and safety (EHS) statistics tended to be reported as separate documents; slowly the trend to fuller environmental reporting has been followed by a move to combined EHS reporting and most recently, to broader corporate social responsibility (CSR) and social accountability reporting.

Consequently, the importance of non-financial data, the quality of that data and the reliance that can be placed upon it, has increased. This has raised the importance of data issues generally within organisations.

In a similar way, the importance of reporting has increased with the consequence that market decisions are now taken by financial analysts on the data provided. Investors use the data to assist in making financial decisions, and insurers use the data to help determine the risk profile of organisations.

Section 6

PRACT 5.indd 51 19/9/05 15:06:03

52

Thus the information on data management provided in this Guide has applications beyond just GHG emissions reporting and may equally be applied to these other purposes.

6.2 Reporting for regulatory purposes

Many organisations are required to report to regulators for specific purposes under various pieces of legislation; two examples are IPC under the Environmental Act 1995 and IPPC under the Pollution Prevention Control Act 1999 and subsequent regulations.

In most cases the legal permits issued to organisations that fall within the scope of these pieces of legislation lay down detailed and specific reporting requirements as to parameters that are required to be monitored, measured, recorded and reported, and the frequency at which these reports must be made and to whom. The requirements within permits are legal obligations. Also, the reporting of inaccurate or incorrect data, whether by accident or design, constitutes a breach of the permit conditions. Failure to meet permit conditions can result in legal action being taken by the regulator, who has the ultimate sanction of withdrawal of the permit to operate.

Consequently, there is a need to ensure that data is collected in an appropriate manner, under controlled conditions, and that the data is managed and reported in a satisfactory way to meet the requirements specified in permits. The importance of this mechanism has in part been recognised in the transition from IPC to IPPC, in that the latter has a requirement for an environmental management system based on the requirements of ISO 14001. However, evidence to date on GHG reporting for regulatory purposes is that many certified EMSs do not include appropriate data and information management and control requirements.

6.3 Voluntary reporting

Many organisations have chosen to produce public reports on a range of issues including such matters as:

• environmental performance;• specific greenhouse gas related questions;• health and safety;• social accountability; and• corporate social responsibility.

Guidance for other data accounting and management systems

PRACT 5.indd 52 19/9/05 15:06:04

53

The motivation for public reporting is derived from a range of considerations, including:

• improving an organisation’s public reputation and brand image;• aiding communications with stakeholders and responding to their

demands;• collecting data to improve the management of organisational risk;• monitoring regulatory compliance;• identifying opportunities for savings in resources used and operational

costs;• improving financial performance and market valuation; • influencing the setting of insurance costs; and• responding to government pressure.

Reputation

Public reports can differentiate an organisation from its competitors and influence access to potential customers and suppliers. They may also enhance the reputation of the organisation internally as a responsible employer – this could improve staff retention and loyalty, and widen the base for recruitment. Since July 2000 pension funds have been required to state the extent to which they take environmental, social and ethical considerations into account when making investment decisions; for example, banks and insurers are showing an increasing interest in environmental management, corporate social responsibility and ethical issues.

Transparency and communication

Reporting can help convey the organisation’s values and promote a two-way communication with its stakeholders. These reports must, however, be comprehensive (within the defined scope) and organisations must be prepared to report ‘warts and all’ to reveal the areas where improvements are still needed, which of course is not always easy to do. A wide range of leading companies from all sectors have chosen to take the reporting step, and have found that the resulting transparency can improve relations with stakeholders, and build trust with local and planning authorities, neighbours, community groups and NGOs.

Risk management

Environmental risk is part of the overall business risks facing all organisations. A reporting process helps to identify such risks and develop strategies for


PRACT 5.indd 53 19/9/05 15:06:04

54

monitoring and managing them before they have a negative impact on the reputation of the organisation.

Cost savings

Of itself a report cannot reduce natural resource use or produce lower energy, water or material costs, but report preparation can focus the organisation’s attention on these issues and help in identifying areas where efficiencies and cost savings can be made.

6.4 The data reporting process

The data reporting process will vary from organisation to organisation. It may be conducted as a stand alone activity or as part of an existing or newly instigated management or data system. There are, however, a number of key decisions which are vital to the success of the process, and these relate to:

• the objective of the reporting;• the issues that are to be reported upon and how, including how they link

with other data collection and reporting systems;• the extent and nature of any stakeholder consultation; and• the need for, nature and extent of any third-party assurance.

These decisions will depend to some extent on:

• the nature and size of the organisation;• the breadth and constituencies of the stakeholder groupings to be

considered;• the resources available to manage and carry out the reporting process;• how many people and organisations are to be involved; and• the timing of the reporting process.

The data reporting process is shown in Figure 6.1 (opposite).

Identification of the audience

A report has the potential to be of interest to a range of audience groupings. These will vary extensively between organisations, but are likely to include some or all of the following:

• employees who may also be customers and neighbours;• the local community and neighbours;


PRACT 5.indd 54 19/9/05 15:06:04

55


Figure 6.1 Representation of the data reporting process

Decide to report

Identify the audiencefor the report

Prepare necessary policy commitments

Consider what toreport and how

Consider assurance arrangements

Gather data andprepare information

Internal assurance and/or external verification

Finalise andpublish report

Review and identifythe main issues to

be covered

Review existing data collection procedures

Develop new data collection procedures

PRACT 5.indd 55 19/9/05 15:06:04

56


• customers who may be influenced extensively by reported standards and reputation, and could include business customers who may ask for specific performance standards – for example, some automotive companies require their suppliers to be certified to the EMS Standard ISO14001;

• suppliers of goods and services;• funders and shareholders and other investors such as bankers and

insurers;• government and agencies including central and local government, the

regulators, and local and national planning authorities;• academics; and• other commentators including the press, pressure groups and NGOs.

The nature of the audience will also influence the form of reporting and the approach to any assurance arrangements that are to be applied to the data and report.

Links to other reporting systems

Data may be collected within organisations for a variety of purposes and by a variety of means. Although some of these data may be very detailed, existing reporting activities may provide systems, information and data that can be used in the compilation of reports as discussed above. It is important to avoid duplication for the following reasons:

• to reduce costs;• to optimise management time and the allocation of responsibilities;• to ensure consistency of information, approach and data quality; and• to ensure that assurance processes are applied equally to all relevant data

streams.

Organisations engaged in industrial processes may be required to collect and report data to the regulator, and in addition, they may collect data required for their participation in any number of voluntary schemes, such as:

• ISO14001 – Environmental Management Systems;• EMAS – European Union Eco-Management and Audit Scheme;• OHSAS 18001 – Occupational Health and Safety Assessment Series;• SA 8000 – Social Accountability Management Systems; and• AA1000 – Social and Ethical Accountability Framework.

Financial reporting systems can provide useful sources of relevant data. Management accounts may include data on, for example, energy consumption

PRACT 5.indd 56 19/9/05 15:06:04

5�


and issues relevant to the climate change levy on energy spending. Such data is likely to have been subjected to some level of internal audit scrutiny.

Avoidance of duplication of effort and inconsistency

Where the same or similar data and information is being collated for a number of different and diverse purposes it is possible, indeed almost inevitable, that duplication of effort is likely to occur. In addition to duplication, this is also likely to cause inconsistencies in interpretation of procedures, processes and information. This may result in varying outputs from the same source information and potential confusion for users who may have no way of knowing which of the data streams produces a figure with a higher degree of inherent inaccuracy

To prevent this occurring each time data is required by an organisation, consideration should be given to how and where this data originates and to whether it is being collected for any other purpose. If slight variations in requirements are found then consideration should be given to changing existing processes in such a way that they generate data suitable for both intended outcomes rather than setting up parallel processes, as often occurs in practice. This has the additional benefits of minimising the level of extra effort – and hence cost – required, and more importantly ensuring consistency of base data for both intended purposes.

Assurance processes are applied equally

Where data is handled in different ways for different purposes it is entirely feasible that one data stream may have a higher degree of quality assurance, control and review applied to it than another. Indeed one of the data streams may be subject to some form of internal or third-party scrutiny, whereas the other is not. In this instance a greater reliance may be placed on one than the other, an issue that could be quite unnecessary if data accounting and reporting procedures were reviewed and aligned.

6.5 Assurance arrangements

A key question for voluntary reporting is whether the report is subject to some form of third-party verification or assurance. If it is, what will be the scope of the verification, to what level will it go and who is to carry out the work. External assurance and verification can enhance a report’s credibility; however, verification is at an early stage of development and there is no consensus as to how it should be done, or what type of organisation is best placed to do it. Accountancy firms,

PRACT 5.indd 57 19/9/05 15:06:04

5�


management consultants, technical consultancies and certification/assurance companies as well as NGOs have provided verification statements or opinions. It is true to say that they vary considerably in terms of the quality and cost of the work. Some of the issues in relation to verification and assurance are shown in Table 6.1.

Table 6.1 Verification and assurance issues

What is the scope of the verification?

data collection and collation processes onlyverification of the data itself onlydata collection, collation, and data verificationdata reporting processes onlypart or all of the dataany combination of the above

•

••

•••

What is the level of assurance? low – a quick overview of the processmedium – review of the data collec-tion processes and a sampling of data streamshigh – total review of the data proc-esses and all data

••

•

Who will carry out the verification?

accountancy firmscertification/verification companiesmanagement consultanciesNGOstechnical consultancies

•••••

In some instances, the process or the data (or both) may have been subject to some form of review or verification for another purpose, for example:

• ISO 14001 participants may have their management systems certified by a third-party certification body accredited by UKAS (United Kingdom Accreditation Service). The certification process examines the management systems and may look at data collection procedures but it is unlikely to examine the data in any great depth. Also, there is no requirement to produce a publicly-available report.

• EMAS requires verification of the management system and data collection processes, and the data in the environmental report.

PRACT 5.indd 58 19/9/05 15:06:04

5�


In deciding whether and how the report is to be verified, consideration is often given to:

• what stakeholders regard as critical in terms of who they see as credible to verify the report;

• how other similar organisations have chosen to verify their reports;

• what internal systems are in place, or can be put in place, to check and ensure that information intended for inclusion in the report is complete and accurate, and would be accessible to external verifiers;

• what resources (both financial and non-financial) are available and how this influences the approach to verification. The verification costs would need to equate in some way with the value added to the reporting process achieved by the verification; and

• the purpose of the report.

The timetable for verification needs to be consistent with the publication timetable for the final report. For formal reporting aligned to, for example, financial year-ends, and in particular for ETS reporting where all eligible installations have to report and verify at the same time, verification organisations get extremely busy close to the end of the reporting period and verification deadlines. Therefore, not only does the timetable need to be appropriately aligned, but good forward planning is essential to ensure that a verifier is available and able to complete work within the time permitted. Wherever possible, compliance and system checking elements of verification (that are not dependent upon year-end data) should be undertaken before the end of the reporting year.

6.6 Reporting required by company law

For all UK-quoted companies, an Operating and Financial Review (OFR) is a legal requirement for financial years beginning on or after 1 April 2005. The OFR requires company directors to describe and analyse (within the statutory annual report) the current and future developments affecting the performance of the organisation. The OFR must be formally approved by the board of directors and signed on their behalf by either a director or the Secretary of the company. According to the regulation enacting this legislation, the OFR “shall be a balanced and comprehensive analysis of the development and performance of the business of the company and its subsidiary undertakings during the financial

PRACT 5.indd 59 19/9/05 15:06:05

60

year”. The intention of the OFR is to encourage companies to be increasingly open and transparent about their operations, thus helping investors to assess business plans and their potential for success.

The OFR requires directors to demonstrate a sound understanding of a wide range of issues confronting their businesses and to articulate these issues in the context of business performance and future plans. This will require a broader and more forward looking reporting style than that used hitherto. The process of determining the content of the OFR will also be subject to review by external auditors as part of the statutory audit.

The new regulation will consolidate, and in many cases significantly extend, the non-financial reporting that companies have historically undertaken on a ‘voluntary’ basis. Therefore, many businesses will need to develop new processes internally, and communicate new information both internally and externally. The OFR is required to include:

• a statement of the business objectives and strategies of the organisation and its subsidiary undertakings;

• a description of the resources available to the company and its subsidiary undertakings;

• a description of the principal risks (both commercial and non-financial) and uncertainties facing the company and its subsidiary undertakings; and

• a description of the capital structure, treasury policies and objectives and liquidity of the company and its subsidiary undertakings.

Most significantly, and to the extent necessary to comply with the above, the OFR is required to include information (where material) about:

• a company’s employees;• environmental matters; and• social and community issues.

The review must include an analysis of these issues using financial and other performance indicators, including information relating to employees, environmental impacts and social and community issues.


PRACT 5.indd 60 19/9/05 15:06:05

61

Disclosures are required regarding:

• the people with whom the company has relations which are essential to its business; and

• receipts from, and returns to, members.

This is the first time that a legal requirement has been placed on listed organisations to formally report as part of the annual statutory report on key non-financial issues linked to key performance indicators, including environmental matters where they are deemed to be material by the directors, that are affecting the organisation and to examine those as part of the formal and public business risk assessment.

6.7 Other useful sources of information

This good practice Guide has focused on data management. This is one part of a reporting process which covers a range of activities from the subject matter and scope of reporting and key performance indicators to the medium of reporting. Guidance is available to cover these broader areas; some useful sources are listed below:

• The Global Reporting Initiatives Sustainability Reporting Guidelines and associated sector guidance (GRI, 2002)

• Defra’s Guidelines on environmental reporting and associated indicator information (Defra, 2005)

• Accounting Standards Board Reporting Standard 1 on the Operating and Financial Review (ASB, 2005)

• ACCA guide to web based reporting (ACCA, 2003); and

• The reports of the judges of the ACCA Sustainability Reporting Awards, which contain ongoing good practice guidance arising each year from the review of published reports submitted to the awards (ACCA, 1997 onwards).


PRACT 5.indd 61 19/9/05 15:06:05

62

PRACT 5.indd 62 19/9/05 15:06:05

63

Activity data Information on material flow, volume and rates of fuel consumption, input materials or production output (and also the number of emissions sources etc) that are used as a starting point for the calculation of carbon dioxide (CO

2) emissions from combustion and processes.

Generally expressed as a numerical value.

Assurance A formal guarantee; a positive declaration that a thing is true; certainty. (Oxford English Dictionary)

CCLA Climate Change Levy Agreement.

Combustion emissions

GHG emissions occurring during the exothermic reaction of a fuel with oxygen.

Direct emissions Those emissions directly generated at sources which are under an organisation’s ownership or control, eg on an organisation’s installation. These include: emissions from combustion in owned or controlled boilers, furnaces, flares, vehicles etc; emissions from chemical production in owned or controlled process equipment.

Emissions factor Emissions factors are based on the carbon content of fuels or input materials and for the purposes of the EU ETS are expressed as tCO

2/TJ for combustion emissions and

tCO2/t or tCO

2/m3 for process emissions.

Environmental claim verification

Confirmation of the validity of an environmental claim using specified predetermined criteria and procedures with assurance of data reliability. (ISO 14050:2002)

EU ETS European Union Emissions Trading Scheme.

Fugitive emissions

Emissions resulting from intentional or unintentional releases, eg equipment leaks from joints, seals, packings and gaskets; methane emissions from coal mines, wastewater treatment, landfills, pits and venting; methane leakages from oil/gas transportation and oil/gas processing facilities; hydro fluorocarbon (HFC) emissions during the use of refrigeration and air conditioning equipment etc.

Appendix A

Glossary and definitions

PRACT 5.indd 63 19/9/05 15:06:05

64

GHG/Greenhouse gas

A gas that absorbs and re-emits infrared radiation, warming the Earth’s surface and contributing to climate change. Each greenhouse gas has a different capacity to cause global warming. Greenhouse gases include water vapour, carbon dioxide (CO

2), methane (CH

4), nitrous

oxide (N2O), hydrochlorofluorocarbons (HCFCs), ozone

(O3), hydrofluorocarbons (HFCs), perfluorocarbons

(PFCs), and sulphur hexafluoride (SF6). For the purposes of the EU ETS these are those gases, and are listed in the Kyoto Protocol. See Kyoto gases.

GHG accounting

The recognition and consolidation of green house gas (GHG) emissions from operations in which a parent company holds an interest (either control or equity) and linking the data to specific operations, sites, geographic locations, business processes and owners.

GHG Registry A public database of an installation’s GHG emissions. For the purposes of the EU ETS the Registry acts like a bank account to record allocations, emissions produced and transactions between parties to trade emissions’ rights. Each EU nation state has its own Registry.

GHG reporting The presentation of GHG data in formats tailored to the needs of various reporting uses and users.

Hysteresis A property of some measurement devices whereby the reading differs depending on whether the load is being added from zero to full scale or the reverse. Defined under ISO standards as, “the maximum difference in output readings for the same input value, one point being obtained whilst increasing from zero, and the other while decreasing from full scale”.

Indirect emissions

Emissions which are the consequence of an organisation’s activities but which are generated at sources controlled by another organisation. These include purchased electricity, steam, and heating/cooling etc.

Intergovern-mental Panel on Climate Change (IPCC)

International body of climate change scientists. Its role is to assess the scientific, technical and socio-economic information relevant to understanding of the risk of human induced climate change.

Appendix A

PRACT 5.indd 64 19/9/05 15:06:05

65

Kyoto gases Carbon dioxide (CO2), methane (CH

4), nitrous oxide

(N2O), hydrofluorocarbons (HFCs), perfluorocarbons

(PFCs), and sulphur hexafluoride (SF6)

Kyoto Protocol A protocol to the United Nations Framework Convention on Climate Change (UNFCCC). It entered into force in February 2005. It requires countries listed in its Annex B (developed nations) to meet reduction targets of GHG emissions relative to their 1990 levels, during the period 2008-2012.

Limited assurance

Defined by the International Auditing and Assurance Standard Board’s International Framework for Assurance Engagements as engagements where “a reduction in assurance engagement risk to a level that is acceptable in the circumstances of the engagement, but where that risk is greater than for a reasonable assurance engagement, as the basis for a negative form of expression of the practitioner’s conclusions”. In other words, the depth and scope of work may have been limited in some way and therefore the conclusions stated in the opinion will be in a negative form such as “nothing came to the attention of [the auditor] to suggest that the subject matter reported is mis-stated”.

Materiality An expression of the relative significance of any individual matter (error, mis-statement, missing record etc) in the context of reported data. It is a matter of professional judgement by the verifier about the threshold at which the user of information would change any decision made on the basis of that information, if the information is shown to contain bias, mis-statement (through individual or aggregate errors and/or uncertainties) or lack of balance etc.

For the purposes of the EU ETS, Commission Decision 29/1/04 gives general guidance that the threshold should be considered to be ±5%.

Appendix A

PRACT 5.indd 65 19/9/05 15:06:05

66

Monitoring methodology

The methodology used for the determination of emissions, including the choice between calculation or measurement and the choice of tiers. Sometimes called the “Monitoring and Reporting Plan”.

Mobile combustion

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

Operator A person who operates or manages an installation, if provided for under national legislation, who has been given the authority to make economic decisions concerning technical operations.

Process emissions

Emissions resulting from the intentional or unintentional reactions between substances or their transformation, including chemical or electrolytic reduction of metal ores, thermal decomposition of substances and the formation of substances for use as products or feedstock.Essentially physical or chemical processes such as CO

2

from the calcinations step in cement processing or CO2

from catalytic cracking in petroleum processing, and PFC emissions from aluminium smelting etc.

Reasonable assurance

Defined by the International Auditing and Assurance Standard Board’s International Framework for Assurance Engagements as engagements where “a reduction in assurance engagement risk to an acceptably low level in the circumstances of the engagement as the basis for a positive form of expression of the practitioner’s conclusions”. In other words, to provide reasonable assurance, sufficient depth and scope of work needs to have been done to gather sufficient evidence to minimise or control the risk of reaching inappropriate conclusions when stating in the opinion that the subject matter reported is free of material mis-statement or is fairly stated.

Risk assessment Assessment carried out to identify potential risks in the data that could lead to material errors or mis-statements. This may be used to focus quality assurance or verification activities and effort.

Appendix A

PRACT 5.indd 66 19/9/05 15:06:05

6�

Source Separately identifiable point or process in an installation from which GHGs are emitted.

Stationary combustion

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

Stoichiometry Determination of equivalent weights of substances in chemical reactions. For example, when methane unites with oxygen in complete combustion, 16g of methane require 64g of oxygen. At the same time 44g of carbon dioxide and 36g of water are formed as reaction productions.

Tier A specified methodology for determining activity data, emissions factors and oxidation or conversion factors.

UK ETS United Kingdom Emissions Trading Scheme.

Verification The process of establishing the truth or correctness through examination or demonstration (OED).Regular, systematic, independent and documented review and confirmation (ex post) that the GHG management activity has met necessary requirements and produced performance results consistent with claims and requirements for a specified period of the specified activity. For the purposes of simplification, and unless otherwise specified, the term “verification” is used to represent the processes of validation, verification and certification.

Appendix A

PRACT 5.indd 67 19/9/05 15:06:05

6�

PRACT 5.indd 68 19/9/05 15:06:06

6�

Key principles in GHG data accounting and reporting

There are a number of key principles that underpin the reporting of GHG data. These should be borne in mind when designing and implementing effective data management systems. The definitions of the key principles vary slightly according to the guidance being used but fundamentally they aim to achieve the same thing. Outlined below are the principles as defined in the WBCSD GHG Protocol (a global multi-party agreed protocol) and the EU Decision on Monitoring and Reporting of GHG for the EU ETS.

Principle EU Commission Decision of 29/01/2004 on monitoring and reporting of GHG (Annex 1, Section 3)

WBCSD GHG Protocol

Accuracy It shall be ensured that the emissions determination is systematically neither over nor under true emissions, as far as can be judged, and that uncertainties are reduced as far as practicable and quantified where required under the EU Guidelines. Due diligence shall be exercised to ensure that the calculation and measurement of emissions exhibit highest achievable accuracy. The operator shall provide reasonable assurance of the integrity of the reported emissions. Emissions shall be determined using the appropriate monitoring methodologies set out in the EU Guidelines. All metering or other testing equipment used to report monitoring data shall be appropriately applied, maintained, calibrated and checked. Spreadsheets and other tools used to store and manipulate monitoring data shall be free from error.

Ensure that the quantification of GHG emissions is systematically neither over nor under actual emissions, as far as can be judged, and that uncertainties are reduced as far as practicable. Achieve sufficient accuracy to enable users to make decisions with reasonable assurance as to the integrity of the reported information.

Appendix B

PRACT 5.indd 69 19/9/05 15:06:06

�0


WBCSD GHG Protocol

Completeness Monitoring and reporting for an installation shall cover all processes and combustion emissions from all sources belonging to activities listed in Annex 1 to the Directive and of all greenhouse gases specified in relation to those activities.

Account for and report on all GHG emission sources and activities within the chosen inventory boundary. Disclose and justify any specific exclusions.

Consistency Monitored and reported emissions shall be comparable over time, using the same monitoring methodologies and data sets. Monitoring methodologies can be changed in accordance with the provisions of the EU Guidelines if the accuracy of the reported data is improved. Changes in monitoring methodologies shall be subject to approval from the competent authority and shall be fully documented.

Use consistent methodologies to allow for meaningful comparisons of emissions over time. Transparently document any changes to the data, inventory boundary, methods or any other relevant factors in the time series.

Cost effectiveness

In selecting a monitoring methodology, the improvements from greater accuracy shall be balanced against the additional costs. Hence, monitoring and reporting of emissions shall aim for the highest achievable accuracy, unless this is technically not feasible or will lead to unreasonably high costs. The monitoring methodology itself shall describe the instructions to the operator in a logical and simple manner, avoiding duplication of effort and taking into account the existing systems in place at the installation.

Faithfulness A verified emissions report shall be capable of being depended upon by users to represent faithfully that which it either purports to represent or could reasonably be expected to represent.

Appendix B

PRACT 5.indd 70 19/9/05 15:06:06

�1


WBCSD GHG Protocol

Improvement of performance in monitoring and reporting emissions

Process of verifying emission reports to be an effective and reliable tool in support of quality assurance and quality control procedures, providing information upon which an operator can act to improve performance in monitoring and reporting emissions.

Materiality An emission report and related disclosures shall be free from material mis-statement, avoid bias in the selection and presentation of information, and provide a credible and balanced account of an installation’s emissions.

(Also defined in Section 2 as: the professional judgment of the verifier as to whether an individual or aggregation of omissions, misrepresentations or errors that affects the information reported for an installation will reasonably influence the intended user’s decisions. As a broad guide, a verifier will tend to classify a mis-statement in the total emissions figure as being material if it leads to aggregate omissions, misrepresentation or errors in the total emissions figure being greater than 5%).

Relevance Ensure the GHG inventory appropriately reflects the GHG emissions of the company and serves the decision making needs of the users – both internal and external to the company.

Appendix B

PRACT 5.indd 71 19/9/05 15:06:06

�2

Appendix B


WBCSD GHG Protocol

Transparency Monitoring data, including assumptions, references, activity data, emissions factors, oxidation factors and conversion factors shall be obtained, recorded, compiled, analysed and documented in a manner that enables the reproduction of the determination of emissions by the verifier and the competent authority.

Address all relevant issues in a factual and coherent manner, based on a clear audit trail. Disclose any relevant assumptions and make appropriate references to the accounting and calculation methodologies and data sources used.

PRACT 5.indd 72 19/9/05 15:06:06

�3

Appendix C

Integration of GHG accounting into ISO14001

– clause by clause analysis

This table is based on work originally undertaken for BP by the authors whilst working for KPMG, and is reproduced in its updated form with their kind permission.

PLANNING4.3.1 Environmental aspects

Clause Ref:

Related to specific ISO14001:2004 requirements

Minimum additional GHG reporting and verification requirements

4.2 Environmental policy

• Does the organisation’s environment policy demonstrate a link to corporate commitments/legal or other requirements on GHG reduction/ reporting (either directly or indirectly)?If yes- does the rest of the EMS make provision for the management/achievement of this policy commitment?

• Is this provision clearly outlined within the EMS documentation?

If not - is there a documented statement demonstrating senior management commitment to addressing the GHG impacts associated with its activities (including meeting any GHG targets set for the organisation/installation) and any legal reporting requirements?• is this statement linked to relevant

organisational GHG policies and commitments?

• is this statement included within the periodic Senior Management review of the environmental policy and EMS?

If inappropriate - for example the organisation encompassed by the EMS is essentially an office with little GHG related activity compared to operational activities - is there a statement outlining the justification for the disclaimer?

• Does the process for evaluating significance contain criteria and/or a weighting that ensures that GHG emissions are defined as a Significant Aspect?

If yes - does the existing procedure for the identification and evaluation of significant environmental aspects have provision for the full identification of aspects related to GHG emissions

If not - how does the organisation ensure that its GHG reduction targets are implemented and monitored (including quality critical and assurance requirements); and any requirements for control and update are taken into account?The following should be considered and incorporated within the EMS documentation (see below):

PRACT 5.indd 73 19/9/05 15:06:06

�4

Appendix C

Clause Ref:


Minimum additional GHG reporting and verification requirements

(as required in the context of the EU Emissions Trading Scheme, for example)?

Does the significant aspects (or another) procedure allow for periodic review of the list of GHG sources as well as provisions for updating the list (and measurement & reporting procedures, and databases etc) when new sources are brought on line or old ones are decommissioned?

• a definition of the GHG reporting boundaries of the installation/ organisation (what facilities and functions are included or excluded)?

• a statement of interfaces and interface arrangements, for example:

– are there shared facilities such as power stations where the GHG related emissions might need to be split between two reporting units – how will this be done?

– how are non-operated assets integrated within the GHG reporting system?

• a listing of ALL sources of GHG emissions?

• where it has been determined that a source should be omitted from calculations and reporting, has this been justified and has the justification and any assumptions been recorded?

• periodic review and update of the list of GHG sources in the light of changes in operations, acquisitions and divestitures, joint ventures etc.

4.3.2 Legal and other requirements

• Does the existing procedure for the identification of legal and other requirements cover GHG related issues? For example, does the ‘Legal Register’ (or equivalent) incorporate the requirements of (or links to):

– organisational commitments and targets

– National, Regional or Local legislation or requirements enacting Kyoto obligations (where relevant)

– other National, Regional or Local requirements related to Climate Change (for example energy/ carbon taxes, Emissions Trading Schemes, Sector guidance/targets etc)

• Understanding of and compliance with legal reporting requirements, including the EU Emissions Trading Scheme and associated permitting, monitoring and reporting requirements

PRACT 5.indd 74 19/9/05 15:06:07

�5

Appendix C

Clause Ref:


Min. additional GHG reporting and verification requirements

4.3.3 Objectives, targets and programmes

• Have objectives and targets for improvement in GHG management/performance been defined following broad consideration of where improvement resources could effectively be expended or where permit etc conditions require improvement?

• Are GHG related objectives and targets documented, monitored, reported and reviewed alongside other HSE objectives and targets arising from the ISO14001 EMS process?

• Including, for example, meeting:– Corporate/ organisational GHG

reduction targets– compliance with legal reporting

requirements– compliance with requirements to

achieve highest possible tiers of accuracy

– compliance with external auditors’ process improvement recommendations, and

– any other requirements that may apply

• Have plans, programmes and responsibilities been clearly defined to meet GHG objectives and targets set?

• Where specific GHG programmes exist, are they documented, monitored, reported and reviewed alongside other management programmes arising from the ISO14001 EMS process?

• Are elements of an organisation’s/installation’s other management systems or plans (eg Process Safety Management, operations management, capital programmes etc) signposted where they contain relevant GHG elements/ actions?

If no - do plans and programmes for management of other issues/ improvements highlight GHG related components? If no - how does the organisation/ installation ensure that its reduction targets are being met? Including:• ensuring that actions result in

meaningful improvement in GHG performance, in particular REAL reductions in GHG emissions

• Ensuring that monitoring and measurement methodologies obtain the highest practicable levels of accuracy?

• Do programme(s) take account of changes within the organisation that might affect GHG emissions? Including:• acquisitions and disposals• new facilities/technical units coming

on line• other changes to processes and

activities that may result in new/loss of sources of GHG emissions

• changing legislative requirements, for example the shift towards cleaner fuels

• changes to EU ETS requirements including extension of scope to include other Kyoto gases etc

If yes – have any of the following been considered within the plans/ programmes?:• cost benefit analysis• future options for improvement

should technology/ funding become available

• mechanisms for project evaluation to determine the effectiveness of GHG reductions in a qualitative and quantitative manner, in order to provide data to review subsequent proposed actions in terms of business case and effectiveness

• The reliability of any existing GHG reporting system in new assets being

PRACT 5.indd 75 19/9/05 15:06:07

�6

Appendix C

brought into the organisation; and their compliance with any applicable reporting requirements

Clause Ref:



IMPLEMENTATION AND OPERATION4.4.1 Resources, roles, responsibility and authority

• Have clear responsibilities for management and reporting of GHG been defined and documented?

• Has designation of responsibilities been accompanied by appropriate training, briefing and supervision of personnel? To ensure that they:- understand the extent of their

responsibilities- understand the implications of how

they carry out their responsibilities can impact on other management/ reporting components up and down the line of management ?

- understand the financial and legal risks and liabilities associated with mis-statement of emissions data for the purposes of the EU ETS?

• Have sufficient resources (time and people etc) been allocated to enable all those involved in the GHG reporting process to perform their responsibilities timely and effectively?

• Is the ISO14001 EMS Management Representative clear as to the extent of GHG coverage that the ISO14001 EMS should have; of their relationship with any other high level personnel with responsibility for GHG monitoring and reporting (eg Emissions Traders, Financial Accountants etc); and also of the financial and legal risks and liabilities associated with GHG accounting and data management?

4.4.2 Competence, training and awareness

• Is there a clear understanding of who is (or what functions are) involved in the calculation, management and reporting of GHG emissions (including where relevant

PRACT 5.indd 76 19/9/05 15:06:07

��

Appendix C

sub-contractors and other personnel working on behalf of the Operator)?

• Is there a clear understanding of what the knowledge, competency and quality control requirements are for each of these functions?

• Has appropriate training, briefing, education or awareness raising been undertaken to ensure that all persons with GHG responsibilities:- are competent to undertake those

responsibilities- understand the implications of not

conducting those responsibilities as specified and/or timely, effectively and rigorously (as appropriate)

- where management of GHG is a component of other management activities, personnel understand the GHG implications of those activities and management functions?

Clause Ref:



4.4.3 Communication

• Have mechanisms been established to ensure that all personnel with responsibilities for managing or reporting GHG emissions are kept up to date with regard to events and developments (both internal and external to the organisation) relating to GHG and Climate Change? Including:

- does this update/briefing/communication extend (in the appropriate amount of detail) right across the GHG information process flow?

- are these same personnel properly communicating with internal and external parties on issues related to organisational operations and GHG performance?

• Have mechanisms been clearly defined for the external reporting of GHG emissions?

• Are changes and adjustments made to data effectively communicated up and down the line of management, such that data being reported at the end of the process is reliable and that change control records are complete?

• Are staff aware of the purpose of GHG reporting and how the data they submit upwards to the GHG data co-ordinator is used?

4.4.4 Documentation

• Does the EMS include an overview of the process for monitoring, reporting and control of GHG within the organisation/ installation, or does it signpost where this information can be found?

• Does this documentation include statements relating to the following items, which are requirements of the GRG:

PRACT 5.indd 77 19/9/05 15:06:07

��

Appendix C

- the GHG reporting boundaries- the calculation of the equity share

percentage (where relevant)- the interface arrangements between

installations (where required, e.g. where there are shared facilities)

- the inventory of GHG sources (and justification of any that have been omitted from the reporting process)

- the organisational or legal reporting guidelines

- the inventory of factors and calculations used by the organisation/ installation to determine amounts of CO2 (and where relevant, other Kyoto gases) emissions

- the roles and responsibilities for GHG reporting

- descriptions (or flow charts) showing the information process flows for each of the GHG gases / source types reported

- the agreed monitoring and calculation methodologies

- permitting, conditions, permit variations and any other agreements with regulators etc.

Clause Ref:



4.4.5 Control of documents

• Have the document control procedures been applied to all relevant GHG documentation (procedures, registers, records, protocols, spreadsheets, calculation methodologies etc)? Including:

- is it possible to determine who has identified, authorised and controls key external documents?

- is it possible to determine which information and data are the most up to date and who has responsibility for control of the document?

- where most data is handled electronically, is it possible to clearly identify on printed hardcopy versions which electronic file has been printed, when it was printed and what revision number it is?

PRACT 5.indd 78 19/9/05 15:06:07

��

Appendix C

Clause Ref:



- for electronic documentation is there a clear filing strategy covering naming, version numbering and dating of files, location of current and archived versions of files and security of access to change data in files (either through password control on the file itself or read/write access control through the IT system)?

4.4.6 Operational control

• Where appropriate, have operational control and maintenance procedures incorporated relevant instructions and activities related to GHG management and reporting? In particular:

- are additional operational control procedures or guidance required to ensure that GHG objectives are met?

- have key operational procedures (eg sample collection, process monitoring, laboratory analysis etc) been amended to highlight the importance of quality control and accuracy

• Have mechanisms been put into place to ensure that all contractors and suppliers have been informed of the organisation’s/installation’s requirements for management, monitoring and reporting of GHG? Especially to ensure that:

- they are working in a manner which will ensure that the organisation’s/ installation’s objectives in relation to GHG are met? and

- in particular, where a contractor is undertaking operations on behalf of the organisation, that might directly impact the amount of GHG emission released, they are clear as to the control and reporting that is required?

4.4.7 Emergency preparedness & response

• What effect do emergency situations have upon GHG emissions?

• Do abnormal/ emergency incidents that result in GHG emissions get captured in the GHG data reported by the installation/ organisation?

PRACT 5.indd 79 19/9/05 15:06:08

�0

Appendix C

Clause Ref:



CHECKING4.5.1 Monitoring and measurement

• Do the procedures and work instructions for monitoring and measurement of key characteristics of the installation’s activities and operations include the detailed requirements for monitoring, estimation/measurement and reporting of GHG related emissions?

• Do the procedures for calibration and maintenance of ‘environment’ critical equipment include all equipment and meters that relate to the measurement and calculation of GHG emissions? Including:

- maintenance of appropriate records to demonstrate reliability of relevant equipment?

- documentation of GHG critical equipment on the list of ISO14001/Environment critical equipment (or equivalent record)?

- Maintenance of records of accuracy and uncertainty calculations to demonstrate that equipment meets required tiers?

• In particular, are the following documented (or referenced)?

- the relevant legal Reporting Guideline requirements

- details of the methodology for calculation(s) that will be used by the installation

- details/inventory of the factors and calculations to be used in determining the CO2 (and other Kyoto gases where required) emissions from individual sources/source types and the overall GHG emission figure that will be reported

- details of by whom, and how, the measurements, calculations, manipulations, consolidations and reporting will be undertaken.? Including:- how information and data will be

processed, stored and reported- how subsequent changes will be

reported internally, adjustments made to data sets

- how such changes will be reported- details of how the installation will

respond to requests for clarification and adjustment made by the independent GHG auditors or the regulators etc? In particular in terms of - who is responsible for making the

actual change- how this change will be recorded

in the EMS/ GHG documentation- who is responsible for sending

updated information to the regulator/ auditor/ Emissions Trader etc.

- details of secondary checks, independent verification, reconciliation and reviews of data along the information process flow2? In particular, where data is:

PRACT 5.indd 80 19/9/05 15:06:08

�1

Appendix C

4.5.2 Evaluation of compliance

Clause Ref:



• Do the procedures for periodic compliance auditing include compliance with:

- relevant legislation related to GHG monitoring and reporting

- the organisation’s GHG target- EU Emissions Trading Scheme

requirements (eg permits and M&R)

4.5.3 Nonconformity, corrective action and preventive action

• In situations where problems have been identified with the process of GHG management and reporting (e.g. failures of secondary checks, information/data change control, omissions etc) are there mechanisms for ensuring that proper remedial action takes place in a timely manner and that actions address the root causes of the problem? Including:

- are mechanisms in place to ensure that any changes, required as a result of non-conformance investigation, to documented procedures, communications, training, or other elements of GHG management and reporting are implemented (and recorded) in a timely manner?

- generated by manual calculations- transferred manually between

various recording logs and/or databases

- has a complicated information process flow

- is manipulated/consolidated by more than one person

- is taken from other process control/information management systems – is there a reconciliation between different systems to ensure that there is accuracy?

- details of how data will be transferred to the organisation’s Emissions Trader for the purposes of establishing the position for trading? Including:

- how subsequent changes will be notified to ensure that the data within the two processes are kept consistent?

PRACT 5.indd 81 19/9/05 15:06:08

�2

Appendix C

Clause Ref:



• Have the ISO14001 record control procedures been applied to all relevant GHG documentation? Including, for example:

– that relevant records related to the generation and reporting of GHG emission figures (at all stages of the information process flows) are clearly identifiable; dated; easily located; and retained for a clearly stated period of time in order that records are available as evidence of the way in which the GHG emission figure reported to the regulator etc has been calculated?

– that if required for audit evidence, relevant records are easily able to be produced? Records might include:- source data from meters etc- results of Laboratory analysis- original sources of activity data e.g.

unit run time hours, fuel consumption, production figures etc

- databases and calculation sheets for manipulating information to produce CO2 (and other Kyoto gases where relevant) emission figures

- databases showing the calculation methodologies, factors and assumptions

• Evidence of the results and actions arising from internal assurance processes, audits and reviews etc.

• Have personnel responsible for key records that are part of other systems (eg finance, IT etc) been informed about the required period of retention (eg 10 years for EU ETS)?

• Have plans been put into place to ensure that appropriate hardware and software is retained for electronic records that are archived?

4.5.4 Control of records

PRACT 5.indd 82 19/9/05 15:06:08

�3

Appendix C

4.5.4 Internal audit

• Has the ISO14001 audit procedure(s) been applied to the management and reporting of GHG emissions? In particular:

- is there a mechanism for ensuring that an internal audit of data, information process flows and GHG objectives, targets and management plans is undertaken on a periodic basis, in order to identify and rectify any weaknesses in the GHG management and reporting process?

- is there a mechanism for ensuring that good practice in one part of an organisation is communicated to other parts?

• Have internal EMS auditors been provided with appropriate training in relation to auditing GHG data (in particular in relation to validation of data, information risks, spreadsheet evaluation and metrology)?

• Have audits included data audits and trailing of data back to source to confirm the accuracy of the final reported numbers and identify any weaknesses in the information process flow?

• Have audits included validation of data calculation processes, including detailed evaluation of the validity, security and integrity of spreadsheets etc

• Have GHG review and assurance been built into existing internal assurance mechanisms (eg quality control, internal audit, secondary review, letters of assurance etc)?

• Have EMS auditors been trained in appropriate data audit techniques compatible with external audit requirements.

Clause Ref:



MANAGEMENT REVIEW4.6 Management Review

• Is there a process for ensuring that Senior Management of the organisation/installation are effectively engaged in the programmes to address its GHG impacts? Including:

– emissions data and GHG performance are regularly reported to the organisation’s/ installation’s Senior Management meeting?

– Development and monitoring of emissions trading strategies and their commercial implications

– Senior Management conducts regular reviews of policy, programmes and performance, ensuring that appropriate actions and amendments are incorporated into policies, procedures and programmes?

– Senior Management are briefed on the results of any external GHG verification audit conducted on installation; and provides feedback on the findings and audit opinion?

• Does Senior Management provide an effective strategic input to ensure that the organisation/ installation will be successf ul in meeting its obligations and objectives for management and reporting of GHG? Including:

- REAL reduction in GHG emissions; and

- reliable emissions data reported to regulators and emissions trading co-ordinator?

PRACT 5.indd 83 19/9/05 15:06:08

�4

PRACT 5.indd 84 19/9/05 15:06:08

�5

Sources of information on emissions factors

GHG Protocol Initiative www.ghgprotocol.org

DEFRA (UK Government) www.defra.gov.uk/environment/climatechange/trading/index.htm

Intergovernmental Panel on Climate Change (IPCC)

www.ipcc.ch/activity/act.htm

Department of Environment, Food and Rural Affairs (2004) Guidance Note 2 - Updated Annex 2 Approved Monitoring and Emissions Calculation Methods

www.defra.gov.uk/environment/climatechange/trading/eu/pdf/monitor-methods.pdf

Appendix D

PRACT 5.indd 85 19/9/05 15:06:09

�6

PRACT 5.indd 86 19/9/05 15:06:09

��

Standard unit conversion factors

Power

Physical Quantity Multiply by To convert to

British thermal units/hour

Btu/Hr

0.2931 Joules/second J/s

British thermal units/hour

Btu/Hr

0.2931 Watts W

Joules/second J/s 1.0 Watt W

Joules/second J/s 3.412 British thermal units/hour

Btu/Hr

Kilowatt hours KWh 3.6 x 106 Joules J

Kilowatt hours KWh 3412.14 British thermal units/hour

Btu/Hr

Kilowatt hours KWh 3.6 Mega joules MJ

Kilowatt hours KWh 0.0036 Gigajoules GJ

Watts W 0.001 Kilowatts KW

Watts W 1.0 Joules/second J/s

Watts W 3.412 British thermal units/hour

Btu/Hr

Thermies a 4.1855 Megajoules MJ

Therms b 105.506 Megajoules MJ

Therms 1 x 105 British thermal units

Btu

Therms 29.3071 Kilowatt hours KWh

Watt hours GWh 3600.0 Joules TJ

Appendix E

a Thermie = a unit of energy – 1,000,000 calories and approximately 4.1855 Megajoulesb Therm = in the EU a legally defined unit of energy – 100,000 Btu and exactly 105.506

Megajoules. Note – in the USA a Therm = 1000m3 natural gas at Standard Temperature and Pressure

PRACT 5.indd 87 19/9/05 15:06:09

��

Volume

Physical Quantity Multiply by To convert to

US Gallons 0.8327 UK Gallons Gal

UK Gallons Gal 0.004546 Cubic Metres M3

UK Gallons Gal 4.546 Litres L

UK Gallons/hour Gal/Hr 0.004546 Cubic Metres/Hour

M3/Hr

Cubic Metres/Hour M3/Hr 0.278 Litres/second L/s

Cubic Metres M3 1000 Litres L

Cubic Metres clean water

M3 1000a Kilograms Kg

Litres clean water L 1 Kilograms Kg

a At standard temperature and pressure - an exact reference temperature of 0°C (273.15 K) and pressure of 1 atm (defined as 101.325 kPa).

Fractions and multiples

Fraction Prefix Symbol Multiple Prefix Symbol

10-1 deci d 10 deca da

10-2 centi c 102 hecta h

10-3 milli m 103 kilo k

10-6 micro µ 106 mega M

10-9 nano n 109 giga G

10-12 pico p 1012 tera T

10-15 femto f 1015 peta P

10-18 atto a 1018 exa E

1021 zeta Z

Appendix E

PRACT 5.indd 88 19/9/05 15:06:09

��

Bibliography and references

ACCA (2003) ‘Guide to web based reporting’, available from www.accaglobal.com/sustainability/reading/

ACCA (1997 onwards) The reports of the judges of the ACCA Sustainability Reporting Awards, which contain ongoing good practice guidance arising each year from the review of published reports submitted, available from www.accaglobal.com/sustainability/reading/previous/

ASB (2005) ‘Accounting Standards Board Reporting Standard on the Operating and Financial Review (ACF345)’ available from www.asb.org.uk/asb/press/pub0793.html – it should be noted that IFRIC has now withdrawn this document pending further review and alignment with other accounting standards.

Boddy, D, Boonstra, A and Kennedy, G (2005) ‘Managing Information Systems – an Organisational Perspective’, Prentice Hall, London

BSI (2002) ‘BS ISO 14050:2002: Environmental management. Vocabulary’, British Standards Institution, London, available from www.iema.net/shop

BSI (2004) ‘BS EN ISO 14001:2004, Environmental Management Systems – Requirements with Guidance for Use’, British Standards Institution, London, available from www.iema.net/shop

Defra (2002) ‘CCA 03 ‘Climate Change Agreements: Performance Data and Auditing For The First Milestone; Guidance On Requirements’, Department for Environment, Food and Rural Affairs, London, 23 April 2002

Defra (2004a) ‘Approved GHG monitoring methods – Annex 2 to Guideline 2 for the EU ETS Baseline’, Department for Environment, Food and Rural Affairs, London, available from www.defra.gov.uk/environment/climatechange/trading/eu/pdf/monitor-methods.pdf

Defra (2004b) ‘EU Emissions Trading Scheme – Guidance Note 2, Guidance on baseline data verification’, Department for Environment, Food and Rural Affairs, London, available from http://www.defra.gov.uk/environment/climatechange/trading/eu/info/guidance.htm

Appendix F

PRACT 5.indd 89 19/9/05 15:06:09

�0

Defra (2005) ‘Guidelines on environmental reporting and associated indicator information’, Department for Environment, Food and Rural Affairs, London, available from www.defra.gov.uk/environment/business/index.htm

EC (2001) ‘Eco-Management and Audit Scheme (EMAS)’, European Commission, Brussels, available from http://europa.eu.int/comm/environment/emas/index_en.htm

EC (2003) ‘Integrated Pollution Prevention Control Reference Document on the General Principles of Monitoring (2003)’, European Commission, Brussels, available from www.epa.ie/Licensing/IPPCLicensing/BREFDocuments/FileUpload,480,en.pdf

EC (2004) ‘European Commission (29/1/04) Commission Decision establishing guidelines for the monitoring and reporting of greenhouse gas emissions pursuant to Directive 2003/87/EC of the European Parliament and of the Council’ – including all references in this, eg to ISO and CEN standards, European Commission, Brussels, available from http://europa.eu.int/comm/environment/climat/pdf/c2004_130_en.pdf

EI (1998) ‘Petroleum Measurement Manual – Part XVIII Guide to Product Loss Control at Marketing Terminals – Chapter 9 – weighed receipts and outputs (Weighbridges)’, The Energy Institute, London – this document is currently undergoing revision.

FEE (2005) ‘Alert - Emissions Trading’, Fédération des Experts Comptables Européens, Brussels, available from www.fee.be/publications/main.htm – click on the sustainability heading

GRI (2002) ‘The Global Reporting Initiatives Sustainability Reporting Guidelines – and associated sector guidance’, available from www.globalreporting.org/guidelines/2002.asp

IASB (2005) ‘International Accounting Standards Board’, available from www.iasb.org/current/ifric.asp?showPageContent=no&xml=17_21_70_12042005.htm

IFRIC (2004) ‘International Financial Reporting Interpretation Committee (IFRIC) 3 on Emissions Rights. Summary’ available from www.iasplus.com/interps/ifric003.htm

Appendix F

PRACT 5.indd 90 19/9/05 15:06:09

�1

ISO (2005a) ‘ISO/IEC 17799:2005 Information technology - Security techniques - Code of practice for information security management’, International Organisation for Standardization, Geneva

ISO (2005b) ‘05/30094281 DC: ISO 14064-1. Greenhouse gases. Part 1. Specification with guidance at the organization level for quantification and reporting of greenhouse gas emissions and removals’, International Organisation for Standardization, Geneva

ISO (2005c) ‘05/30094284 DC: ISO 14064-2. Greenhouse gases. Part 2. Specification with guidance at the project level for quantification, monitoring and reporting of greenhouse gas emission reductions or removal enhancements’, International Organisation for Standardization, Geneva

ISO (2005d) ‘05/30101674 DC: ISO 14064-3. Greenhouse gases. Part 3. Specification with guidance for the validation and verification of greenhouse gas assertions’, International Organisation for Standardization, Geneva

Morris, A (2005) ‘Measurement and Instrumentation Principles’, Elsevier Butterworth-Heinemanne, Oxford

UNFCC (2005) ‘UN Framework Convention on Climate Change – including the Common Reporting Format’, United Nations, available from http://unfccc.int/2860.php

WBCSD (2004) ‘Greenhouse Gas Protocol’, World Business Council for Sustainable Development/World Resources Institute, Geneva, available from www.wbcsd.ch/plugins/DocSearch/details.asp?type=DocDet&ObjectId=NDc5NA

Whitman, M and Mattord, H (2003) ‘Principles of Information Security’, Thomson Learning, Canada

Appendix F

PRACT 5.indd 91 19/9/05 15:06:10

PRACT 5.indd 92 19/9/05 15:06:10

• Future Perfect provides advisory, support and other

services in relation to the management and reporting

of environment, health & safety, social accountability,

climate change and information security.

• We work closely with clients to align these

sustainability aspects of their businesses with the

fi nancial and legal aspects of enterprise management.

• Our services include – policy, strategy, management

systems (formal and certifi ed to ISO Standards),

training and coaching, internal and external assurance,

data management and reporting, and interim

management.

Future Perfect LtdJohn Eccles HouseRobert Robinson AvenueThe Oxford Science ParkOxfordOX4 4GP01865338058

[email protected]@fpsustainability.commark.miller@fpsustainability.comwww.fpsustainability.com

Ecology - E� ciency - Economy - Enterprise

PRACT 5 COVER.indd 2 19/9/05 15:04:12

iema

Best Practice Series Volume 5 October 2005

T H E I N S T I T U T E O F E N V I R O N M E N TA L M A N A G E M E N T A N D A S S E S S M E N T

iema St. Nicholas House, 70 Newport, Lincoln LN1 3DP UKTel: 01522 540069 Fax: 01522 540090

£15free to members

Environmental D

ata Managem

ent: for emissions trading and other purposes

Volume 5

O

ctober 2005


PRACT 5 COVER.indd 1 19/9/05 15:04:07