A Recent Survey of GHG Emissions Reporting and Assurance

Judy Ryan & Demi Tiller , External Reporting Board, Wellington, New Zealand

This paper describes research undertaken to understand current market practice in relation to greenhouse gas
(GHG) emission reporting in New Zealand. Our research sampled 237 large New Zealand entities. The results
show that 31% of entities were doing some form of voluntary GHG emission reporting. Of the entities report-
ing GHG emissions, 73% were reporting some Scope 3 emissions. The majority (51%) do not appear to get
assurance for their GHG emissions reports. This is a useful benchmark to assess the level and development
of GHG emissions reporting in the future. It indicates the approach reporting entities should take if future
regulations and standards follow the current market practice.

This paper outlines research undertaken to understand
current market practice in relation to greenhouse gas
(GHG) emission reporting in New Zealand.
The Financial Sector (Climate-Related Disclosures
and Other Matters) Amendment Bill passed on 21 Oc-
tober 2021. It established a mandatory climate-related
disclosure reporting regime for Aotearoa New Zealand.
Under this regime, climate-reporting entities will be
required to produce climate statements according to
disclosure requirements in External Reporting Board
(XRB) standards, based on the Task Force on Climate-
Related Financial Disclosures (TCFD) recommended
disclosures.
We reviewed potential climate-reporting entities to
assess the current state of how and what GHG emis-
sions are being reported.1 This paper is not in-
tended to be a comprehensive outline of how potential
climate-reporting entities are applying the Recommen-
dations of the Task Force on Climate-Related Financial
Disclosures.2 However, it is a deeper look at how selected
entities report their emissions.3 There is no current
snapshot of how entities are reporting their GHG emis-
sions. This report provides a benchmark to assess the
level and development of GHG emissions reporting in
the future. It is intended that this report could be used to
compare changes in the way entities report in the future.
Our research sampled the publicly available report-
ing of 237 large New Zealand entities. The results show
that 31% of entities reviewed were doing some form
of voluntary GHG emission reporting. Of those en-
tities reporting GHG emissions, 73% were reporting
some Scope 3 emissions. The majority (51%) do not ap-
pear to get assurance for their GHG emissions reports.
The paper is structured as follows. The next section
provides background information. Specifically, it de-
scribes the TCFD, the XRB’s climate-related disclosures
project and GHG emissions (what are GHG emissions?
Scope 3 emissions reporting, the inaccuracy of GHG re-
porting and double counting). Then it briefly describes
the method before outlining survey results.
Background
The TCFD
The TCFD was created in 2015 by the Financial Stability
Board to develop consistent climate-related financial
disclosures to be used by companies, banks and in-
vestors to provide information to stakeholders. The
TCFD produced recommendations in 2017 outlining a
framework for reporting climate-related information.
To date, this has been the leading guidance on climate-
related financial disclosures reporting and has received
widespread support globally. Multiple countries are
considering its recommendations, including Australia,
Canada, the European Union and the United Kingdom
(TCFD 2020: 2).
The TCFD recommendations incorporate four key
themes: Governance; Strategy; Risk Management; and
Metrics and Targets. Under these themes, 11 disclosures
are recommended. The disclosure of GHG emissions
is required under the recommended disclosures for
Metrics and Targets. Section b of Metrics and Targets
requires entities to disclosure Scope 1, Scope 2 and, if
appropriate, Scope 3 GHG emissions, and the related
risks (TCFD 2017: 14).4
Correspondence: Demi Demi Tiller, The External Reporting Board,
Level 7/50 Manners Street, Te Aro, Wellington 6011, New Zealand;
email: demi.tiller@xrb.govt.nz
Accepted for publication 19 January 2022.

Australian Accounting Review (2022), No. 101 Vol. 32, 181–187 doi: 10.1111/auar.12364 181
A Recent Survey of GHG Emissions Reporting and Assurance
External Reporting Board’s project
The XRB is developing reporting standards for manda-
tory climate-related disclosures. Under the climate-
related disclosure legislation, disclosure standards will
be based on the recommendations of the TCFD.
In October 2021, the XRB produced its first consulta-
tion document on climate-related disclosures (NZ CRS
1). This consultation document provided the draft sec-
tions of the Governance and Risk Management sections
of the proposed standard. The XRB intends to issue a
second consultation document on Strategy and Metrics
and Targets in March 2022. This second consultation
document will cover emission-reporting disclosure re-
quirements equivalent to the TCFD.
Hence, by March 2022, the XRB will have to consider
what recommendations it puts in place for the climate-
related disclosure framework and assurance. We expect
the XRB will be considering:
• the presentation requirements;
• the disclosure requirements;
• the criteria for measuring the data to be disclosed
(i.e., organisational boundary choices, consolidation
choices and scope choices); and
• the assurance level.
The survey results, outlined below, are helpful to in-
dicate what is current market practice for the above
considerations.
Another key consideration in the XRB’s work is
international alignment. The XRB stated in its con-
sultation document that it will attempt to develop the
climate-related disclosure framework in parallel with
international standards, in particular the International
Sustainability Standards Board’s (ISSB) future standard
(XRB 2021a: 11). The ISSB standard is intended to be
prescriptive and rules-based, whereas the framework
being developed by the XRB is intended to be principles-
based (XRB 2021b: 10). It will be interesting to see how
similar these standards will be and the extent to which
either standard aligns with current market practice.
What are GHG emissions?
GHGs are vented to the Earth’s atmosphere from hu-
man activity. GHGs include any gas with molecules
made up of three or more atoms that absorb infrared
radiation. GHGs trap some of the infrared light which
heats the Earth. Some common GHGs include Carbon
dioxide (CO2), Nitrous oxide (N2O), Methane (CH4)
and various chlorine and bromine containing com-
pounds (SF6, HFCs, PFCs and NF3) (NIWA 2021a).
Different GHGs can trap different amounts of heat
in the atmosphere, which results in different relative
182 Australian Accounting Review
J. Ryan & D. Tiller
impacts on climate change. Therefore, GHG emissions
are expressed as carbon dioxide equivalents (CO2e).
Since the industrial revolution, humans have emitted
more and more GHGs into the atmosphere. Human ac-
tivities such as burning coal and oil for transport and
industry, cutting down forests and an increase in land
used for agriculture globally cause more GHGs to enter
the atmosphere. These anthropogenic GHG emissions
cause climate change (NIWA 2021b).
In the context of New Zealand, it is important to
talk about ‘emissions reporting’ not ‘carbon reporting’.
Discussing ‘carbon reporting’ ignores the other gases
which contribute to climate change. Data from the Pro-
ductivity Commission (Low-emissions Economy) Re-
port (NZPC 2018) show the breakdown of emissions
in New Zealand compared to an average Organisation
for Economic Co-operation and Development (OECD)
country. In New Zealand, gross GHG emissions were
mainly made up of CO2 (44.5%), CH4 (43.5%) and
N2O (9.6%) compared to OECD averages of 79%, 12%
and 6% respectively (NZPC 2018: 32; Stats NZ 2021).
New Zealand’s methane levels are proportionately sub-
stantially higher than the OECD average. Exclusively
discussing carbon ignores a huge portion of emissions
in New Zealand.
Scope 3 emissions reporting
Emissions are generally referred to as being in one of
three scopes. Scopes 1, 2 and 3 are referred to in the
TCFD. They are defined as follows:
Scope 1: All direct GHG emissions.
Scope 2: Indirect GHG emissions from consumption of
purchased electricity, heat and steam.
Scope 3: Other indirect GHG emissions not covered in
Scope 2 that occur in the value chain of the report
company, including both upstream and down-
stream emissions (TCFD 2017: 63).
Scope 1 and 2 are more commonly reported on;
however, Scope 3 or value chain reporting is essential
to capturing the biggest risks and opportunities of an
entity. For many entities most of their emissions (and
therefore risk and opportunities) are in the value chain
(GHG Protocol 2011: 5). However, this is also where the
largest assumptions and estimates arise.
Internationally, the focus is moving to include the
reporting of Scope 3 emissions as these often hold the
majority of an entity’s emissions.5 The GHG Protocol is
a 20-year partnership between the World Resources In-
stitute and the World Business Council for Sustainable
Development. It has established a comprehensive global
framework to measure and manage GHG emissions. In
2011, the GHG Protocol released its Corporate Value
Chain (Scope 3) Standard. ISO 14064-1: 2018 has
© 2022 CPA Australia.
J. Ryan & D. Tiller A Recent Survey of GHG Emissions Reporting and Assurance

additional indirect emission categories to cover value

chain reporting (IOS 2018). In 2020, the Partnership
for Carbon Accounting Financials (PCAF) launched its
Global GHG Accounting and Reporting Standard for
the finance industry.

Inaccuracy of GHG reporting

It is important to bear in mind that all GHG reporting

is, in some way, inaccurate. Nearly all emissions report-
ing is estimates based on activities and emissions factors
(GHG Protocol 2015: 42).6 For example, if an entity
needs to quantify emissions for an employee working
from home, rather than having to know everything
about everyone’s energy use and daily habits, the Min-
istry for the Environment has created an emission factor
which can be applied per employee per day working at
home (MfE 2020: 12). This is built up from estimates
based on factors such as energy used to boil a jug,
computer and monitor use, lights, waste and typical
Figure 1 Types of entities reviewed [Colour figure can be
heating sources. viewed at wileyonlinelibrary.com]
Even though emissions reporting is based on esti-
mates, it is the quantum rather than the exact quantity
that is important. Entities can look at the estimates and
get insight into managing risks (GHG Protocol 2015: 3). entities that would be required to comply with climate-
related disclosure standards was unknown, as legislation
had not been passed. The entities were selected based
Double counting
on who was likely to be captured under the framework
in September 2021. It is possible that some of these
One criticism of reporting Scope 3 emissions is that it
will not meet the thresholds that have been introduced
results in double counting. Double counting is inherent
in the final climate-related disclosures legislation; some
in emissions reporting. Emissions only ever appear in
may have ceased to trade, and others might not have
one entity’s Scope 1. There should be no double count-
been included when they should have been. Nonethe-
ing between Scope 1 of two different entities. One en-
less, it provides a good overview of market practice in
tity’s Scope 2 emissions will come from a generator’s
NZ.
Scope 1 emissions. All Scope 3 emissions are someone
The 237 entities identified (see Figure 1) included
else’s Scope 1, 2 or 3 emissions, so these emissions will
listed companies (154), banks (32) and managed invest-
be counted three or more times by other entities.
ment schemes (27), insurers (19) and Crown financial
Double counting is not an issue because the objec-
institutions (CFIs) (5). There were 10 entities for which
tive is not to aggregate individual entities’ emissions to
no reporting could be found. This was made up of one
determine the economy’s total emissions. Rather, the
bank, three managed investment schemes, three listed
purpose is to understand the emissions that a company
entities and three insurers.
‘causes’ due to its operations. Every time entities decide
This research looked at the location of any GHG
to fly, to create waste or to turn on that light, they are
reporting (i.e., the annual report, a separate sustain-
causing another entity to make emissions on their be-
ability or Environmental, Social, and Governance
half. If only Scope 1 emissions were counted, then it
report, a third-party audit certificate, or in a GHG
would not describe most of the story.
emissions report), the scopes of emissions reported on,
the standard (or framework) used to inform reporting,
Method the consolidation method adopted, the existence and
level of assurance, and the targets and metrics used.7
The XRB’s climate-related standards will be applied These are some reporting considerations that may be
by large entities (e.g., market capitalisation exceeding prescribed in future regulations or standards; whether
NZ$60 million) with public accountability. However, they be in presentation or disclosure requirements or
at the time the survey began, the exact scope of the guidelines.

© 2022 CPA Australia. Australian Accounting Review 183

A Recent Survey of GHG Emissions Reporting and Assurance J. Ryan & D. Tiller

Figure 2 Location of GHG emissions report [Colour figure can be viewed at wiley-
onlinelibrary.com]

Survey Results

Content of GHG reporting

Most entities do not report GHG emissions. About one-

third (74 or 31%) of the entities reviewed were reporting
GHG emissions. Disclosures were usually a summary
statement and little to no information was provided on
assumptions.
Figure 2 describes the reporting location of the GHG
emissions reports. GHG reporting was generally in the
annual report (41) or a separate sustainability report
(13). Fourteen entities also produced a separate GHG
emissions report or a Toitū disclosure.8 Only six had a
publicly available GHG emissions report.
An important step in emissions reporting is defin-
ing the organisational boundary and how the data
are consolidated. This is similar to the consolidation
process in financial reporting which determines how an
entity determines the parameters of its group’s annual
report (e.g., which subsidiaries and shareholdings are Figure 3 Consolidation method (or boundary) disclosed by
included). The GHG Protocol has identified three dis- those reporting [Colour figure can be viewed at wileyon-
tinct boundary-setting or consolidation methodologies. linelibrary.com]
The equity-share approach is similar to proportional
consolidation. Ownership of 25% of a building will ation, but in some cases, it may not have operational
report 25% of the building’s emissions. There are two control.
control approaches. Financial control is similar to Figure 3 reports the boundary or method of consol-
the control applied in financial reporting standards. idating emissions across entities reviewed. Over half
Operating control is distinct from financial control. (41 or 56%) of those reporting GHG emissions did
An entity may have joint financial control of an oper- not describe the consolidation method applied to their

184 Australian Accounting Review © 2022 CPA Australia.

J. Ryan & D. Tiller
Figure 4 Reporting standards disclosed by reporters
[Colour figure can be viewed at wileyonlinelibrary.com]
Figure 5 The scope of emissions reported [Colour figure
can be viewed at wileyonlinelibrary.com]
emissions. Of those that did disclose their consolidation
method, the operational control method was used in
all but one case. In our review, only one entity used a
financial control method.
Figure 4 describes the reporting standard or frame-
work used to estimate emissions. Twenty-seven entities
(36%) did not disclose what standard they used. For
those reporting, the GHG Protocol Corporate Standard
and ISO 14064-1 were equally popular; used by 42%
(31) of the reporting entities. Of those 31 entities, 15
reported using both standards.
Scope 3 reporting
Figure 5 describes the scope of emissions reported.
Nearly a quarter of the entities reviewed are reporting
© 2022 CPA Australia.
A Recent Survey of GHG Emissions Reporting and Assurance
Figure 6 Audits and level of assurance of reporters
[Colour figure can be viewed at wileyonlinelibrary.com]
some Scope 3 emissions. Of those entities reporting
GHG emissions, 73% (54) report Scope 3 emissions.
The emission sources included in Scope 3 reporting
were often not disclosed clearly. Typical Scope 3 emis-
sions were for business travel and waste. Eleven entities
were only reporting Scope 1 and 2 emissions. Three
reported an emissions total but did not disclose what
was included (or excluded). Only six entities included
emissions from the value chain.
Assurance
Figure 6 reports on the level of assurance. Of those en-
tities who are currently reporting emissions 51% (38)
do not appear to get assurance. Of those that do get
assurance, the majority (36%, 27) get assurance to a
reasonable standard. Toitū is the most common assur-
ance provider, conducting 22 of the 36 assurance en-
gagements (61%).
Conclusion
The purpose of this research was to sample entities that
would likely have to comply with the XRB’s climate-
related disclosures. This resulted in a sample of 237
large New Zealand entities. From this sample details of
any GHG emission disclosures were recorded. This in-
formation is of interest to practitioners and academics
interested in GHG reporting. It will also provide a
benchmark to gauge the level and development of GHG
emissions reporting in the future.
The results show a moderate level of voluntary re-
porting. Only one-third of the sample reported GHG
Australian Accounting Review 185
A Recent Survey of GHG Emissions Reporting and Assurance
emissions (74). Of the 74 reporting entities, over half
(41) did not provide details on the organisational
boundary and consolidation definitions. Twenty-seven
entities (36%) did not specify the organisational bound-
ary or consolidation method. The reporting of Scope 1,
2 and 3 emissions is inconsistent.
In terms of what was reported, the annual report is
the most common location (141, 55%). The operational
control method was used in all but one case. GHG Pro-
tocol and ISO 14064-1 were equally popular frameworks
for measuring GHG emissions. The majority of entities
reported some Scope 3 emissions although it was not
often clear what had been included or excluded. About
half of the entities get assurance, with 27 (36%) getting
assurance to a ‘reasonable standard’.
Overall, these results show there has been low up-
take on voluntary reporting in New Zealand. Addition-
ally, the quality of reporting lacks maturity. The limited
Scope 3 reporting indicates a large portion of emissions
are unaccounted for. At a minimum a mandatory re-
porting regime will result in more reporting; it could
also raise the maturity of reporting for those who are
currently reporting voluntarily. Additionally, if Scope 3
emissions were mandated, investors would get a fuller
picture of an entity’s emissions.
The results of this survey will be considered during the
development of the proposed framework, along with re-
cent international updates, including the ISSB. The XRB
will be consulting on the Metrics and Targets section in
March 2022.
Notes
1 The concept of a climate-reporting entity was introduced by the
Financial Sector (Climate-Related Disclosures and Other Mat-
ters) Amendment Act 2021. It includes registered banks, licenced
insurers, building societies, credit unions and mangers of regis-
tered managed investment schemes; subject to meeting certain
financial thresholds.
2 For example, see McGuinness Institute, Reviewing TCFD infor-
mation in 2017–2020 annual reports of NZSX-listed companies
(June 2021).
3 Emissions reporting is only one disclosure required under the
TCFD.
4 The TCFD only requires organisations to report their Scope 3
emissions ‘if appropriate’. The XRB will have to decide whether
or not it requires an entity to report their Scope 3 emissions or
whether it introduces a materiality threshold.
5 Analysis performed using data from the CDP’s (formerly Carbon
Disclosure Project) supply chain program indicates that a given
company’s Scope 3 emissions average 11.4 times higher than its
direct accountable emissions (CDP 2020: 5).
6 These factors are calculated ratios relating GHG emissions to
a proxy measure of activity at an emissions source. The Inter-
governmental Panel on Climate Change guidelines (IPCC 1996)
refer to a hierarchy of calculation approaches and techniques
186 Australian Accounting Review
J. Ryan & D. Tiller
ranging from the application of generic
emission factors to direct monitoring.
7 This list was based on factors identified as considerations prepar-
ers will need to produce a GHG emission report or equivalent.
8 Toitū Envirocare (Toitū) is a wholly owned subsidiary of Man-
aaki Whenua – Landcare Research, a Government-owned Crown
Research Institute. Toitū offers carbon management and carbon
neutral certifications for organisations, goods and services, farms
and building operations. The Toitū carbonreduce and Toitū car-
bonzero programs are accredited by the Joint Accreditation Sys-
tem of Australia and New Zealand (JAS-ANZ) and under ISO
14065. The Toitū carbonreduce program is accredited by the
CDP (formerly Carbon Disclosure Project) as a suitable standard
for verification of greenhouse gas information.
Acknowledgements
The authors gratefully acknowledge the assistance and
guidance given by Michael Bradbury, Dr Amelia Shar-
man and the team at the External Reporting Board.
References
CDP. 2020, CDP Global Supply Chain Report 2020, CDP, New
York.
International Organization for Standardization (IOS) 2018,
Greenhouse Gases – Part 1: Specification with Guidance at the
Organization Level for Quantification and Reporting of Green-
house Gas Emissions and Removals, IOS.
Ministry for the Environment (MfE) 2020, Measuring Emis-
sions: A Guide for Entities, Ministry for the Environment,
Wellington.
New Zealand Productivity Commission 2018, Low-emissions
Economy, New Zealand Productivity Commission, Wellington.
NIWA. 2021a, Climate Change: The Science, https://niwa.
co.nz/education-and-training/schools/students/climate-
change/climate-change-the-science last accessed on 28
October 2021.
NIWA. 2021b, What are Greenhouse Gases, https://niwa.co.nz/
atmosphere/faq/what-are-greenhouse-gases last accessed on
28 October 2021.
Stats NZ. 2021, New Zealand’s Greenhouse Gas Emissions
https://www.stats.govt.nz/tereo/indicators/new-zealands-
greenhouse-gas-emissions last accessed 28 October 2021.
Task Force on Climate-related Financial Disclosures (TCFD)
2017, Recommendations of the Task Force on Climate-related Fi-
nancial Disclosures. TCFD.
Task Force on Climate-related Financial Disclosures (TCFD)
2020, 2020 Status Report, TCFD.
The External Reporting Board (XRB) 2021a, Aotearoa New
Zealand Climate Standard 1 Climate-related Disclosures: Gov-
ernance and Risk Management Consultation Document. XRB.
© 2022 CPA Australia.
J. Ryan & D. Tiller
The External Reporting Board (XRB) 2021b, Climate-Related
Disclosures: Governance and Risk Management Consultation
Document NZ CS 1, XRB, Wellington.
The Greenhouse Gas Protocol (GHG Protocol) 2011, Corpo-
rate Value Chain (Scope 3) Accounting and Reporting Standard,
GHG Protocol.
© 2022 CPA Australia.
A Recent Survey of GHG Emissions Reporting and Assurance
The Greenhouse Gas Protocol (GHG Protocol) 2015, Corpo-
rate Accounting and Reporting Standard: Revised Edition, GHG
Protocol.
The Intergovernmental Panel on Climate Change (IPCC).
1996, Revised 1996 IPCC Guidelines for National Greenhouse
Gas Inventories, IPCC.
Australian Accounting Review 187