What is the materiality threshold in a GHG verification, and is 5% the rule?

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Senseible · Accepted Answer

No standard fixes 5%. ISO 14064-3 leaves the verifier to set materiality from the programme's rules and the needs of the people relying on the statement, and ISAE 3410 treats it as professional judgement. 5% of total emissions is a common choice, and some programmes write a number into their rules, but it is a convention, not a law. The programme, if there is one. A scheme's verification rules may set the figure; the EU ETS, for example, uses 5% for most installations and 2% for the largest. The intended user. For a buyer report, a bank or a voluntary disclosure, the verifier agrees the level with you and records it in the verification plan or engagement letter. The level of assurance. Reasonable assurance work is designed to detect smaller misstatements than limited assurance, so the planning is tighter. The quantitative test compares misstatements with the total, usually as a percentage. The qualitative test asks whether an error would change a reader's decision regardless of size: a missing site, an excluded gas, the wrong scope, a claim such as carbon neutral that the data does not support. A small error of that kind can still be material. Plans the work around higher-risk sources, the ones large enough that an error could cross the threshold. Adds up misstatements found, both those you correct and those you leave, and compares the sum, not just each error, with materiality. Projects sample errors to the whole population: an error found in 1 of 20 sampled invoices suggests more in the rest. Reports non-conformities with the programme rules whatever their size. The threshold as a figure and what it is a percentage of: total Scope 1 and 2, or each scope separately. Whether Scope 3 is in the boundary of the statement, since its uncertainty is much higher. How uncorrected misstatements below the threshold will be reported.