# How big an error is acceptable in a carbon audit? What materiality threshold do verifiers use?

Canonical: https://senseible.earth/answers/acceptable-error-in-carbon-audit-materiality

Under the EU ETS verification rules, a misstatement is material at 5% of reported emissions for most installations and 2% for the largest emitters. Under ISO 14064-3, the verifier and the user of the report agree the threshold. Below the threshold, errors still have to be corrected or explained.

## The EU ETS numbers

Implementing Regulation (EU) 2018/2067, the EU ETS accreditation and verification regulation, sets materiality in Article 23. It is 5% of total reported emissions for installations emitting up to 500,000 tonnes of CO2e a year, and 2% for larger installations. A verifier looks at misstatements one by one and added together.

Many verifiers use these figures as a reference for other programmes too, which is why 5% is often quoted as the norm.

## ISO 14064-3 and voluntary reports

ISO 14064-3:2019 does not fix a number. The verifier sets materiality in the verification plan, based on the programme's rules or what the intended user needs. For a buyer report or a voluntary disclosure, 5% is common, but check the engagement letter.

## Size is not the only test

- Qualitative issues can fail a report even if the tonnes are small: a missing site, a wrong method, or a claim the data does not support.
- Non-conformities with the monitoring plan or programme rules are reported whatever their size.
- Uncorrected misstatements below materiality still appear in the verifier's findings, and they add up over the year.

## How to stay well inside the threshold

1. Recompute every line: quantity times factor should equal the reported figure.
2. Check units, especially litres against kg and kVAh against kWh.
3. Remove duplicate invoices before totalling.
4. Reconcile fuel and power totals with accounts and meter readings.
5. Keep the source document for every line, so the verifier can sample it.

## Worked example: is this error material?

- Reported emissions: 10,000 t CO2
- Errors found: a duplicated coal invoice of 240 t and a unit error of 80 t
- Together: 240 + 80 = 320 t, which is 3.2% of 10,000 t
- Against a 5% threshold: not material, but both must be corrected or explained
- If a further 200 t error appears: 520 t, which is 5.2%, so the report is materially misstated

## What Senseible does here

Senseible runs rule checks before any verifier sees the data: it recomputes each line within max(0.01, 0.1%), flags missing quantities, units and factors, and fingerprints each file so identical copies are not counted twice. Its "Verified" status means those rule checks passed; it is not an independent verification opinion.

- [What is materiality in GHG verification?](https://senseible.earth/answers/what-is-materiality-in-ghg-verification)
- [What auditors check in GHG assurance](https://senseible.earth/answers/what-auditors-check-in-ghg-assurance)
- [CBAM verification for non-EU producers](https://senseible.earth/climate-intelligence/cbam-verification-non-eu-producer)

Sources: [Commission Implementing Regulation (EU) 2018/2067, Article 23 (materiality levels)](https://eur-lex.europa.eu), [ISO 14064-3:2019, Validation and verification of greenhouse gas statements](https://www.iso.org), [European Commission, CBAM legislation and guidance](https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism/cbam-legislation-and-guidance_en)

Last reviewed 2026-10-15. Confirm the materiality level in the CBAM definitive-period verification rules before quoting it for CBAM data.