There is a set structure for auditors to follow when it comes to limited vs reasonable assurance, as laid out by New Zealand’s External Reporting Board (XRB). The auditor will apply this structure to their review, as well as their own experiences, which help them understand where to draw the line for a limited vs reasonable assurance audit activity. For a clear definition of limited vs reasonable assurance, please refer to ISO 14064 part 3.
What to expect before, during and after a scope 3 assurance engagement
Auditors do not expect perfect data. They want to see a clear, transparent and well-documented approach. Scope 3 assurance is a valuable opportunity to strengthen controls, improve data quality and build confidence in future reporting.
In this webinar in partnership with thinkstep-anz, we explain what happens during a scope 3 assurance engagement, what evidence auditors look for and how to prepare. Our experts also unpack common assurance terms and share practical ways to improve your scope 3 data over time.
Watch the webinar replay here or scroll down for key takeaways and Q&A with the speakers.
Key takeaways
1. Estimate all relevant scope 3 categories
Do not exclude a category because the data is difficult to collect. Start with a reasonable estimate, then investigate further if it is significant.
2. Focus on material emissions
Use estimates to identify your emissions hot spots. Improve data quality where emissions are highest and keep lower-impact categories simple.
3. Show how you reached the number
Document your methods, sources, emission factors, assumptions and calculations. Auditors need to trace each figure back to its source.
4. Auditors focus on risk
Auditors consider the size of each emissions source, the uncertainty involved and the potential for errors. These risks determine where they test more closely.
5. Understand the assurance process
Limited assurance involves less testing than reasonable assurance. Engage your assurance provider early to agree on the scope, evidence and level of assurance needed.
Q&A with the speakers
Auditors set a materiality threshold which changes depending on the level of assurance required. A 5% threshold applies for reasonable assurance, while a higher threshold up to 10% may apply for limited assurance.
Under Australian regulations, are there any specific data quality requirements for Scope 3 emissions? This is particularly relevant because collecting reliable data for upstream Scope 3 emissions can be challenging due to limited supplier-specific information, inconsistent reporting methods and reliance on secondary data or estimates.
Emission factors from known databases, such as those from the Australian and New Zealand governments, are usually considered good quality. These two databases in particular do not require further verification. However, bespoke emission factors will need to be checked to see if they have been third-party verified. If not, further investigation is required – this will take additional time which should be included in the scope of the audit. On top of this, auditors will also need to check that the most up-to-date emission factors have been used.
Let’s assume the construction company is the one buying the materials. They should use stages A1–A3, which cover the materials from the factory (cradle-to-gate). Then there is stage A4, the transport to the building site. If the company organizes the transport themselves, they will have the best data. If they don't, they can use the transport information included in the material’s EPD (if they include it).
For standard documentation and guidance, you can refer to the GHG Protocol standard. For more bespoke guidance, you can engage your local sustainability professional to help prepare you for reporting your data.
About SGS
SGS is the world’s leading Testing, Inspection and Certification company. We operate a network of over 2,500 laboratories and business facilities across 115 countries, supported by a team of over 100,000 dedicated professionals. With more than 145 years of service excellence, we combine the precision and accuracy that define Swiss companies to help organizations achieve the highest standards of quality, compliance and sustainability.
Our brand promise – when you need to be sure – underscores our commitment to trust, integrity and reliability, enabling businesses to thrive with confidence. We proudly deliver our expert services through the SGS name and a portfolio of trusted specialized brands, including Applied Technical Services, Brightsight, Bluesign and Nutrasource.
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