Reporting entities need flexibility to explain why their boundary choice best reflects how the company manages operations, makes investment and operating decisions, and influences or implements emissions reductions.
AAFA, responding to the California Air Resources Board’s (CARB) request for feedback on GHG emissions reporting requirements under SB 253, urged CARB to align with existing emissions reporting frameworks and ensure flexibility in the use of standards.
AAFA recommended that CARB not mandate specific methods and allow flexibility to report using whichever method is the best fit for the reporting entity.
AAFA is also aligned with a 5 per cent de minimis Scope 3 reporting threshold and a sectoral phase-in approach to the implementing regulations and provides further context on the costs associated with reporting and related assurance engagements.
CARB has proposed two approaches for setting organizational boundaries—the equity share approach and the control approach—and has requested feedback on how entities should share their choice of organisational boundary.
AAFA recommended that CARB not mandate specific methods and allow flexibility to report using whichever method is the best fit for the reporting entity.
AAFA requested CARB to eliminate the emissions intensity per dollar of revenue, a release from AAFA said. This key performance indicator is dependent on industry, and it is not accurately comparable across businesses.
Further, for private businesses that are not required to disclose annual revenue, publication of this information could provide a method for competitors to circumvent an entity’s right to privacy.
CARB should also eliminate tedious and overly burdensome requirements to report all sources and all emission types in carbon dioxide equivalent, AAFA suggested. International businesses reporting will have hundreds of different sources for their scope 1 and 2 emissions because of all the different countries of operation and energy providers.
Given that up-to-date factors and sources are a foundational requirement of emissions assurance, relisting them is redundant and burdensome on reporting entities, according to AAFA.
Additionally, CARB should not require entities to list each emission type in carbon dioxide equivalent, AAFA noted in a release. If all emission types are to be reported in carbon dioxide equivalent, then all scopes 1 and 2 emissions should be reported as a gross carbon dioxide equivalent figure.
AAFA recommended that CARB should not dictate which specific factors can be used and instead require emission factors to be aligned with recognized standards such as the GHG Protocol, ISO 14040/44 and relevant product category rules to ensure consistency and credibility.
Critically, the list of acceptable sources should not be overly restrictive, as an exclusive approach would disrupt many entities’ existing accounting practices, it observed.
CARB should instead look for defensible methodology and transparency, relevance to the specific geography of operations, and reasonable age. Entities should briefly explain the methodology behind the factor, whether public or proprietary, note any adjustments made and demonstrate that the factor aligns with established standards such as the GHG Protocol and ISO 14040/44.
When changing emissions factors, reporters should document the reason for the update like access to better primary data, improved relevance or methodological refinement using a standardised format.
AAFA recommended that CARB align with the GHG Protocol and SBTi and allow entities to report certain Scope 3 categories as de minimis. A 5-per cent de minimis threshold at the category level is consistent with GHG Protocol and SBTi standards.
AAFA does not believe CARB’s estimated annual cost per reporting entity is accurate and undercounts the cost of reporting, it added.
Fibre2Fashion News Desk (DS)
