Completeness in focus: Building a high-quality GHG inventory for AASB S2

In our first article on data quality, we explored why getting your carbon data right is more important than ever in the era of mandatory climate reporting. Now, we’re discussing the first of the five key data quality indicators completeness. 

According to the GHG Protocol: Corporate Value Chain (Scope 3) Accounting and Reporting Standard, completeness is about how well your data represents the full scope of your emissions-generating activities. That means covering all relevant locations, accounting for seasonal variations, and ensuring no material gaps in your data. 

While many organisations are familiar with the NGER Scheme and the GHG Protocol, the introduction of AASB S2 Climate-related Disclosures (AASB S2) changes the game. The GHG Protocol now serves as a measurement tool—not a reporting framework—and the NGER Scheme’s limited scope no longer cuts it.

AASB S2, aligned with the ISSB’s global standards, requires a broader lens: businesses must consider their entire value chain, both upstream and downstream (see paragraph B32). 

So, what does “complete” really mean in this new context? What are the key considerations that businesses need to consider to prepare a complete GHG inventory? 

In this article, we consider completeness from two angles: 

1. Your organisational boundary, who and what needs to be included in your GHG inventory 
2. The activity data behind your GHG emissions calculations, how much of it you’ve captured, and how representative it really is. 

Part 1: Your organisational boundary 

One of the early steps in preparing your GHG inventory is defining your reporting boundary, a boundary setting policy tailored to your business. This means taking a close look at your business model and value chain to identify all operations and the sources of GHG emissions associated with each of them.

By mapping out every relevant activity, you can then classify sources of GHG emissions across scopes and categories, to establish your operational boundary. 

This detailed mapping exercise is the first step toward producing a complete GHG inventory. Here are some key questions to guide your thinking: 

• Have you considered all upstream activities that contribute to and enable your business operations to occur? 
• Have you captured every process and all of the operations that make up your business? 
• Have you thought about how your customers use your products? Including all use phases and disposal of each product sold? 
• Have you factored in the role of contractors and other third-parties, and how these may or may not form part of your direct GHG emissions? 

While some businesses are more complex than others, even seemingly minor oversights can materially impact the completeness of your carbon footprint. For example, forgetting equipment that contains refrigerants or omitting a use phase of your product may have a material impact on the completeness of your GHG emissions measurement. 

As we wrote previously, relying on measurement performed under the NGER Scheme is no longer sufficient. Its thresholds can exclude entire facilities or sources of GHG emissions. In the same way, applying the GHG Protocol’s “minimum boundary” concept may lead to the omission of measurable and reportable activities. 

So, what counts as a relevant activity? That’s the first question businesses must answer. Only once you’ve compiled a complete list of these activities can you begin to understand what data you need for measurement. 

Part 2: Collecting activity data 

Once your reporting boundary is clearly established, only then is it possible to identify all the data required for measurement. In this phase, completeness means collecting data for all identified sources of GHG emissions across all business operations. 

Most businesses operate multiple information systems, however, financial accounting remains the one system every business must maintain. These accounting records represent a complete picture of business activities during a reporting period and are (often) subject to assurance. 

According to the GHG Protocol, the best way to ensure completeness is to collect data from all operations and locations. For assurance purposes, completeness of Scope 1, Scope 2 and upstream Scope 3 emissions can be demonstrated by reconciling your activity data with audited financial records and the supporting general ledger. This can be more challenging for some emission sources, but it’s a critical step. 

Filling in the gaps

Especially in the first year of measuring an organisation’s GHG emissions, it’s not unusual to observe gaps in activity data. This is a reality for many businesses starting their GHG emissions measurement journey. So, the challenge becomes twofold:

• How can management be confident that all data gaps have been appropriately identified?
• And once identified, how will those gaps be addressed? 

Once you’ve pinpointed where the gaps are, you’re in a position to fill them. That’s the purpose of this data quality indicator: to ensure that gaps are not only recognised, but also addressed through estimation as required.

Estimation should be applied thoughtfully, taking into account the statistical representativeness of the data, as well as known seasonal patterns and other fluctuations that naturally occur in business activities. 

A complete GHG inventory 

In the past, management may have justified excluding certain business activities or sources of GHG emission from measurement by deeming them immaterial to the organisation’s carbon footprint.

But when an auditor asks how that conclusion was reached, can the business demonstrate its position without quantifying those sources? 

This is where materiality comes into play and goes hand in hand with completeness. In a business’s first year of reporting, assurance providers will need to conclude whether the GHG inventory is complete. If management is unable to demonstrate a comprehensive organisational boundary or show how data gaps have been identified and addressed, can they truly be confident in the completeness of the inventory?

And without that confidence, is it even possible to assess the materiality of individual sources of GHG emissions? It is critical to note that materiality should be considered individually and in aggregate.

Need support? 

If GHG emissions reporting feels too hard and you want to ensure your data is complete and audit-ready, our sustainability reporting experts are here to help.