Introduction
Assurance Definition:
Assurance refers to the degree of confidence or certainty we have that the information about a company’s inventory is reliable. This confidence is based on the understanding that the inventory details are thorough, correct, consistent, clear, pertinent, and don’t have significant mistakes.
Why Assurance Matters:
Getting assurance (confidence) about a company’s product inventory is crucial. This confidence is important for both the company itself and other interested parties (stakeholders) who use this information to make decisions. If you know the inventory information is reliable, you can make better decisions.
Documenting the Process:
To ensure assurance, it’s essential to carefully and thoroughly document how the inventory information is managed. This documentation is called a “data management plan.” This plan outlines the step-by-step process of handling inventory data. By having a clear and comprehensive plan, it becomes easier to verify and ensure the accuracy and reliability of the inventory information.
Requirements
- The product GHG inventory shall be assured by a first or third party.
- Companies shall choose assurance providers that are independent of, and have no conflict of interest with, the product GHG inventory process.
- Companies shall report the assurance statement in the inventory report. The statement shall include:
- Whether the assurance was performed by a first or third party
- The level of assurance achieved (limited or reasonable) including assurance opinion or the critical review findings
- A summary of the assurance process
- The relevant competencies of the assurers
- How any potential conflicts of interest were avoided for first party assurance
Parties Involved:
There are three main parties involved in the process of assurance for a company’s product inventory:
- Reporting Company: This is the company that wants assurance about the accuracy of its inventory.
- Stakeholder Users: These are people or groups (like investors or customers) who use the inventory report to make decisions.
- Assurer(s): These are the individuals or entities providing assurance. If the reporting company itself does this, it’s called first-party assurance. If an external party does it, it’s third-party assurance.
First and Third Party Assurance:
- First-Party Assurance: When the company itself ensures the accuracy of its inventory.
- Third-Party Assurance: When an external party (not the company) ensures the accuracy of the inventory.
Assurance Independence:
- Assurance providers (assurers) need to be independent and free from conflicts of interest. This ensures unbiased judgment.
- Third-party assurance is inherently more objective and independent.
Competencies of Assurers:
- Assurers need to be competent, having expertise in assurance, knowledge of the company’s industry, and the ability to assess emission sources and potential errors.
Assurance Process:
- Assurance is achieved through verification (assessing reliability) and critical review (ensuring consistency with standards).
- Verification involves planning, identifying sources, performing assurance processes, evaluating results, and reporting conclusions.
- Critical review ensures consistency with standards, valid methods, appropriate data, transparency, and consistency.
Levels of Assurance:
- Two levels: limited and reasonable. The reporting company decides the level, influencing the rigor of the verification process.
- Absolute assurance isn’t possible due to practical limitations, but reasonable assurance is the highest level provided.
Critical Review Findings:
- Critical review checks conformity with standards, methodological choices, and assumptions for public reporting.
- ISO standards and guidelines like ISO 14040, ISO 14044, and SETAC’s Guidelines for Life Cycle Assessment are referred to for critical review.
