Croda, a global manufacturer of speciality chemicals, adopts a reasonable level approach to verification improving GHG emissions data quality and credibility, whilst driving internal engagement.
Croda International is a global speciality chemicals manufacturer producing high-quality ingredients and technologies for some of the most successful brands in the world in sectors such as personal care, health and agriculture. Croda puts sustainability at the heart of its operations and has made ambitious commitments to set a science-based emissions reduction target and create innovative products that have a positive effect on the environment and society. This is supported by its long-term strategy to become Climate, Land and People positive by 2030.
This level of ambition requires Croda to not only understand its impacts on the environment, climate and the opportunities for reduction, but also to collect, calculate and report relevant and highly accurate data, including its greenhouse gas (GHG) emissions from own operations and the value chain.
Ensuring relevant and accurate reporting of GHG emissions whilst measuring its impact across operations and supply chain in line with best practice
Effective mitigation of climate impacts starts with the appropriate measurement of emissions and identification of yearly performance trends. However, as most manufacturing companies would relate, accurate data collection and calculation of emissions in line with standards comes with its challenges, risks of errors and subsequent misreporting of impacts.
Croda has taken steps to reduce the risk of reporting materially incorrect emissions by undertaking independent third-party verification. This type of engagement increases the integrity of the GHG inventory and helps demonstrate to stakeholders the alignment with relevant standards and best practice. In addition, verification provides confidence to Croda that any organisational changes, such as acquisitions, are fully incorporated in the footprint and the process of re-baselining / restating emissions is done correctly.
Most organisations that have their emissions verified, do so to a limited level, where a relatively small percentage of emissions are included in scope of verification and the independent opinion outlines a negative statement, where the verifier did not identify any “material” discrepancies between GHG emissions reported and actual data. Whilst a limited engagement does provide many benefits in reporting, it has a significantly lower scope and overall coverage of verified emissions compared to the most comprehensive level, reasonable verification.
We take our responsibility to report accurate, up-to-date emissions data to our stakeholders seriously, and reasonable verification provides confidence in the figures we report externally. For customers, accurate supplier data is vitally important in their scope 3 decarbonisation journeys. Avieco have supported us on our journey to “reasonable verification”, with a good understanding of ways of reporting and providing practical, knowledgeable advice as we have increased our verification level. We will continue to work to improve the level of accuracy of our scope 3 emissions reporting, as we know that this is where the vast majority of our carbon impact lies.
Using a reasonable level of verification to improve data accuracy and enhance the credibility of GHG emissions statements
Croda appointed Avieco as subject-matter experts, to conduct a reasonable verification engagement using ISO 14064-3:2019 standard, taking an approach that followed the rigour of the standard and streamlined the process through a 3-phase delivery model.
The level of verification requires a distinct approach by requiring a more thorough assessment of the boundary of reporting and the procedures applied in data collection, whilst also comprising a much wider emissions’ scope through extensive data testing, ranging between 70% – 80% coverage of all emissions. This is the most comprehensive approach, as absolute verification is not attainable due to intrinsic uncertainties related to the nature of accounting systems and emissions conversions.
By having the most of the GHG emissions and reporting processes scrutinised in such detail, Croda’s customers and other interested parties, such as ESG rating agencies, analysts and investors, can use the data in their assessments with confidence that it has a high degree of accuracy and completeness.
Croda achieved 5 key improvements through Avieco’s verification engagement, including:
- Better data reported – verifiers identified several data accuracy issues due to various errors related to input / transcription / calculation / units / emission factors from invoices to internal spreadsheets to system and master files. Croda successfully completed all the corrections resulting in a notable improvement in the site data reported, as well as Group calculations and final emissions statements.
- Identified key opportunities – Croda is focusing on addressing two key areas related to a) continuing to improve the quality of data across scope 3 to improve accuracy of emissions reported and b) adopting new internal systems for data collection and calculation of GHG emissions to increase the rigour and streamline the process for internal stakeholders.
- Increased level of internal engagement – Avieco and Croda worked together to deliver the project in a seamless way for sites, which helped getting internal stakeholders engaged and collaborative, as the focus was on sharing best practice, and also on identifying the gaps and how to align reporting systems across the global sites.
- Enhanced reporting documentation – Croda worked on further developing the internal reporting documentation across scopes 1, 2 and 3, including procedures for internal validation, category definitions, boundaries, methodologies, among others. This not only increases the transparency of Croda’s GHG reporting practices, but also the resilience against internal changes and supports consistent yearly accounting of GHG emissions.
- Better communication with sites – Croda actioned on Avieco’s recommendation to provide sites a summary of their annual emissions, key impacts and feedback. Sites showed to have a good grasp of Croda’s wider sustainability and carbon reduction ambitions in the long term, which inspires a solution-driven mindset to support local and broader decarbonisation objectives.
Despite the challenges faced due to the COVID-19 pandemic, Croda decided to undertake another reasonable verification engagement in 2020 and start implementing the key opportunities identified with Avieco. This demonstrates to internal and external stakeholders the commitment to reporting accurate GHG emissions statements, and equally important, an appetite for continuous improvement in reporting practices and long-term performance, supporting its customers to further reduce their scope 3 emissions.
Croda’s 2019 verification statement issued by Avieco (formerly Carbon Smart) can be accessed here.
Verification engagements provide a host of benefits to organisations that measure and disclose GHG emissions impacts, regardless of their level of experience in the reporting space, namely:
- Reduce the risk of misleading stakeholders by improving the accuracy of data reported
- Enhance reputation and stakeholder confidence in data for internal and external use
- Help identify key reporting weaknesses and specific opportunities for improvement
- Increase the level of internal engagement with the reporting process and fosters the sharing of best practice methods used
- Assist with business decision-making based on sound data, such as appropriate target-setting using an accurate baseline
- Contribute towards the achievement of Leadership score in CDP
For more information, please contact:
Corina Radu, Senior Consultant