General
Why emission factor transparency matters for accurate carbon audits
Misha Cajic
February 7, 2025
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7
min read
Accurate carbon accounting is built on a foundation of reliable emission factors. These values — used to convert activity data into emissions — are the backbone of any sustainability report. But if organizations don’t disclose which emission factors they’re using and where they come from, audits become significantly more challenging. Without transparency, inconsistencies arise, making it difficult to verify data, compare performance over time, or meet regulatory requirements.
As more businesses commit to net-zero targets and mandatory climate reporting expands, the need for clear and verifiable emissions data has never been greater. Transparency around emission factors ensures that businesses can stand behind their carbon footprint calculations and that auditors can efficiently verify the accuracy of reported data. Without it, emissions reporting risks becoming unreliable, leading to compliance issues, reputational damage, and potential financial penalties.
Emission factors determine the carbon footprint of a given activity, whether that’s electricity consumption, fuel use, or supply chain operations. They serve as conversion values that translate raw activity data (such as kilowatt-hours of electricity used or liters of fuel burned) into greenhouse gas emissions. The challenge is that these factors are not universal — they vary by region, source, and methodology.
For example, the emission factor for electricity use in a country with a coal-heavy energy grid will be much higher than one with a predominantly renewable energy mix. Similarly, the emission factor for freight transport will depend on factors like fuel type, vehicle efficiency, and distance traveled. If businesses don’t clearly disclose which factors they use and where they source them from, their reported emissions may lack credibility and be difficult to verify.
Auditors rely on transparency to confirm that reported emissions align with established standards such as the Greenhouse Gas (GHG) Protocol or Science Based Targets initiative (SBTi) requirements. A lack of clarity can lead to miscalculations, double counting, or even greenwashing claims. Without standardized and well-documented emission factors, two companies in the same industry could report drastically different emissions for similar activities, making it impossible to compare performance accurately.
A sustainability audit assesses whether a company’s emissions data is accurate, consistent, and complete. If emission factors are not disclosed, auditors must spend extra time tracing the origin of calculations, which can slow down the verification process and introduce uncertainty. Inconsistencies in methodologies can also lead to discrepancies in emissions reporting across different years or business units, making it difficult to track progress toward sustainability goals.
Transparent reporting on emission factors helps ensure that carbon accounting is replicable and auditable. When companies clearly document the sources of their factors — whether they come from government agencies, industry databases, or proprietary models — it allows auditors to verify that calculations are accurate and based on credible sources. This is particularly important for companies reporting Scope 3 emissions, where supply chain complexities make transparency even more critical.
Without a clear understanding of the emission factors used, auditors may question the reliability of reported data, leading to costly delays, restatements, or even regulatory penalties. On the other hand, businesses that proactively disclose their methodologies can demonstrate accountability and streamline the audit process, reducing both costs and compliance risks.
Regulatory bodies and investors are demanding greater transparency in emissions reporting. Frameworks such as the EU’s Corporate Sustainability Reporting Directive (CSRD), the U.S. Securities and Exchange Commission’s (SEC) proposed climate disclosure rules, and the International Sustainability Standards Board (ISSB) are pushing companies toward standardised, verifiable carbon data.
Failure to disclose emission factors can raise red flags for regulators, as it suggests a lack of consistency or rigour in carbon accounting. This can lead to compliance issues, increased scrutiny from stakeholders, and reputational risks. For publicly traded companies, inconsistent or unverifiable emissions data can also result in financial penalties or loss of investor confidence.
Beyond regulatory compliance, businesses must also meet the expectations of customers, investors, and business partners. Many organisations now require suppliers to provide detailed emissions data as part of procurement decisions. If businesses fail to disclose the methodology behind their carbon footprint calculations, they risk losing contracts or being excluded from sustainability-focused investment portfolios.
By making emission factors transparent, companies build trust with stakeholders and demonstrate a genuine commitment to sustainability. Transparency signals that an organisation is not just tracking emissions for compliance reasons but is actively working to reduce its environmental impact in a measurable and accountable way.
Avarni simplifies emissions reporting by ensuring businesses have clear, auditable data. The platform provides standardised emission factors sourced from credible databases, including government agencies and industry benchmarks, while also allowing companies to integrate their own custom factors when needed.
One of the key benefits of using Avarni is the ability to track and disclose emission factors in a structured and automated way. Instead of manually managing complex datasets, businesses can leverage Avarni’s platform to ensure that all emissions calculations are based on consistent, transparent methodologies. This minimises errors, reduces audit-related delays, and increases confidence in reported data.
Beyond standardising emission factors, Avarni includes a comprehensive audit trail feature that records all changes made to emissions data. This ensures that businesses can track how their emissions figures are calculated, which emission factors were applied, and any modifications that occurred over time.
Audit trails provide a layer of accountability that is essential for sustainability reporting. If auditors or regulators need to verify past emissions data, Avarni’s system makes it easy to trace every change back to its source. This helps organisations maintain compliance with evolving climate disclosure requirements while reducing the risk of reporting errors.
By offering built-in audit trails, Avarni removes the guesswork from emissions reporting, ensuring that businesses can demonstrate full transparency in their carbon accounting processes. This not only simplifies audits but also strengthens trust with investors, regulators, and stakeholders who require verifiable sustainability data.
As sustainability reporting becomes more regulated and scrutinised, the importance of transparent emission factors will only grow. Companies that fail to provide clear, verifiable emissions data risk falling behind, while those that prioritise transparency will gain a competitive advantage in an increasingly climate-conscious business environment.
By embracing transparency, businesses can improve the accuracy of their emissions reporting, build trust with stakeholders, and simplify the auditing process. In an era where sustainability claims are under increasing scrutiny, organisations must be prepared to back up their data with clear, credible sources.
Want to improve the transparency of your emissions reporting? Avarni helps businesses streamline carbon accounting and prepare for audits with confidence. Get in touch with us today.
