What is ISO 14064? Greenhouse Gas Accounting and Verification

ISO 14064 is a family of standards for quantifying and verifying greenhouse gas emissions and removals. Published in three parts, the series covers organizational inventories (14064-1), project-level emission reductions (14064-2), and verification procedures (14064-3). Two additional standards (14065 and 14066) define requirements for verification bodies and verifiers.

Organizations worldwide face pressure to measure and report greenhouse gas impacts. ISO 14064 addresses this by providing standardized approaches to GHG accounting, distinct from the product life cycle assessment standards (ISO 14040/44, ISO 14067) we’ve examined previously.

The fundamental difference: ISO 14064 focuses on organizational and project boundaries, while product LCA traces impacts across complete supply chains. A company’s operational emissions inventory looks nothing like the life cycle footprint of what it produces.

ISO 14064-1: Organizational Inventories#

ISO 14064-1 specifies how organizations quantify and report their greenhouse gas emissions and removals. It establishes principles, requirements and guidance for designing, developing and managing GHG inventories at the organizational level.

Organizations must define organizational boundaries using one of two consolidation approaches. The control approach accounts for 100% of emissions from facilities where the organization has financial or operational control, nothing from facilities where it merely holds equity interest without control. The equity share approach quantifies emissions proportional to economic interest in each facility.

The choice matters. A company with 30% equity in a high-emission facility reports nothing under operational control (if another partner operates it) but significant emissions under equity share. The standard allows different approaches for different reporting goals but requires documentation and consistency.

Once organizational boundaries are defined, emissions are categorized. Direct GHG emissions come from sources the organization owns or controls – combustion in owned boilers, company vehicles, on-site chemical processes. These must be quantified separately for each gas type: CO₂, CH₄, N₂O, NF₃, SF₆, and appropriate groupings for HFCs and PFCs.

Indirect GHG emissions from imported energy cover electricity, steam, heating and cooling purchased from external suppliers. These emissions occur at power stations and district heating facilities, not within organizational boundaries, but result from the organization’s energy consumption.

The 2019 revision expanded the indirect emissions framework. Organizations must now assess five additional indirect emission categories:

Indirect emissions from transportation cover upstream and downstream freight, business travel, employee commuting and product distribution. These occur outside organizational boundaries but stem from organizational activities.

Indirect emissions from products used by the organization span purchased goods, capital equipment and contracted services. This captures supply chain emissions from material production through to delivery at the organization’s gate.

Indirect emissions from products used by others address downstream impacts – product use, end-of-life treatment, and disposal. A vehicle manufacturer’s inventory might include fuel combustion by customers over the product lifetime.

Organizations establish their own criteria for determining which indirect emissions are significant enough to quantify. The standard requires transparency in these criteria and justification for any exclusions. This prevents cherry-picking favorable categories while ignoring problematic ones.

ISO 14064-2: GHG Projects and Carbon Markets#

ISO 14064-2 addresses greenhouse gas projects designed to reduce emissions or enhance removals. It provides principles and requirements for determining baselines, monitoring project performance, and quantifying emission reductions or removal enhancements.

Projects exist to generate carbon credits. A renewable energy installation, energy efficiency upgrade, or reforestation programme becomes a “GHG project” when structured to demonstrate emission reductions against a baseline scenario. The baseline represents what would have happened without the project.

Baseline determination proves critical. Project proponents must identify all relevant sources, sinks and reservoirs (SSRs) – the complete scope of GHG flows associated with both project and baseline scenarios. This includes controlled SSRs (directly managed by the project), related SSRs (consequential effects within the project), and affected SSRs (impacts beyond project boundaries, often called leakage).

A biomass energy project’s controlled SSRs include the new facility’s stack emissions. Related SSRs cover biomass cultivation and transportation. Affected SSRs might include land-use changes triggered by biomass demand or displaced fossil fuel production.

The baseline scenario must be conservative, plausible and credibly represent conditions in the project’s absence. Overestimating baseline emissions produces phantom carbon credits – monetizing reductions that never occurred. The standard explicitly requires that emission reductions go beyond what would have happened anyway, embedding additionality requirements directly into baseline determination.

Project emissions and baseline emissions are quantified separately using the same SSRs and time periods. Emission reductions equal the difference: baseline emissions minus project emissions. If affected SSRs increase emissions (leakage), these offset the project’s claimed reductions.

This matters financially. Carbon markets trade these emission reductions as credits, offsets or allowances. Verification under ISO 14064-3 typically becomes mandatory for projects seeking credit certification, unlike organizational inventories where verification remains optional.

ISO 14064-3: Verification and Validation#

ISO 14064-3 specifies procedures for verifying GHG statements. It applies across the 14064 family – organizational inventories (14064-1), project emission reductions (14064-2), and product carbon footprints (ISO 14067). The standard covers both verification (historical data) and validation (future projections).

Verification provides independent assurance that GHG statements are materially correct and conform to specified criteria. A verifier evaluates whether the organization’s reported emissions, reductions or footprint accurately represents actual GHG impacts within acceptable uncertainty.

The standard defines two assurance levels. Reasonable assurance provides high confidence in the GHG statement through extensive evidence-gathering. The verifier designs detailed procedures to reduce verification risk to an acceptably low level, expressing conclusions in positive form: “the GHG statement fairly represents actual emissions.”

Limited assurance provides reduced confidence through less extensive evidence-gathering. This relies on an assumption that data management systems and controls are reliable. The verifier concludes in negative form: “nothing has come to our attention to suggest the GHG statement is materially misstated.”

Limited assurance proves cost-effective for interim reporting periods between comprehensive verifications. A GHG programme might require reasonable assurance every five years with limited assurance for intervening annual reports. But limited assurance should not be used initially – verifiers need reasonable assurance engagement experience to assess data quality before accepting limited scope work.

Materiality determines what matters in verification. Information is material if its omission or misstatement could influence intended users’ decisions. Verifiers establish materiality thresholds based on the GHG statement’s magnitude and intended use. An investor evaluating climate risk faces different materiality than a regulatory compliance report.

The verification process follows structured phases: strategic analysis of the organization and its GHG systems, risk assessment identifying where material misstatements might occur, evidence-gathering to address identified risks, and conclusion formation based on accumulated evidence.

ISO 14064-3 also introduced agreed-upon procedures (AUP) – engagements that perform selected verification activities and report findings without expressing an overall opinion. AUP allows targeted investigation of specific emission sources or calculation methodologies when full verification isn’t warranted.

ISO 14065 and 14066: Verifier Requirements#

ISO 14065 defines requirements for GHG verification bodies seeking accreditation or recognition. It addresses impartiality, competence, communication and validation/verification processes. Verification bodies must demonstrate independence from the organizations they verify, maintain appropriate management systems, and handle appeals and complaints consistently.

ISO 14066 specifies competence requirements for validation and verification teams. Team leaders and team members need appropriate technical knowledge, verification experience and understanding of the applicable standard and criteria. For product carbon footprints, this includes life cycle assessment methodology. For organizational inventories, it covers accounting principles and data management systems. For project verification, it demands baseline methodology and additionality assessment skills.

These standards create a framework for credible third-party verification. An organization seeking verification identifies an accredited verification body meeting ISO 14065 requirements, which assigns a competent team meeting ISO 14066 criteria, conducting verification according to ISO 14064-3 procedures. The result: an independent verification statement that intended users can rely upon.

Organizational Accounting vs Product Life Cycle Assessment#

The distinction between organizational GHG accounting and product life cycle assessment causes persistent confusion. They measure different things using incompatible boundaries.

Organizational inventories under ISO 14064-1 track emissions from facilities an organization controls or holds equity in. Boundaries follow legal or financial relationships. An electronics manufacturer’s organizational inventory includes its assembly plant’s energy use and on-site waste treatment but stops at the factory gate. Upstream component production and downstream product use fall outside organizational boundaries unless the manufacturer chooses to assess indirect emissions.

Product carbon footprints under ISO 14067 trace impacts through complete supply chains. Boundaries follow physical cause-and-effect. The same electronics product’s carbon footprint includes raw material extraction in multiple countries, component manufacturing by hundreds of suppliers, assembly, distribution, consumer use over the product lifetime, and end-of-life treatment. Organizational control becomes irrelevant.

This creates significant gaps. A company might report decreasing organizational emissions while its product footprints increase dramatically. Outsourcing moves emissions from direct (organizational) to indirect (supply chain). Organizational inventory shows improvement. Product footprint shows deterioration. Both statements are technically correct but tell opposite stories.

The indirect emission categories in ISO 14064-1 attempt to bridge this gap by encouraging upstream and downstream accounting. But these remain optional assessments based on organization-defined significance criteria. Product LCA mandates complete supply chain inclusion for all significant impacts.

Verification Requirements: The Critical Difference#

ISO 14064-3 provides a comprehensive verification framework. The standard exists. The methodology is defined. Verification bodies are accredited. Verifiers are trained. All the infrastructure for robust third-party assurance is in place.

But verification remains optional for organizational inventories under ISO 14064-1. Companies can publish GHG inventories with no independent verification whatsoever. Many do, particularly for voluntary sustainability reporting. Some jurisdictions mandate reporting without mandating verification. Others require verification for specific sectors or emission sources.

This contrasts sharply with Environmental Product Declarations under EN 15804 or ISO 21930, which require mandatory third-party verification before publication. You cannot publish an EPD without independent verification. You can publish an organizational GHG inventory without anyone checking it.

Project emission reductions under ISO 14064-2 typically require verification when seeking carbon credit certification. Carbon markets and offset programmes usually mandate third-party verification to ensure claimed reductions are real, additional, and accurately quantified. The financial value of credits justifies verification costs.

Product carbon footprints under ISO 14067 follow the same pattern as organizational inventories – verification is recommended but optional unless making comparative assertions for public disclosure. A company can claim its product has a 50% lower carbon footprint than competitors without verification unless it intends public comparative claims.

This creates credibility gaps. Two organizations reporting similar emissions might have vastly different data quality. One underwent rigorous third-party verification. The other self-reported using assumptions and generic factors. Users cannot distinguish between them without investigating verification status.

The verification framework exists. Its application depends entirely on regulatory requirements, programme rules and organizational decisions about credibility investment.

Business Context and Reporting Pressures#

Global greenhouse gas emissions exceed 50 gigatonnes CO₂e annually. Nearly 200 countries committed to nationally determined contributions under the Paris Agreement. Corporate climate commitments proliferate – science-based targets, net-zero pledges, carbon neutrality claims. Investors demand climate risk disclosure. Customers want product carbon footprints. Regulators impose emission reporting and carbon pricing.

ISO 14064 provides standardized methodology for these diverse reporting needs. But standardized methodology doesn’t guarantee comparable results. Organizations make numerous methodological choices within the standards’ requirements: consolidation approach, organizational boundary definition, significance criteria for indirect emissions, emission factor selection, uncertainty quantification approaches.

A multinational corporation with complex ownership structures and extensive supply chains faces hundreds of methodological decisions in developing an organizational inventory. Each decision affects reported emissions. Two equally compliant inventories for the same organization might differ by 20% based solely on legitimate methodological choices.

Verification helps but doesn’t eliminate this variability. Verifiers assess whether methods align with stated criteria and whether data supports reported results. They don’t standardize methodological choices across organizations. Comparability requires consistent methodology, not just correct application of divergent approaches.

Product carbon footprints face similar challenges despite more prescriptive LCA standards. System boundary decisions, allocation procedures, cut-off criteria and data quality all introduce variability. Verification confirms the study followed its stated methodology. It doesn’t make studies with different methodologies comparable.

Carbon markets amplify these challenges. Projects generate credits based on baseline comparisons. Conservative baselines protect credit integrity but reduce project financial viability. Optimistic baselines increase credit volume but risk selling phantom reductions. Verification provides assurance but cannot eliminate baseline uncertainty or predict future counterfactual scenarios.

The standards provide the framework. Quality depends entirely on who applies them, with what competence, under what incentives, and whether anyone independently verifies the result.