The Climate Registry's Materiality Definition Explained

The materiality definition in The Climate Registry is part of its general verification protocol (GVP). It allows for a threshold of 5%, either over or under statement, of an entitys direct or indirect emissions of greenhouse gases. Direct emissions refers to occurrence onsite from the source, such as when refrigerant gas discharges during a leak. Indirect emissions refer to the use of resources or goods that discharge greenhouse gases during their production.

Six main gases are tracked by the Climate Registry, as being major players in the fight against global warming. These gases are part of the hydrofluorocarbons and perfluorocarbons families, most commonly found in refrigerants and methane, carbon dioxide, sulfur hexafluoride and nitrous oxide.

When the greenhouse gases registry first released its materiality definition, there was a great deal of confusion with the term absolute value basis in defining the threshold. But in the most recently released clarification, the term has been removed and replaced with a 5% overstatement or understatement threshold leeway.

The Climate Registry has set verification standards to address emissions reported by organizations in North America. The materiality definition is quite specific to this geographic region, and as other regions around the world have different reporting requirements, the registry requires stand alone verification statements for each region. Thus, documents have to include the materiality threshold plus the threshold for emissions calculated using different methods in each area.

Organizations are permitted to specifically define their gas emissions in respect to which emissions could be classified as insignificant within their particular operation. The 5% materiality definition is classified to represent the amount of insignificant emissions allowed, and is a standard within financial accounting practices.

The materiality definition has been included to address simple errors or mistakes with regard to greenhouse gas emissions. The 5% is intended to allow for rounding errors, uncertain emission factors, numerical mistakes or other miscalculations. Any difference between true emissions and stated emissions is inaccurate if the variance is larger than 5%.

The Climate Registry was established to assist in the voluntary reporting of greenhouse gas emissions through standardized reporting in the United States, Canada and Mexico. Established in 2007, this nonprofit agency aims to get a better understanding of the effects of greenhouse gases on our environment. The registry does support policies involving mandatory reporting as well as voluntary reporting and the regulatory oversight of gas emissions.

The materiality definition is just one aspect of the registrys reporting requirements. Other reporting protocols include types of direct and indirect emissions calculated on a geographical, company, operational and facility level. Reporting is done on an annual basis. As such, many facilities, especially those equipped with refrigeration and air-conditioning (RAC) systems or heating, ventilation and air conditioning (HVAC) systems, have contracted with vendors of refrigerant management programs. The software and web based applications automatically track and report emissions information, ensuring accuracy and compliance.

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