Standards Development

Scope

This document specifies requirements for the verification process of quantitative and qualitative sustainability information, including reporting on environmental, social, governance (ESG) and other sustainability aspects.

It applies to the set of rules and procedures for carrying out verification by providing elements of a verification programme, such as process, evidence-gathering activities, reporting. This document addresses uncertainty in values and how to address these uncertainties. It addresses primary and secondary sources of data and how they relate to the strength of verification evidence. For the verification of quantitative information, it details the approach for continuous and discrete forms of data and the types of evidence gathering activities that can be applicable to each. Continuous data can be further categorized ratio and interval data. Verification approaches include an assessment of data collection, data editing, data transformation, data control processes as well as numerical techniques that aid in verification analytical testing.

For verification of qualitative information, it details the approach for binary, ordinal, and nominal forms of data and the types of evidence gathering activities that can be applicable to each. Verification approaches include an assessment of data collection, data editing, data transformation, data control processes as well as numerical techniques that aid in verification analytical testing

Purpose

Background and market need

With increasing public demand for statements in terms of sustainability as well as advancing legal provisions (regulatory and contractual) for declaration and reporting of such information (e.g. legislation of EU Green Deal, US SEC Climate Disclosure, commercial supply chain contracts and mandatory reporting), there is a significant market need for the validation and verification of sustainability information.

Standards are needed for both the compiling of information regarding environmental, social, governance (ESG) and other sustainability aspects (indicators, reporting metrics, and disclosures) as well as for harmonised approaches to validation and verification of that information. This validated and verified information can then be used for decision making based on sustainability declarations, such as investments, procurement, or individual choices for a consumer product or a workplace. Frameworks and processes for validation and verification should be compatible with the globally accepted quality infrastructure (standardisation, conformity assessment by validation/verification, peer assessment, accreditation). Furthermore, developing these methodologies as ISO standards would allow all interested parties, especially those with already implemented structures and existing instruments, to participate.

Problems to be solved

Standards for the declaration and reporting of sustainability information already exist or are under development. This relates, for instance, to entities (e.g. listed companies or suppliers) that are increasingly required to report specific ESG or sustainability aspects under voluntary or mandatory arrangements (e.g. as a pre-requisite to supply chain or market access, pre-condition for tenders and government procurement, and as part of securities exchange or regulatory annual reporting). Within the existing legal framework of many countries and regions, the global system of conformity assessment and its recognition (e.g. through multilateral arrangements between accreditation bodies), the tools for reliable assessment and confirmation of declared information (claims, reports etc.) currently exists.

However, standardised specifications of a consistent process for validating and verifying reported sustainability information is lacking.

Benefit for end-users 

Parties interested in qualitatively trustworthy and quantitatively comparable information will benefit from standardised validation and verification processes to be performed by legal entities that fulfil the requirements of ISO/IEC 17029:2019, Conformity assessment — General principles and requirements for validation and verification bodies.

Justification of the proposed structure of a standards series

While both result in a confirmation of declared information, validation and verification differ significantly in their execution.

Assessing historic data with respect to truthful and correct statements in a verification requires different methodological approaches than determining whether declarations on an intended purpose or future effect is reasonable and plausible in a validation. It is therefore proposed to dedicate separate documents to validation and verification processes.

As for the type of information to be validated or verified, distinction could be made according to the subject matter (e.g. environmental, social, governance). However, taking the perspective of describing methodologies, the distinction according to the nature of the assessed information, being quantitative or qualitative, appears more rational.

For both activities, validation and verification, general principles and requirements should be specified. A separate Part 1 document for this purpose is proposed as it is not assumed that these general principles and requirements will undergo rapid development and require revision soon. Part 1 will provide the opportunity to provide a consistent overview of the entire validation and verification process.

To specify requirements for the specific details within verification and validation processes, which evolve more quickly, it is suggested to establish separate parts, in this case the proposed Part 2 for verification.

Currently, the market need for verification of sustainability information (confirmation of truthfulness of historic data) is more pressing than the need for validation (confirmation of plausibility of claims regarding future outcomes). In summary, the proposal therefore focusses on general principles and requirements in Part 1, i.e. developing a document on general principles and requirements first, and then a Part 2 on verification of quantitative and qualitative information. Standards on validation, competence criteria for validation/verification personnel, requirements for specific validation/verification programmes etc. can be developed as further parts to the proposed document or as separate sectoral standards.

Relation and/or impact on existing work

This proposal complements the existing scope of ISO 14065:2020, General principles and requirements for bodies validating and verifying environmental information by broadening the coverage to include the validation and verification of other sustainability aspects, such as social and governance issues. It will be applicable for validation/verification bodies according to ISO/IEC 17029, serving as part of a validation/verification programme. In that regard, the proposed documents will be general and further specification of the individual aspects and applications will be possible. ISO 14064-3:2019, Greenhouse gases

— Part 3: Specification with guidance for the verification and validation of greenhouse gas statements provides requirements for validation/verification processes related verifying and validating greenhouse gas statements, and is used as part of validation/verification programmes in the field.

The lessons learnt in developing and revising ISO 14064-3 for GHG statement validation and verification processes will certainly contribute to the work included in this proposal.

Other documents which will provide contributions to this work include ISO 14030-4:2021, Environmental performance evaluation

— Green debt instruments

— Part 4: Verification programme requirements; ISO 14016:2020, Environmental management

— Guidelines on the assurance of environmental reports and ISO 14017:2022, Environmental management

— Requirements with guidance for verification and validation of water statements, to name a few.

Other ISO standards with in specific technical fields, and the cross-cutting areas of governance, sustainable finance, and information technology are also relevant. Outside of ISO, international accounting standards of the IAASB and ISSB such as ISAE 3000 and ISAE 3400 will assist, as well of the work of the various international sustainability reporting frameworks such as the UN Global Compact, GRI, ISEAL and UNEP.

Justification for the proposed committees to be involved It is the nature of sustainability information to encompass more than one aspect (e.g. relating to “environmental” as well as “social” aspects at the same time).

Regarding the unambiguous categorisation, some sustainability information could be debatable (e.g. aspects of animal welfare neither being clearly “environmental” nor “social”) or could depend on the context (e.g. being considered as “social” from one perspective and as “governance” from another).

This proposal for validation and verification processes is therefore based on differentiating the any data and information as being of a quantitative or qualitative nature, and not differentiating it according to specific sustainability aspects, such as “ESG” (e.g. not by adding deliverables for “social information” and “governance information” to the existing ISO 14065 for “environmental information).

With that assumption of a technical rather than a sectoral differentiation, it seems unlikely to identify one single ISO/TC with a scope obviously matching the proposed documents. ISO/TC 207 as an ISO technical committee have a scope of standardization that includes reference social and economic aspects, alongside the environment. Given previous successful joint work between ISO/CASCO and ISO/TC 207 over several decades it is appropriate for both committees to work together again and jointly take on this task. ISO/CASCO is a policy committee of the ISO Council. Its role is to establish horizontal cross-sectorial standards related to conformity assessment, including validation and verification (e.g. ISO/IEC 17029).

As included in the NWIP there are a number of other ISO Committees that should become liaisons to this work, and their contributions are welcome in order to make the resulting standards fit-for-purpose and market relevant.