Glossary›Emissions accounting and measurement›Emissions intensity metric
Glossary term
Cluster D · D24
Tier 1
Emissions intensity metric
Definition
An emissions intensity metric expresses emissions as a ratio to a business measure: tonnes of CO2-e per million dollars of revenue, per square metre, per unit produced or per employee. It allows performance to be compared across periods and between entities of different sizes. Intensity can improve while absolute emissions rise, so it is presented alongside absolute figures, never instead of them.
On this page
In practice
Intensity is the most useful internal management metric in a climate programme and the most misused external one, and the gap between those two facts is where boards get into trouble.
AASB S2 recognises intensity explicitly as a target type. Paragraph 33(g) requires an entity, where a climate-related target is quantitative, to disclose whether it is an absolute target or an intensity target. Appendix B paragraph B66 supplies the definitions: an absolute target is a total amount of a measure or a change in that total, while an intensity target is a ratio of a measure, or a change in the ratio, to a business metric.
The arithmetic that causes the problem is simple and it should be stated in every board paper that carries an intensity figure. If revenue grows fifteen per cent and emissions grow eight per cent, intensity improves by roughly six per cent while absolute emissions rise eight per cent. Both statements are true. Only one of them describes what the atmosphere experiences, and only the absolute figure is what AASB S2 requires to be disclosed as the emissions metric.
That is why the pairing rule matters. AASB S2 requires disclosure of absolute gross Scope 1, Scope 2 and Scope 3 emissions. Intensity is an additional metric and a permitted target type; it is not a substitute for the gross figures and cannot be presented as one. An entity whose public communications lead with intensity improvement while its disclosed absolute emissions rise has created exactly the inconsistency ASIC’s greenwashing enforcement is built around, and it has done so using two figures that are both individually accurate.
Choosing the denominator. This is a real judgement and it is under-documented almost everywhere.
Denominator
When it is right, and what it costs you
Revenue
The most common and the weakest, because it moves with price, product mix and currency, none of which relate to emissions. A revenue-intensity improvement driven by a price rise is not an environmental outcome.
A physical measure
Tonnes produced, square metres occupied, passenger kilometres, units shipped. Far more defensible because it holds a real relationship with the emissions. Where a physical denominator exists for the business, use it.
Headcount
Appropriate for a services business with no meaningful physical output, and the honest choice for professional services firms rather than a fallback.
Whichever is chosen, the denominator must be defined precisely and drawn from an audited source where one exists. Revenue should be the statutory revenue figure from the financial report, not a management measure, because the assurer will agree it there and any difference becomes a question.
What the assurer does with it
Intensity metrics sit in the metrics and targets pillar, so they come into scope in an entity’s second reporting year under ASSA 5010 paragraph 10(b) rather than the first.
The assurer’s test has two halves. The numerator is the emissions figure they have already tested, so nothing new happens there. The denominator is the interesting half: they agree it to the financial report or to an audited operational record, and they confirm the definition is stated and unchanged from the prior period.
They accept an intensity metric with a defined denominator agreed to an auditable source, presented alongside the absolute figures, with the denominator definition disclosed. They reject a denominator that cannot be agreed to any record, a denominator definition changed between periods with no restatement of the comparative, an intensity figure presented without the corresponding absolute figures, and a numerator whose boundary differs from the denominator’s: group revenue divided by parent-only emissions being the standard version of that error.
They also perform a consistency read across the annual report and the website. Where intensity improvement is claimed prominently and absolute emissions rose, they raise it, because the sustainability assurer is required to consider whether the sustainability report is materially inconsistent with other information the entity publishes.
Commonly confused with
Absolute emissions, and the confusion is usually deliberate rather than accidental in external communications. Also confused with carbon efficiency or productivity language used in industry reporting, which carries no fixed definition and should not appear in a disclosure document without one.
Sources
1
2
ASSA 5010 Timeline for Audits and Reviews of Information in Sustainability Reports under the Corporations Act 2001
AUASB
Review status
Review required
Last reviewed
15 September 2026
Editorial pass, unsigned
Reviewer required
Carbon accounting specialist and registered company auditor
Next scheduled review
1 July 2027
Part of
Cluster D, Emissions accounting and measurement
49 terms from the head term carbon accounting down to individual Scope 3 categories and the mechanics of factors, boundaries and data quality. The largest cluster in the glossary.
Related terms
The reference period an intensity target is measured from
The unit the numerator is expressed in
The pillar the intensity disclosure sits inside
Related questions
What does the board have to sign?
−
The directors’ declaration in the sustainability report. For financial years commencing between 1 January 2025 and 31 December 2027, directors declare they have taken reasonable steps to ensure the report complies with the Corporations Act. From financial years commencing 1 January 2028, they declare their opinion that it does comply.
What will our audit and risk committee ask us?
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The same questions they ask about the financial report, applied to information the committee has never seen before. Expect them on capture and scope, where each number comes from and what controls sit over it, the significant judgements and materiality, who your assurance provider is and whether they are independent of the preparer, and what liability protection applies and until when. It works as a self-test: anything you cannot answer today is a work item.
What happens if we have to restate last year’s emissions?
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You restate the comparative and disclose what changed, why, and the effect. Restatement is expected as data improves and is not treated as a failure. What the assurance practitioner tests is whether you have a written policy setting out when you restate, and whether you applied it consistently.
Other terms in this cluster
Emissions intensity metric