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ESRS E1: Climate Change·Disclosure Requirement E1-10
Internal carbon pricing
Practical guidance for preparing this disclosure. Use this card to identify the information to prepare, verify claims and organise supporting evidence. For exact requirements, always refer to the official European Commission source.
Published passport
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Prepared from official source material and published report evidence. No named approver is recorded yet, so this page carries no byline.
Use it alongside the official European Commission source while that review is in progress.
Standard
ESRS E1: Climate Change
Disclosure Requirement E1-10 · 2026-5010-final
Last reviewed
—
LRA educational guidance · Not issued or endorsed by European Commission
To prepare this disclosure
Disclosure focus
This disclosure asks an organisation to explain whether it uses an internal carbon price, and if so, how that price is applied in practice. The report should make clear what type of internal price is used, what decisions it informs, and whether it is used consistently in planning, investment appraisal, or operational decision-making rather than only in isolated cases.
The practical focus is on the real scope and role of the price across the business. Readers should be able to see whether it covers the whole organisation or only selected activities, sites, or projects, and how it influences choices on emissions-related risks and opportunities. The emphasis is on transparency about coverage, purpose, and use, not just the existence of a headline figure.
This LRA educational guidance supports disclosure preparation. For the exact requirements, always refer to the official European Commission source.
Before you start
Before you start
A quick mental checklist before you prepare this disclosure — tick each as you settle it.
Preparation
Key information to prepare
| Preparation field | What to capture | Evidence hint | Owner |
|---|---|---|---|
| Carbon price in use | Confirm whether the group uses an internal carbon price in any business decision process during the reporting period, and record a clear yes/no. | Pricing policy, investment appraisal templates, planning papers, or approval memos showing the price is applied. | Finance / Sustainability |
| How price informs choices | Describe the ways the carbon price is built into decisions, such as screening, ranking, budgeting, or project approval, using the actual decision processes used in the period. | Capital allocation papers, project business cases, planning guidance, or committee packs showing the price affecting decisions. | Finance / Strategy |
| Aligned reporting assumptions | State whether the assumptions behind the carbon price are kept in step with the assumptions used in the financial statements, and explain the basis for that alignment. | Accounting policy papers, valuation models, impairment files, budgeting assumptions, and finance sign-off notes. | Finance / Accounting |
| Average carbon price | Capture the average internal carbon price applied in the period, expressed per tonne of CO2e, using the same basis used in the underlying pricing records. | Pricing schedule, model outputs, project files, or finance calculations showing the period average and unit basis. | Finance / Sustainability |
| Pricing scheme coverage | Describe which parts of the business, activities, or decisions are covered by the carbon pricing approach, and note any exclusions or limits in scope. | Carbon pricing policy, scope notes, business unit coverage lists, and implementation guidance. | Sustainability / Finance |
＋ Show E1-10 sub-elements (LRA working checklist)
Use the carbon price in business decisions where it is relevant.
Keep the carbon-price approach aligned with the assumptions used in the financial statements.
State whether the organisation uses an internal carbon price.
Report the average carbon price applied.
Describe the scope covered by the carbon-pricing approach.
How to prepare it
Confirm whether your organisation uses an internal carbon price at all, and then map where that price is applied in business decisions. Keep the explanation tied to actual decision processes, not just a policy label.
Check that the carbon-price approach sits comfortably with the assumptions used in the financial statements. If there are differences, note them clearly so the reporting team can explain the link or the gap.
Identify the pricing scheme or schemes that sit within the scope of the figure you will report. Make sure you know which parts of the business, activities, or emissions are included before you calculate anything.
Gather the source records needed to support the reported average carbon price. Use the underlying calculations and inputs that show how the number was built, and keep the unit as currency per tonne of carbon dioxide equivalent.
Prepare the narrative answers alongside the number: whether the price is used, how it informs decisions, and how it aligns with financial reporting assumptions. If any part is not applicable or differs by scheme, document that clearly rather than leaving it implicit.
Before finalising, compare your draft against the official source and check that every required item is covered without adding extra claims. Review the wording, scope, and figures together so the reported answer is complete and internally consistent.
Request the data
Request the internal carbon pricing details from Finance
Translate the disclosure into an internal business question — then adapt it to your organisation's own language.
How does the business use an internal carbon price in planning, investment and other decisions, and what price level and scope are being applied?
Use your organisation’s own terms first, then map them to the disclosure. For example, if your teams talk about a shadow price, carbon fee, internal levy or planning rate, use that wording in the request and only translate it afterwards for reporting. Keep the ask practical and avoid framework jargon where your business does not use it internally.
Weak request
Please provide the ESRS E1:E1-10 internal carbon pricing disclosure data, including whether internal carbon pricing is used, how it is used in decision-making, consistency with financial statement assumptions, the average carbon price, and the pricing scheme scope.
Why it fails: It uses framework language that many owners will not recognise, so the request is harder to action. It also does not tell the owner what source file, period, boundary, or approval trail to provide, which makes the response less usable for reporting review.
Better request
Please send the finance team’s carbon pricing note or model extract for [reporting period], showing the price used, where it is applied in planning or investment decisions, whether it matches the assumptions used in the financial statements, the average price and unit basis, and the scope covered. Include the source file, version, owner and approver, and use your own internal terms in the response.
Formal email template
Subject: Request for internal carbon pricing information for [reporting period] Hi [name/team], We are preparing the sustainability reporting pack and need a short evidence pack on how our organisation uses an internal carbon price. Please send, for [reporting period]: - the type of internal carbon price used in the business; - where it is applied in decision-making, such as planning, investment cases, budgeting or scenario work; - whether it is aligned with the assumptions used in the financial statements, or if it differs; - the average price and the unit basis used; - the scope covered by the pricing approach; - the source file or system, plus the owner and approver. Please use your team’s own terminology in the response, and we will map it to the reporting wording afterwards. If helpful, you can return this as a short table plus the supporting document or model extract. Please also note any exclusions, changes during the period, or points we should check before sign-off. Thanks, [preparer name]
Short Teams / Slack version
Hi [name/team] — could you share the internal carbon pricing details for [reporting period]? Please include the price used, where it is applied, whether it matches the financial assumptions or not, the scope covered, and the source file/model. Use your own team terms and we’ll map them later. Thanks.
Industry examples
Manufacturing
Context. A group uses a planning carbon rate in capex screening and plant upgrade cases.
Adapted request. Please share the planning rate used in capex and project approvals for [reporting period], including where it is applied, the average rate, the scope covered across plants and product lines, and whether it is aligned with the assumptions used in the financial statements. Attach the model extract or approval note.
Example response. The group used a shadow price of EUR 90 per tCO2e in capex screening for major plant projects. It was applied to new equipment cases and decarbonisation options across three manufacturing sites. The rate was used for planning and was not the same as the assumptions in the financial statements. Source: capex model v4, approved by Finance Director.
Real estate
Context. A property business applies an internal levy to refurbishment and development appraisals.
Adapted request. Please provide the internal levy or carbon rate used in refurbishment and development appraisals for [reporting period], including the price, the projects it covers, how it feeds into investment decisions, and whether it is consistent with the financial statement assumptions. Include the policy note and the latest appraisal template.
Example response. A carbon levy of GBP 75 per tCO2e was applied to refurbishment appraisals and selected development cases. It influenced option ranking in investment papers. The levy was separate from the assumptions used in the financial statements. Evidence: carbon pricing policy dated March 2025 and appraisal template v2.
Draft your disclosure
Notes that turn data into a disclosure
LRA training templates — adapt them to your organisation, and check the official source before sign-off.
Method note
Explain how the organisation defines its internal carbon price, which parts of the business it covers, and whether the figure is aligned with the assumptions used in the financial statements.
Context note
State whether the organisation uses an internal carbon price, how it informs business choices, and what the reported average price and scope tell readers about the breadth and purpose of the approach.
Fluctuation statement
If the average price or coverage has changed, note whether this reflects a revised pricing method, a wider or narrower scope, or a change in how the price is used in decision-making.
Content index entry
E1-10 Internal carbon pricing — [location / page] / [notes]Download Centre
Preparation tools & forms
Professional preparation tools for E1-10 — free with an LRA Community membership. Register once (it's free) and every download unlocks, together with the Disclosure Library, templates and the LRA AI Assistant.
Assurance readiness
For each claim, check the evidence
| Claim | Risk | Evidence to check |
|---|---|---|
| We say whether the group uses an internal carbon price at all, and we describe the pricing approach in plain terms. | The assurer will check that the statement is complete and not overstated, and that the reporter has not implied a pricing approach where none is actually used. | Policy papers or internal guidance on carbon pricing; management confirmation of whether any scheme is in place; draft disclosure showing the yes/no statement is consistent with internal records. |
| We explain where the carbon price is used in practice, including the main business choices and operating decisions it informs. | The assurer will probe whether the reported use is real and current, and whether the description matches how the price is actually fed into decisions rather than being a generic statement. | Decision papers, investment appraisals, planning packs, or committee papers showing the price being applied; process notes describing how it is used; sign-off from the relevant business owner. |
| We have checked that the price used for this purpose is aligned with the price assumptions used in impairment work, or we have explained any difference clearly. | The assurer will look for unexplained gaps between the internal price and the assumptions used in financial reporting, especially where the two could affect each other. | Impairment model inputs, finance papers, and reconciliation notes comparing the two price bases; explanations for any differences; review by finance and sustainability teams. |
| For each pricing approach we use, we show the average amount per tonne and make clear which part of the business or which activities that approach covers. | The assurer will test whether the averages are calculated on a sensible basis, whether the coverage is clearly defined, and whether the figures are not mixed across different schemes. | Calculation workings, scheme definitions, scope notes, and source data used to derive each average; mapping of each scheme to the relevant business area, asset set, or activity group; evidence of review of the arithmetic and classification. |
Evidence pack to prepare
Common reporting gaps
Figures are stated without the supporting narrative, or narrative without figures.
Scope is inconsistent between the text and the numbers.
The reporting boundary is left undefined.
Material changes since the previous period are not disclosed.
Estimates and measured values are not distinguished.
Source records for the figures are not identified.
Common gaps
Mistakes to avoid when collecting the data
Wrong ownerThe request goes to the sustainability team alone, even though the price used in planning, finance and investment choices sits with different business owners.
Framework language instead of business termsPeople ask for the data using disclosure labels, so the finance or operations team cannot map it back to the way they actually track the price internally.
No clear boundaryThe team never agrees which business units, projects or pricing rules are in scope, so different contributors send figures from different parts of the organisation.
Wrong period basisOne person pulls the latest approved price while another uses the price that was active during the reporting period, so the numbers do not line up.
Mixed counting basisSome sources report a simple average and others use a weighted figure, which makes the final price impossible to compare on the same basis.
Source labels lostThe original file names, system tags or version notes are stripped away, so nobody can trace where each price figure came from.
Separate populations mergedPrices used for different decision types are blended together, even though the organisation keeps them apart for planning, project appraisal or finance checks.
Missing evidence trailThe team collects the number but not the supporting notes, extracts or approval record, so there is no clear path from source to sign-off.
Where judgement is often needed
Set the group boundary after acquisitions or disposalsUse the same organisational perimeter you apply for the rest of your sustainability reporting, and if a buy-in or sale changes which entities sit inside the group, explain the cut-off date and whether the price data covers the full year or only the period in scope.
Choose one working definition where country rules differIf local teams use different emissions or carbon-cost definitions, pick a single group basis for the reported figure, describe any local exceptions, and make clear how you converted them into one comparable number.
Decide how to treat near-boundary operations and joint arrangementsFor sites, ventures or activities that sit close to your reporting boundary, state whether they are included, excluded or partly reflected, and explain the rule you used so readers can see why the same type of operation may be treated differently.
Explain whether the price is a planning rate or an actual chargeIf the figure comes from an internal planning rate rather than a fee actually paid, say so and describe where that rate is used in capital, project or operating decisions.
Align the carbon-price basis with finance assumptions where possibleWhere the price used in decisions differs from the assumptions behind your financial statements, disclose the difference, the reason for it and whether you have used a single basis or separate bases for different decisions.
State the timing rule for the average priceIf you calculate the average using opening values, closing values, monthly updates or another timing approach, name the method and explain why it best reflects how the business actually uses the price.
Show when estimates are used instead of measured inputsIf some parts of the calculation rely on estimates, proxies or modelled data, identify those parts, explain the estimation approach and note any material uncertainty or later true-up process.
Round consistently and explain any material effectApply one rounding convention across the disclosure, and if rounding changes the reported figure in a way that could affect interpretation, say how you rounded and whether the underlying unrounded amount is materially different.
Aggregate enough to protect sensitive business informationWhere a detailed split by business, site or country could reveal sensitive information, combine the data to a higher level, state the aggregation basis and make sure the reported total still covers the same population.
Examples
Illustrative examples
Synthetic, written by LRA — not from a company report, not text from any standard.
Illustrative (synthetic) example — heavy manufacturing
We use an internal carbon charge in our investment and operating decisions, and we apply it consistently with the assumptions used in our financial statements. For the year, the average charge applied across the relevant business areas was **€85 per tonne of CO₂e**.
- The charge covered **100%** of the projects and procurement decisions in scope for our capital allocation process.
- It was used to compare lower-emission options, test payback periods, and screen major spending proposals before approval.
This example shows how a reporter can explain whether an internal carbon charge is used, how it affects decisions, whether it aligns with financial statement assumptions, and what the average charge was, without naming the organisation.
Illustrative (synthetic) example — retail and logistics
We do not use an internal carbon charge in our current planning cycle, so it is not built into our investment appraisals or budget setting. Because of that, there is no average charge to report, and our financial statement assumptions are not set on that basis.
- The company has not adopted a carbon price for decision-making across its fleet renewal and warehouse expansion plans.
- The relevant pricing scheme scope is therefore **0%** for this reporting period.
This example shows a reporter that has not adopted an internal carbon charge, explains the effect on decisions and financial statement assumptions, and makes clear that there is no average charge or covered scope to report.
Company reports
How companies report E1-10 in practice
Examples of full and partial reporting practice. These are evidence-led reviews, not exact disclosure templates to copy.
Intesa Sanpaolo S.p.A.
Banks / Diverse Financials / Insurance · Italy · 2024
Intesa Sanpaolo S.p.A.'s 2024 Annual Report provides a clear disclosure of its internal carbon price, set at €57 per tonne of CO2 equivalent, as detailed on page 201. This figure is supported by references to the Life Cycle Impact Assessment Environmental Prices, indicating a quantitative approach to internal carbon pricing. However, the report lacks additional narrative context or broader discussion on the application or impact of this internal carbon price, with no further quotable evidence found elsewhere in the document.
Iberdrola, S.A.
Electric Utilities / IPP / Energy Traders · Spain · 2025
Iberdrola’s 2025 Sustainability Report includes coverage of an internal carbon pricing scheme, explicitly mentioned on page 51, which applies to activities impacting Scopes 1, 2, and 3 CO2 emissions. This is supported by references on page 138 linking carbon credits to the internal carbon pricing system. However, the report does not provide numeric values or further narrative details on the scheme beyond these mentions, leaving some aspects unclear.
Kakao Corp.
Media · South Korea · 2024
Kakao Corp.'s 2024 ESG Report provides evidence of operating an internal carbon pricing system that integrates climate risk into its financial decision-making, as noted on pages 12 and 15. The report references this system in the context of risk management and net zero goals, with mentions on pages 12, 15, and 57. However, there is no quotable evidence regarding specific numeric values or detailed narrative explanations beyond these mentions.
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Scenarios to work through
A group finance team is updating a capital request for a new production line. The project pack includes an internal carbon charge to test whether the investment still works if emissions costs rise, and the same charge is also used in the impairment model.
QShould the preparer treat this as an internal carbon price being used, and how should the link to decision-making and the financial assumptions be described?
Reveal model answer →Hide answer ↑
Yes. The preparer should record that the organisation uses an internal carbon price and explain that it is applied in investment appraisal and also feeds into the assumptions used for the financial statements. The description should make clear whether the same price is carried through both processes, or whether the finance team has aligned the two sets of assumptions in another way, so the reader can see the connection between strategic decisions and reported numbers.
Why this matters · If a carbon price shapes business choices, explain where it is used and whether the financial reporting assumptions are aligned with it.
A preparer finds two different carbon prices in the planning files: one used by the sustainability team for project screening and a lower one used by treasury in long-term forecasts. Management says both are intentional because they serve different purposes.
QHow should the preparer handle the explanation of consistency with the assumptions in the financial statements?
Reveal model answer →Hide answer ↑
The preparer should not imply that the same figure is used everywhere if it is not. They should explain the relationship between the two prices and state whether the amount used in the financial statements is the same as, or different from, the one used in internal decision-making. If they differ, the explanation should make clear why the finance assumptions are not identical to the planning price and how the organisation has dealt with that difference.
Why this matters · Where different carbon prices are used, be clear about which one supports the accounts and how it relates to the planning price.
A manufacturing business uses a shadow price only for major projects above a set threshold, while smaller projects are assessed without it. The sustainability team is unsure whether to report the price as covering the whole business or only part of the investment process.
QWhat scope should the preparer describe for the carbon pricing scheme?
Reveal model answer →Hide answer ↑
The preparer should describe the actual reach of the scheme, not overstate it. In this case, the explanation should say that the carbon price is used only for selected investment decisions above the threshold, rather than across all projects or all business units. The scope note should help the reader understand which decisions are covered and which are not.
Why this matters · Describe the real coverage of the pricing approach, including any limits on where it is applied.
A preparer is drafting the disclosure and has the average carbon price from the year-end planning model, but the model combines prices from several internal tools and one external benchmark. The team is unsure whether the figure should reflect the blended amount or only the price used in the main approval process.
QHow should the average carbon price be determined and explained?
Reveal model answer →Hide answer ↑
The preparer should use the average price that reflects the organisation’s internal carbon pricing approach as it is actually applied in decision-making. If several tools or price inputs are blended, the explanation should make that clear and identify the scheme or schemes the figure relates to. The key is that the reported amount matches the way the price is used, rather than presenting a number that does not correspond to the real process.
Why this matters · Report a price that matches the way the organisation actually applies carbon pricing, and explain the scheme behind it.
Framework references
Relevant ESRS requirements and related disclosures
Available framework references and nearby disclosures relevant to preparing this requirement.
ESRS
E1-10
within ESRS E1: Climate Change
Related & explore
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Browse all disclosures →
More in ESRS E1 → Browse full catalogue → Disclosure Library home → Search all disclosures →
FAQ
Questions this page answers
E1-10 carbon price in use: what data do I need to gather before drafting the disclosure?+−
Start with the five datapoints listed on the page: carbon price in use, how the price informs choices, aligned reporting assumptions, average carbon price, and pricing scheme coverage. The page also gives a step-by-step preparation section to help you turn those inputs into a draft.
How do I use the E1-10 step-by-step preparation section in practice?+−
Use it as a working checklist to move from raw inputs to a draft disclosure. It is designed to help you identify the right data, set the scope and assumptions, and organise the information before writing.
What should I include in the E1-10 evidence pack for assurance readiness?+−
The page provides an evidence pack with five items to support assurance readiness. Use it alongside the four assurance claims to verify so you can show the claim, the risk, and the supporting evidence clearly.
What are the four assurance claims to verify for E1-10 carbon price in use?+−
The page says there are four assurance claims to verify, each framed around claim, risk, and evidence. Use them to check that the disclosure is supported by traceable documentation before it is finalised.
How do I decide who owns the E1-10 carbon price in use data?+−
The page is set up for practitioners to assign ownership across ESG, HR, data owners, and assurance reviewers. Use the preparation steps and evidence pack to agree who collects each input, who checks it, and who signs it off.
What common mistakes does the E1-10 page warn me to avoid?+−
It includes a list of common reporting gaps and mistakes to help you spot weak points early. Use that list as a pre-submission check against your draft, evidence pack, and assumptions.
How should I use the synthetic illustrative example for E1-10 carbon price in use?+−
Treat it as a drafting aid, not a real company example. The page includes synthetic illustrative disclosures and a quantitative table to show how the information can be presented consistently in a draft.
What can I take from the E1-10 draft-output section when writing the disclosure?+−
The draft-output section gives visualisation ideas, narrative starters, and a content-index line. Use those to turn your prepared data into a clear first draft and to keep the structure consistent.
How do I use the E1-10 Prep & Assurance workbook (.xlsx)?+−
The workbook is there to help you organise preparation and assurance evidence in one place. Use it to capture the required datapoints, track ownership, and assemble the evidence pack before drafting.
What is the printable E1-10 Library Card (.pdf) for?+−
It is a quick-reference download for the disclosure topic. Use it alongside the workbook when you need a concise reminder of the datapoints, preparation steps, and assurance checks.
Where can I find real company examples for E1-10 carbon price in use?+−
The page includes a 'From company reports' table that links to real published reports where the topic is disclosed. Use it to see how others have presented the topic, while still drafting your own disclosure from the page guidance.
More questions this page can help with
E1-10 carbon price in use checklist for ESG managersE1-10 carbon price in use evidence pack templateE1-10 how to prepare the disclosure step by stepE1-10 average carbon price and pricing scheme coverage data pointsE1-10 aligned reporting assumptions what should be documentedE1-10 how to assign ownership for carbon price in use reportingE1-10 common reporting gaps and mistakes to avoidE1-10 synthetic illustrative example disclosureE1-10 draft output narrative starters and content index lineE1-10 Prep & Assurance workbook downloadE1-10 Library Card PDF downloadE1-10 from company reports examples
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