Disclosure focus
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.
Prepare
What to collect before drafting
Tick each field as the evidence lands. Owners are the teams that usually hold the source files.
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Carbon price in use
Finance / SustainabilityConfirm whether the group uses an internal carbon price in any business decision process during the reporting period, and record a clear yes/no.
Evidence Pricing policy, investment appraisal templates, planning papers, or approval memos showing the price is applied.
Watch for Yes/no is mis-stated because the source decision framework is not checked, so the disclosure does not reconcile to the pricing policy in use.
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How price informs choices
Finance / StrategyDescribe 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.
Evidence Capital allocation papers, project business cases, planning guidance, or committee packs showing the price affecting decisions.
Watch for The narrative overstates use because it is based on policy intent rather than the actual decision-making workflow, so the process description does not match the approval records.
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Aligned reporting assumptions
Finance / AccountingState 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.
Evidence Accounting policy papers, valuation models, impairment files, budgeting assumptions, and finance sign-off notes.
Watch for The assumption set is taken from a different model or period, so the carbon price basis does not reconcile to the financial statement assumptions.
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Average carbon price
Finance / SustainabilityCapture the average internal carbon price applied in the period, expressed per tonne of CO2e, using the same basis used in the underlying pricing records.
Evidence Pricing schedule, model outputs, project files, or finance calculations showing the period average and unit basis.
Watch for The figure mixes different price bases or periods, so the reported average does not reconcile to the source pricing calculation.
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Pricing scheme coverage
Sustainability / FinanceDescribe which parts of the business, activities, or decisions are covered by the carbon pricing approach, and note any exclusions or limits in scope.
Evidence Carbon pricing policy, scope notes, business unit coverage lists, and implementation guidance.
Watch for The coverage statement misses a business unit or decision type, so the scope description does not match the actual scheme coverage.
Before you start
- Have you decided whether your organisation uses an internal carbon price at all for this reporting period?
- If you do use one, is it the price that actually feeds into investment, budgeting, or other business decisions?
- Have you checked whether the price basis lines up with the assumptions used in your financial statements?
- Can you trace the average price you plan to report back to a source record or calculation you can explain?
- Have you settled which parts of the business, activities, or emissions are covered by the pricing approach you will describe?
How to prepare it
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
Download preparation tools for E1-10 with free verified email access for 24 hours. Source-report links remain public.
Check
For each claim, check the evidence
We say whether the group uses an internal carbon price at all, and we describe the pricing approach in plain terms.
Risk 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.
Evidence to check 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.
Risk 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.
Evidence to check 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.
Risk 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.
Evidence to check 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.
Risk 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.
Evidence to check 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.
Where drafts go wrong
Mistakes to avoid and where judgement is needed
The left column is what preparers get wrong while collecting; the right column is where you will have to make and explain a judgement.
Mistakes to avoid
- 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.
Judgement 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
How it reads on the page
Synthetic, written by LRA — not from a company report, not text from any standard.
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.
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.
Quality ladder
- Basic
We used an internal carbon price of 45 currency units per tCO2e.
- Better
We used an internal carbon price of 45 currency units per tCO2e in project appraisal and capital planning, and we applied it to Scope 1 and Scope 2 emissions.
- Best
We used an internal carbon price of 45 currency units per tCO2e this year across project appraisal, capital planning and transition planning for Scope 1 and Scope 2 emissions, and we kept it aligned with the assumptions used in our financial statements because we did not change the underlying planning basis.
Check your understanding
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.
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.
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.
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.
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Advice, not assurance
Framework references
Relevant ESRS requirements and related disclosures
ESRS
E1-10
within ESRS E1: Climate Change
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FAQ
Questions this page answers
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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