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 EFRAG source.
Before you start
A quick mental checklist before you prepare this disclosure — tick each as you settle it.
Preparation
Key datapoints to prepare
＋ 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
1Confirm 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.
2Check 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.
3Identify 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.
4Gather 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.
5Prepare 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.
6Before 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.
Industry examples
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]
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Preparation tools & forms
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Assurance readiness
For each claim, check the evidence
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 owner
The 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 terms
People 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 boundary
The 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 basis
One 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 basis
Some 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 lost
The original file names, system tags or version notes are stripped away, so nobody can trace where each price figure came from.
Separate populations merged
Prices used for different decision types are blended together, even though the organisation keeps them apart for planning, project appraisal or finance checks.
Missing evidence trail
The 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 disposals
Use 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 differ
If 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 arrangements
For 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 charge
If 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 possible
Where 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 price
If 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 inputs
If 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 effect
Apply 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 information
Where 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.
How companies report E1-10 in practice
Real reports where this topic is disclosed. These are report practice, 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
Related framework references
How this disclosure maps across the major reporting frameworks.
Primary
Related & explore
Transition plan for climate change mitigation → Guide ✓Anticipated financial effects from material physical and transition risks and potential climate-related opportunities → Guide ✓Identification of climate-related risks and scenario analysis → Guide ✓Resilience in relation to climate change → Guide ✓Policies related to climate change mitigation and adaptation → Guide ✓Actions and resources in relation to climate change mitigation and adaptation → Guide ✓Show all 10 related 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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