IFRS S2 Greenhouse Gas Emission Disclosure Requirements
The International Sustainability Standards Board (ISSB) releases educational materials on IFRS S2 greenhouse gas emission disclosure requirements, aimed at providing guidance on greenhouse gas disclosure for enterprises.
The ISSB has released a revised draft of IFRS S2, adjusting Scope 3 disclosure and allowing companies to use measurement methods besides Greenhouse Gas Protocol.
Related Post: International Sustainability Standards Board Releases IFRS S2 Exposure Draft
Introduction to IFRS S2 Greenhouse Gas Emission Disclosure Requirements
IFRS S2 greenhouse gas emission disclosure requirements provide guidance to enterprises in a question-and-answer format, covering topics such as greenhouse gas disclosure background, disclosure requirements, etc. Questions and answers that enterprises may be interested in including:
Question 2: What greenhouse gas protocol standards do IFRS S2 reference?
IFRS S2 cites two greenhouse gas protocol standards, namely:
- Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, used for Scope 1, Scope 2, and Scope 3 greenhouse gas disclosures.
- Greenhouse Gas Protocol Corporate Value Chain Accounting and Reporting Standard, used for Scope 3 greenhouse gas disclosure.
Question 4: Do companies need to disclose the fifteen categories of greenhouse gases in Scope 3?
Enterprises do not need to disclose fifteen categories, but they need to confirm which categories are relevant. If the disclosure of that category can provide material information to stakeholders, then disclosure is required.
Question 8: How can companies apply the proportional mechanism in Scope 3 disclosures?
When selecting methods, inputs, and assumptions for calculating Scope 3, enterprises should use available, reasonable, and supported information without incurring excessive costs. Enterprises can consider data availability, quality, and collection costs, and use the data from the previous period as a basis for estimation to reduce cost burden.
Question 11: Do companies need to set greenhouse gas emission targets based on IFRS S2?
IFRS S2 does not require companies to set greenhouse gas emission targets but requires companies to disclose information on any greenhouse gas emission targets they have already set. These disclosures include target content, target setting and review methods, performance analysis for targets, as well as which greenhouse gases the targets involve, whether they involve Scope 1, Scope 2, and Scope 3, whether the targets are total or net greenhouse gas emissions targets, and whether carbon credits are used to offset greenhouse gas emissions.
Question 12: What information do companies need to disclose when using net greenhouse gas emission targets?
IFRS S2 requires companies to disclose their total greenhouse gas emission targets when using net greenhouse gas emission targets, so that stakeholders can understand the emission reduction actions taken by the company. When a company plans to use carbon credits to achieve net greenhouse gas emissions targets, it needs to disclose relevant information about carbon credits:
- The dependence of corporate greenhouse gas targets to carbon credits.
- The schemes and types of corporate carbon credits, as well as the climate risks and opportunities brought by carbon credits.
Question 13: Do companies need to adjust their greenhouse gas disclosures after acquiring or disposing of assets?
IFRS S1 requires companies to provide greenhouse gas disclosures for the two periods, and sustainable disclosures must use the same entity as in financial reports. Therefore, whether a company adjusts its greenhouse gas disclosure depends on whether it needs to adjust in its financial reports:
- The companies acquired during the reporting period are not part of the financial reporting entity, so they do not need to be included in greenhouse gas disclosure.
- The companies disposed of during the reporting period are part of the financial reporting entity and therefore need to be included in the greenhouse gas disclosure.
If companies believe that these adjustments can reflect the climate risks and opportunities they face, they can provide supplementary information and disclose greenhouse gas information in the supplementary information.
Reference:
IFRS Foundation Publishes Educational Material about Greenhouse Gas Emissions Disclosure Requirements in IFRS S2
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