Volume 9—Iron & Steel Producers

Industry-based Guidance on implementing

Climate-related Disclosures

June 2023

IFRS S2

IFRS

® Sustainability Disclosure Standard

International Sustainability Standards Board

This Industry-based Guidance accompanies IFRS S2 Climate related Disclosures (published

June 2023; see separate booklet) and is issued by the International Sustainability

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IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

Introduction

This volume is part of the Industry-based Guidance on Implementing IFRS S2 Climate-related

Disclosures. This guidance suggests possible ways to apply some of the disclosure requirements in

IFRS S2 but does not create additional requirements.

This volume suggests possible ways to identify, measure and disclose information about

climate-related risks and opportunities that are associated with particular business

models, economic activities and other common features that characterise participation in

this industry.

This industry-based guidance has been derived from Sustainability Accounting Standards

Board (SASB) Standards, which are maintained by the International Sustainability

Standards Board (ISSB). The metric codes used in SASB Standards have been included for

ease of reference. For additional context regarding the industry-based guidance contained

in this volume, including structure and terminology, application and illustrative

examples, refer to Section III of the Accompanying Guidance to IFRS S2.

IFRS S2 INDUSTRY-BASED GUIDANCE

Volume 9—Iron & Steel Producers

Industry Description

The Iron & Steel Producers industry primarily consists of entities producing iron and

steel in mills and foundries. The steel producers segment produces iron and steel

products from its own mills. These products include flat-rolled sheets, tin plates, pipes,

tubes, and products made of stainless steel, titanium and high alloy steels. Iron and steel

foundries, which cast various products, typically purchase iron and steel from other

entities. The industry also includes metal service centres and other metal merchant

wholesalers, which distribute, import or export ferrous products. Though entities are

developing alternative processes, steel production primarily relies on two primary

methods: the basic oxygen furnace (BOF), which uses iron ore as an input, and the

electric arc furnace (EAF), which uses scrap steel. Many entities in the industry operate

on an international scale. Note: With a few exceptions, most entities do not mine their

own ore to manufacture steel and iron products. There exists a separate standard for the

Metals & Mining (EM-MM) industry.

Sustainability Disclosure Topics & Metrics

Table 1. Sustainability Disclosure Topics & Metrics

TOPIC

METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Raw steel production, percentage from: (1) basic oxygen

furnace processes, (2) electric arc furnace processes

Quantitative

Metric tons (t),

Percentage

(%)

EM-IS-000.A

Total iron ore production 10

Quantitative

Metric tons (t)

EM-IS-000.B

Total coking coal production 11

Quantitative

Metric tons (t)

EM-IS-000.C

Greenhouse Gas Emissions

Topic Summary

Iron and steel production generates significant direct greenhouse gas (GHG) emissions,

primarily carbon dioxide and methane, from production processes and on-site fuel

combustion. Although technological improvements have reduced the GHG emissions per

ton of steel produced, steel production remains carbon-intensive compared to other

industries. Regulatory efforts to reduce GHG emissions in response to the risks posed by

climate change may result in additional regulatory compliance costs and risks for iron

and steel entities because of climate change mitigation policies. Entities can achieve

operational efficiencies through the cost-effective reduction of GHG emissions. Capturing

such efficiencies can mitigate the potential financial effects of increased fuel costs from

regulations that limit—or put a price on—GHG emissions.

Metrics

EM-IS-110a.1. Gross global Scope 1 emissions, percentage covered under

emissions-limiting regulations

The entity shall disclose its gross global Scope 1 greenhouse gas (GHG) emissions

to the atmosphere of the seven GHGs covered under the Kyoto Protocol—carbon

dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs),

perfluorocarbons (PFCs), sulphur hexafluoride (SF6), and nitrogen trifluoride (NF3).

1.1

Emissions of all GHGs shall be consolidated and disclosed in metric tons of

carbon dioxide equivalent (CO2-e) and calculated in accordance with

published 100-year time horizon global warming potential (GWP) values.

To date, the preferred source for GWP values is the Intergovernmental

Panel on Climate Change (IPCC) Fifth Assessment Report (2014).

1.2

Gross emissions are GHGs emitted into the atmosphere before accounting

for offsets, credits or other similar mechanisms that have reduced or

compensated for emissions.

Note to EM-IS-000.B – The scope of production includes iron ore consumed internally and that

which is made available for sale.

Note to EM-IS-000.C – The scope of production includes coking coal consumed internally and

that which is made available for sale.

IFRS S2 INDUSTRY-BASED GUIDANCE

Scope 1 emissions are defined and shall be calculated according to the

methodology contained in The Greenhouse Gas Protocol: A Corporate Accounting and

Reporting Standard (GHG Protocol), Revised Edition, March 2004, published by the

World Resources Institute and the World Business Council on Sustainable

Development (WRI/WBCSD).

2.1

These emissions include direct emissions of GHGs from stationary or

mobile sources that include production facilities, office buildings and

product transportation (marine, road and rail).

2.2

Acceptable calculation methodologies include those that conform to the

GHG Protocol as the base reference, but provide additional guidance, such

as industry- or region-specific guidance. Examples include:

2.2.1

GHG Reporting Guidance for the Aerospace Industry published by the

International Aerospace Environmental Group (IAEG)

2.2.2

Greenhouse Gas Inventory Guidance: Direct Emissions from Stationary

Combustion Sources published by the U.S. Environmental Protection

Agency (EPA)

2.2.3

India GHG Inventory Program

2.2.4

ISO 14064-1

2.2.5

Petroleum Industry Guidelines for reporting GHG emissions, 2nd edition,

2011, published by IPIECA

2.2.6

Protocol for the quantification of greenhouse gas emissions from waste

management

activities

published

Entreprises

pour

l’Environnement (EpE)

2.3

GHG emission data shall be consolidated according to the approach with

which the entity consolidates its financial reporting data, which is

generally aligned with the ‘financial control’ approach defined by the GHG

Protocol and the approach provided by the Climate Disclosure Standards

Board (CDSB) that is described in REQ-07, ‘Organisational boundary,’ of the

CDSB Framework for reporting environmental and social information.

The entity shall disclose the percentage of its gross global Scope 1 GHG emissions

covered under an emissions-limiting regulation or programme intended to limit

or reduce emissions directly, such as cap-and-trade schemes, carbon tax/fee

systems, and other emissions control (for example, command-and-control

approach) and permit-based mechanisms.

3.1

Examples of emissions-limiting regulations include:

3.1.1

California Cap-and-Trade (California Global Warming Solutions Act)

3.1.2

European Union Emissions Trading Scheme (EU ETS)

3.1.3

Quebec Cap-and-Trade (Quebec Environment Quality Act)

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

3.2

The percentage shall be calculated as the total amount of gross global

Scope 1 GHG emissions (CO2-e) covered under emissions-limiting

regulations divided by the total amount of gross global Scope 1 GHG

emissions (CO2-e).

3.2.1

For emissions subject to more than one emissions-limiting

regulation, the entity shall not account for those emissions more

than once.

3.3

The scope of emissions-limiting regulations excludes emissions covered

under voluntary emissions-limiting regulations (for example, voluntary

trading systems), as well as reporting-based regulations.

The entity may discuss any change in its emissions from the previous reporting

period, including whether the change was because of emissions reductions,

divestment, acquisition, mergers, changes in output or changes in calculation

methodology.

In the case that current reporting of GHG emissions to the CDP or other entity

(for example, a national regulatory disclosure programme) differs in terms of the

scope and consolidation approach used, the entity may disclose those emissions.

However, primary disclosure shall be according to the guidelines described above.

The entity may discuss the calculation methodology for its emissions disclosure,

such as if data are from continuous emissions monitoring systems (CEMS),

engineering calculations or mass balance calculations.

EM-IS-110a.2. Discussion of long- and short-term strategy or plan to manage

Scope 1 emissions, emissions reduction targets, and an analysis of performance

against those targets

The entity shall discuss its long- and short-term strategy or plan to manage its

Scope 1 greenhouse gas (GHG) emissions.

1.1

Scope 1 emissions are defined and shall be calculated according to the

methodology contained in The Greenhouse Gas Protocol: A Corporate Accounting

and Reporting Standard (GHG Protocol), Revised Edition, March 2004,

published by the World Resources Institute and the World Business

Council on Sustainable Development (WRI/WBCSD).

1.2

The scope of GHG emissions includes the seven GHGs covered under the

Kyoto Protocol—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O),

hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride

(SF6), and nitrogen trifluoride (NF3).

The entity shall discuss its emission reduction target(s) and analyse its

performance against the target(s), including, if relevant:

2.1

The scope of the emission reduction target (for example, the percentage of

total emissions to which the target is applicable);

2.2

Whether the target is absolute or intensity-based, and the metric

denominator if it is an intensity-based target;

IFRS S2 INDUSTRY-BASED GUIDANCE

2.3

The percentage reduction against the base year, with the base year

representing the first year against which emissions are evaluated towards

the achievement of the target;

2.4

The time lines for the reduction activity, including the start year, the

target year and the base year;

2.5

The mechanism(s) for achieving the target; and

2.6

Any circumstances in which the target or base year emissions have been,

or may be, recalculated retrospectively or the target or base year has been

reset.

The entity shall discuss the activities and investments required to achieve the

plans or targets, and any risks or limiting factors that might affect achievement of

the plans or targets.

The entity shall discuss the scope of its strategies, plans or reduction targets, such

as whether they pertain differently to different business units, geographies or

emissions sources.

The entity shall discuss whether its strategies, plans, or reduction targets are

related to, or associated with, emissions limiting or emissions reporting-based

programmes or regulations (for example, the EU Emissions Trading Scheme,

Quebec Cap-and-Trade System, California Cap-and-Trade Program), including

regional, national, international or sectoral programmes.

Disclosure of strategies, plans or reduction targets shall be limited to activities

that were ongoing (active) or reached completion during the reporting period.

Energy Management

Topic Summary

The production of steel requires significant energy, sourced primarily from the direct

fossil fuel combustion as well as energy purchased from the grid. Energy-intense

production has implications for climate change, and electricity purchases from the grid

can result in indirect Scope 2 emissions. The choice between various production

processes—electric arc furnaces and integrated basic oxygen furnaces—can influence

whether an entity uses fossil fuels or purchases electricity. This decision, together with

the choice between using coal versus natural gas or on-site versus grid-sourced electricity,

may influence both the costs and reliability of energy supply. Affordable, easily accessible

and reliable energy is an important industry competitive factor. Energy costs account for

a substantial portion of iron and steel manufacturing costs. How an iron and steel entity

manages its energy efficiency, its reliance on various types of energy and associated

sustainability risks, and its ability to access alternative sources of energy can influence its

profitability.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

Metrics

EM-IS-130a.1. (1) Total energy consumed, (2) percentage grid electricity and

(3) percentage renewable

The entity shall disclose (1) the total amount of energy it consumed as an

aggregate figure, in gigajoules (GJ).

1.1

The scope of energy consumption includes energy from all sources,

including energy purchased from external sources and energy produced by

the entity itself (self-generated). For example, direct fuel usage, purchased

electricity, and heating, cooling and steam energy are all included within

the scope of energy consumption.

1.2

The scope of energy consumption includes only energy directly consumed

by the entity during the reporting period.

1.3

In calculating energy consumption from fuels and biofuels, the entity shall

use higher heating values (HHV), also known as gross calorific values

(GCV), which are measured directly or taken from the Intergovernmental

Panel on Climate Change (IPCC).

The entity shall disclose (2) the percentage of energy it consumed that was

supplied from grid electricity.

2.1

The percentage shall be calculated as purchased grid electricity

consumption divided by total energy consumption.

The entity shall disclose (3) the percentage of energy it consumed that was

renewable energy.

3.1

Renewable energy is defined as energy from sources that are replenished

at a rate greater than or equal to their rate of depletion, such as

geothermal, wind, solar, hydro and biomass.

3.2

The percentage shall be calculated as renewable energy consumption

divided by total energy consumption.

3.3

The scope of renewable energy includes renewable fuel the entity

consumed, renewable energy the entity directly produced and renewable

energy the entity purchased, if purchased through a renewable power

purchase agreement (PPA) that explicitly includes renewable energy

certificates (RECs) or Guarantees of Origin (GOs), a Green‐e Energy

Certified utility or supplier programme, or other green power products

that explicitly include RECs or GOs, or for which Green‐e Energy Certified

RECs are paired with grid electricity.

3.3.1

For any renewable electricity generated on-site, any RECs and GOs

shall be retained (not sold) and retired or cancelled on behalf of the

entity for the entity to claim them as renewable energy.

3.3.2

For renewable PPAs and green power products, the agreement shall

explicitly include and convey that RECs and GOs be retained or

replaced and retired or cancelled on behalf of the entity for the

entity to claim them as renewable energy.

IFRS S2 INDUSTRY-BASED GUIDANCE

3.3.3

The renewable portion of the electricity grid mix that is outside of

the control or influence of the entity is excluded from the scope of

renewable energy.

3.4

For the purposes of this disclosure, the scope of renewable energy from

biomass sources is limited to materials certified to a third-party standard

(for example, Forest Stewardship Council, Sustainable Forest Initiative,

Programme for the Endorsement of Forest Certification or American Tree

Farm System), materials considered eligible sources of supply according to

the Green-e Framework for Renewable Energy Certification, Version 1.0 (2017) or

Green-e regional standards, or materials eligible for an applicable state

renewable portfolio standard.

The entity shall apply conversion factors consistently for all data reported under

this disclosure, such as the use of HHVs for fuel usage (including biofuels) and

conversion of kilowatt hours (kWh) to GJ (for energy data including electricity

from solar or wind energy).

EM-IS-130a.2. (1) Total fuel consumed, (2) percentage coal, (3) percentage

natural gas and (4) percentage renewable

The entity shall disclose (1) the total amount of energy consumed as an aggregate

figure, in gigajoules (GJ).

1.1

The calculation methodology for fuel consumed shall be based on actual

fuel consumed as opposed to design parameters.

1.2

Acceptable calculation methodologies for fuel consumed may include

methodologies based on:

1.2.1

Adding fuel purchases made during the reporting period to

beginning inventory at the start of the reporting period, less any

fuel inventory at the end of the reporting period

1.2.2

Tracking fuel consumed by vehicles

1.2.3

Tracking fuel expenses

The entity shall disclose (2) the percentage of fuel consumed that was coal.

2.1

The percentage shall be calculated as the amount of coal consumed (in GJ)

divided by the total amount of fuel consumed (in GJ).

2.2

The scope of coal consumed may include thermal coal, metallurgical coal,

coke and coke breeze.

The entity shall disclose (3) the percentage of fuel consumed that was natural gas.

3.1

The percentage shall be calculated as the amount of natural gas consumed

(in GJ) divided by the total amount of fuel consumed (in GJ).

The entity shall disclose (4) the percentage of fuel consumed that was renewable

fuel.

4.1

Renewable fuel generally is defined as fuel that meets all the following

requirements:

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

4.1.1

Produced from renewable biomass;

4.1.2

Used to replace or reduce the quantity of fossil fuel present in a

transportation fuel, heating oil or jet fuel; and

4.1.3

Achieved net greenhouse gas (GHG) emissions reduction on a

lifecycle basis.

4.2

The entity shall disclose the standard or regulation used to determine if a

fuel is renewable.

4.3

The percentage shall be calculated as the amount of renewable fuel

consumed (in GJ) divided by the total amount of fuel consumed (in GJ).

In calculating energy consumption from fuels, the entity shall use higher heating

values (HHV), also known as gross calorific values (GCV), which are directly

measured or taken from the Intergovernmental Panel on Climate Change.

The entity shall apply conversion factors consistently for all data reported under

this disclosure, such as the use of HHVs for fuel usage.

Water Management

Topic Summary

Steel production requires substantial volumes of water. Entities face increasing

operational, regulatory and reputational risks associated with water scarcity, costs of

water acquisition, regulations on effluents or amount of water used, and competition

with local communities and other industries for limited water resources. These risks are

particularly likely to affect regions where water is scarce, resulting in water availability

constraints and price volatility. Entities unable to secure a stable water supply could face

production disruptions, while rising water prices could directly increase production costs.

Consequently, entities adopting technologies and processes to decrease reduce water

consumption may reduce operating risks and costs by mitigating the operational impacts

of regulatory changes, water supply shortages and community-related disruptions.

Metrics

EM-IS-140a.1. (1) Total water withdrawn, (2) total water consumed; percentage of

each in regions with High or Extremely High Baseline Water Stress

The entity shall disclose the amount of water, in thousands of cubic metres,

withdrawn from all sources.

1.1

Water sources include surface water (including water from wetlands,

rivers, lakes and oceans), groundwater, rainwater collected directly and

stored by the entity, and water and wastewater obtained from municipal

water supplies, water utilities or other entities.

The entity may disclose portions of its supply by source if, for example, significant

portions of withdrawals are from non-freshwater sources.

IFRS S2 INDUSTRY-BASED GUIDANCE

2.1

Fresh water may be defined according to the local laws and regulations

where the entity operates. If no legal definition exists, fresh water shall be

considered to be water that has less than 1,000 parts per million of

dissolved solids.

2.2

Water obtained from a water utility in compliance with jurisdictional

drinking water regulations can be assumed to meet the definition of fresh

water.

The entity shall disclose the amount of water, in thousands of cubic metres,

consumed in its operations.

3.1

Water consumption is defined as:

3.1.1

Water that evaporates during withdrawal, use and discharge

3.1.2

Water that is directly or indirectly incorporated into the entity’s

product or service

3.1.3

Water that does not otherwise return to the same catchment area

from which it was withdrawn, such as water returned to another

catchment area or the sea

The entity shall analyse all its operations for water risks and identify activities

that withdraw and consume water in locations with High (40–80%) or Extremely

High (>80%) Baseline Water Stress as classified by the World Resources Institute’s

(WRI) Water Risk Atlas tool, Aqueduct.

The entity shall disclose water withdrawn in locations with High or Extremely

High Baseline Water Stress as a percentage of the total water withdrawn.

The entity shall disclose water consumed in locations with High or Extremely

High Baseline Water Stress as a percentage of the total water consumed.

Supply Chain Management

Topic Summary

Iron ore and coal are critical raw material inputs to the steel production process. Iron ore

mining and coal production are resource-intensive processes. Mineral extraction often

has substantial environmental and social impacts adversely affecting local communities,

workers and ecosystems. Community protests, legal or regulatory action, or increased

regulatory compliance costs or penalties can disrupt mining operations. Iron and steel

entities could face supply disruptions as a result, or in some cases, also may be subject to

regulatory penalties associated with the environmental or social impact of the mining

entity supplier. Minimising such risks through appropriate supplier screening,

monitoring and engagement, iron and steel producers may manage their direct critical

raw materials suppliers proactively to ensure they are not engaged in illegal or otherwise

environmentally or socially damaging practices.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

Metrics

EM-IS-430a.1. Discussion of the process for managing iron ore or coking coal

sourcing risks arising from environmental and social issues

The entity shall discuss its policies and procedures for managing environmental

and social risks that may affect sourcing that are present in its iron ore or coking

coal supply chain.

1.1

Discussion shall include any existing or projected risks or constraints in

obtaining raw materials (for example, iron ore or coking coal) within the

supply chain, including those related to restricted/limited availability,

political situations, local labour conditions, natural disasters, climate

change or regulations.

1.2

The scope of disclosure may include description of the use of screening,

codes of conduct, audits and certifications.

If audits are discussed, the entity may disclose whether audits are internal (first

party), independent (third party) or administered by peers (for example, trade

organisations).

IFRS S2 INDUSTRY-BASED GUIDANCE

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