ifrs-s2-ibg-volume-32-electric-utilities-and-power-generators-part-b

Industry-based Guidance on implementing

Climate-related Disclosures

Volume 32—Electric Utilities & Power Generators

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

Standards Board (ISSB).

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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 32—Electric Utilities & Power Generators

Industry Description

Electric Utilities & Power Generators industry entities generate electricity; build, own and

operate transmission and distribution (T&D) lines; and sell electricity. Utilities generate

electricity from many different sources, commonly including coal, natural gas, nuclear

energy, hydropower, solar, wind and other renewable and fossil fuel energy sources. The

industry comprises entities operating in both regulated and unregulated business

structures. Regulated utilities face comprehensive regulatory oversight of their pricing

mechanisms and their allowed return on equity, among other types of regulation, to

maintain their licence to operate as a monopoly. Unregulated entities or merchant power

entities are often independent power producers (IPPs) that generate electricity to sell to

the wholesale market, which includes regulated utility buyers and other end users.

Furthermore, entities in the industry may operate across both regulated and deregulated

power markets depending on their operational span. Regulated markets typically contain

vertically integrated utilities that own and operate everything from the generation of

power to its retail distribution. Deregulated markets commonly split generation from

distribution to encourage wholesale power generation competition. Overall, the complex

task of providing reliable, accessible, low-cost power while balancing the protection of

human life and the environment remains a challenge.

Note: The Electric Utilities & Power Generators industry covers activities related only to

electricity provision, not to natural gas provision. Some utilities may operate in both

electricity and natural gas markets. Utilities undertaking activities related to natural gas

sourcing and distribution also should consider the topics and metrics in the Gas Utilities

& Distributors (IF-GU) industry.

Sustainability Disclosure Topics & Metrics

Table 1. Sustainability Disclosure Topics & Metrics

TOPIC

METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Greenhouse

Gas

Emissions &

Energy

Resource

Planning

(1) Gross global Scope 1 emissions,

percentage covered under

(2) emissions-limiting regulations and

(3) emissions-reporting regulations

Quantitative

Metric tons (t)

CO₂-e,

Percentage

(%)

IF-EU-110a.1

Greenhouse gas (GHG) emissions

associated with power deliveries

Quantitative

Metric tons (t)

CO₂-e

IF-EU-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

Discussion

and Analysis

n/a

IF-EU-110a.3

continued...

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

...continued

TOPIC

METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Water

Management

(1) Total water withdrawn, (2) total water

consumed; percentage of each in

regions with High or Extremely High

Baseline Water Stress

Quantitative

Thousand

cubic metres

(m³),

Percentage

(%)

IF-EU-140a.1

Number of incidents of non-compliance

associated with water quality permits,

standards and regulations

Quantitative

Number

IF-EU-140a.2

Description of water management risks

and discussion of strategies and

practices to mitigate those risks

Discussion

and Analysis

n/a

IF-EU-140a.3

End-Use

Efficiency &

Demand

Percentage of electric load served by

smart grid technology 29

Quantitative

Percentage

(%) by

megawatt

hours (MWh)

IF-EU-420a.2

Customer electricity savings from

efficiency measures, by market 30

Quantitative

Megawatt

hours (MWh)

IF-EU-420a.3

Nuclear

Safety &

Emergency

Management

Total number of nuclear power units,

broken down by results of most recent

independent safety review

Quantitative

Number

IF-EU-540a.1

Description of efforts to manage nuclear

safety and emergency preparedness

Discussion

and Analysis

n/a

IF-EU-540a.2

Grid

Resiliency

Number of incidents of non-compliance

with physical or cybersecurity standards

or regulations

Quantitative

Number

IF-EU-550a.1

(1) System Average Interruption

Duration Index (SAIDI), (2) System

Average Interruption Frequency Index

(SAIFI), and (3) Customer Average

Interruption Duration Index (CAIDI),

inclusive of major event days 31

Quantitative

Minutes,

Number

IF-EU-550a.2

Table 2. Activity Metrics

ACTIVITY METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Number of: (1) residential, (2) commercial, and

(3) industrial customers served 32

Quantitative

Number

IF-EU-000.A

continued...

Note to IF-EU-420a.2 – The entity shall discuss the opportunities and challenges associated with

the development and operations of a smart grid.

Note to IF-EU-420a.3 – The entity shall discuss customer efficiency regulations relevant to each

market in which it operates.

Note to IF-EU-550a.2 – The entity shall discuss notable service disruptions such as those that

affected a significant number of customers or disruptions of extended duration.

Note to IF-EU-000.A – The number of customers served for each category shall be considered as

the number of meters billed for residential, commercial, and industrial customers.

IFRS S2 INDUSTRY-BASED GUIDANCE

...continued

ACTIVITY METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Total electricity delivered to: (1) residential,

(2) commercial, (3) industrial, (4) all other retail

customers, and (5) wholesale customers

Quantitative

Megawatt

hours (MWh)

IF-EU-000.B

Length of transmission and distribution lines 33

Quantitative

Kilometres

(km)

IF-EU-000.C

Total electricity generated, percentage by major energy

source, percentage in regulated markets 34

Quantitative

Megawatt

hours (MWh),

Percentage

(%)

IF-EU-000.D

Total wholesale electricity purchased 35

Quantitative

Megawatt

hours (MWh)

IF-EU-000.E

Greenhouse Gas Emissions & Energy Resource Planning

Topic Summary

Electricity generation represents the largest source of greenhouse gas (GHG) emissions in

the world. Mainly carbon dioxide, methane and nitrous oxide, these emissions are mostly

by-products of fossil fuel combustion. The transmission or distribution (T&D) segments of

the industry produce negligible emissions. Electric utility entities could face significant

operating costs and capital expenditures for mitigating GHG emissions as environmental

regulations become increasingly stringent. Although many of these costs may be passed

to a utility’s customers, some power generators, especially in deregulated markets, may

be unable to recoup these costs. Entities may reduce GHG emissions from electricity

generation through careful infrastructure investment planning by ensuring the delivery

of an energy mix capable of meeting the emissions requirements set forth by regulations,

and by implementing industry-leading technologies and processes. Being proactive in

cost-effectively reducing GHG emissions may create a competitive advantage for entities

and mitigate unanticipated regulatory compliance costs. Failure to properly estimate

capital-expenditure needs and permitting costs, or other difficulties in reducing GHG

emissions, may result in significant negative effects on returns in the form of asset write-

downs, the costs to obtain carbon credits, or unexpected increases in operating and

capital expenditures. Regulatory emphasis on this issue may increase in the coming

decades, as exemplified by the international emissions-reduction agreement made at the

21st session of the United Nations Conference of the Parties in 2015.

Note to IF-EU-000.C – The length of transmission and distribution lines shall be calculated on a

circuit kilometre basis, where a circuit-kilometre is defined as the total length of circuits,

regardless of conductors used per circuit.

Note to IF-EU-000.D – Generation shall be disclosed by each of the following major energy

sources: coal, natural gas, nuclear, petroleum, hydropower, solar, wind, other renewables, and

other gases. The scope includes owned and/or operated assets. The scope excludes electricity

consumed at the generating facilities.

Note to IF-EU-000.E – The scope excludes electricity consumed at the generating facilities.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

Metrics

IF-EU-110a.1. (1) Gross global Scope 1 emissions, percentage covered under

(2) emissions-limiting regulations and (3) emissions-reporting regulations

The entity shall disclose its (1) 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.

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)

IFRS S2 INDUSTRY-BASED GUIDANCE

2.3

GHG emissions data shall be consolidated and disclosed according to the

approach with which the entity consolidates its financial reporting data,

which generally is aligned with the ‘financial control’ approach defined by

the GHG Protocol, and the approach published 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 (2) 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)

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 shall disclose (3) the percentage of its gross global Scope 1 GHG

emissions that are covered under emissions reporting-based regulations.

4.1

Emissions reporting-based regulations are defined as regulations that

demand the disclosure of GHG emissions data to regulators and/or the

public, but for which there is no limit, cost, target, or controls on the

amount of emissions generated.

4.2

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

Scope 1 GHG emissions (CO2-e) that are covered under emissions reporting-

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

emissions (CO2-e).

4.2.1

For emissions that are subject to more than one emissions

reporting-based regulation, the entity shall not account for those

emissions more than once.

4.3

The scope of emissions reporting-based regulations does not exclude

emissions covered under emissions-limiting regulations.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

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.

IF-EU-110a.2. Greenhouse gas (GHG) emissions associated with power

deliveries

The entity shall disclose gross global greenhouse gas (GHG) emissions associated

with electric power delivered to retail customers, resulting from owned power

generation and purchased power.

1.1

GHG emissions are defined as 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).

1.1.1

Emissions of all GHGs shall be consolidated and disclosed in metric

tons of carbon dioxide equivalents (CO2-e), calculated in accordance

with published 100-year time horizon global warming potential

(GWP) values. To date, the preferred source for GWP factors is the

Intergovernmental

Panel

Climate

Change

(IPCC)

Fifth

Assessment Report (2014).

1.1.2

Gross emissions are GHGs emitted into the atmosphere before

accounting for offsets or credits.

GHG emissions associated with electric power delivered to retail customers are

defined by, and shall be calculated according to, the methodology established by

the numerator in ‘EPS Metric D-3: Retail Electric Deliveries’, contained in the

Electric Power Sector Protocol for the Voluntary Reporting Program, June 2009,

Version 1.0, provided by The Climate Registry, including 2010 Updates and

Clarifications (which clarified that ‘EPS Metric D-3: Retail Electric Deliveries’ was

mislabelled as ‘EPS Metric D-1’ in Version 1.0).

2.1

These emissions generally are calculated as the sum of emissions from

power generation facilities owned by the entity, and those from power

purchased from a third-party, subtracted by the emissions from power

that was resold at the wholesale level.

2.2

The scope of GHG emissions shall include all emissions associated with

power delivered to retail customers, including emissions associated with

power lost in transmission and distribution.

IFRS S2 INDUSTRY-BASED GUIDANCE

2.3

Emissions factors for power purchased from third-parties are based on the

most relevant and accurate method, which will depend on the type of

power purchased. The Electric Power Sector Protocol for the Voluntary

Reporting Program establishes potential methods.

Disclosure corresponds to the numerator in the metric contained in the Electric

Power Research Institute’s 2018 Metrics to Benchmark Electric Power Company

Sustainability Performance, ‘Total CO2 emissions rate for power deliveries’, except for

the scope of emissions including all seven GHGs covered under the Kyoto Protocol.

IF-EU-110a.3. 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;

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 its strategy to manage risks and opportunities associated

with the GHG emissions regulatory environment, which may include:

3.1

Any changes it has made or plans to make to its business structure or

model

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

3.2

The development of new technologies or services

3.3

Any changes it has made or plans to make to its operational process,

control or organisational structures

3.4

Influencing the regulatory or legislative process and outcomes, which may

include

interactions

with

regulators,

regulatory

agencies,

utility

commissions, legislators and policymakers

The entity may discuss its involvement in green power markets, including the

number of customers served (by customer category) and the corresponding

electricity generated.

4.1

Green power markets are defined as an optional utility service that allows

customers the opportunity to support a greater level of utility entity

investment in renewable energy technologies.

4.2

The entity may disclose instances in which the provision of green power

markets is required by state renewable portfolio standards.

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.

Water Management

Topic Summary

Electricity generation is one of the most water-intensive industries in the world in terms

of water withdrawals. Thermoelectric power plants—typically coal, nuclear and natural

gas—use large quantities of water for cooling purposes. The industry is facing increasing

water-related supply and regulatory risks, potentially requiring capital investment in

technology or even creating stranded assets. As water supplies tighten in many regions—

and electricity generation, agriculture and community use compete for water supplies—

power plants increasingly may be unable to operate at full capacity, or at all, because of

region-specific water constraints. The availability of water is an important factor to

consider when calculating the future value of many electricity-generating assets and for

evaluating proposals for new generation sources. Increased water scarcity—because of

factors such as increasing consumption and reduced supplies resulting from climate

change, which could result in more frequent or intense droughts—could prompt

regulatory authorities to limit entities’ ability to withdraw necessary amounts of water,

IFRS S2 INDUSTRY-BASED GUIDANCE

especially in regions with high baseline water stress. Furthermore, entities must manage

the growing number of regulations related to the significant biodiversity impacts that

such large withdrawals may cause. To mitigate these risks, entities can invest both in

more efficient water-usage systems for plants, and place strategic priority on assessing

long-term water availability, as well as water-related biodiversity risks, when siting new

power plants.

Metrics

IF-EU-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.

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.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

IF-EU-140a.2. Number of incidents of non-compliance associated with water

quality permits, standards and regulations

The entity shall disclose the total number of incidents of non-compliance,

including violations of a technology-based standard and exceedances of quantity

or quality-based standards.

The scope of disclosure includes incidents governed by applicable jurisdictional

statutory permits and regulations, which include the discharge of a hazardous

substance, violation of pre-treatment requirements or total maximum daily load

(TMDL) exceedances.

The scope of disclosure shall only include incidents of non-compliance that

resulted in a formal enforcement action(s).

3.1

Formal enforcement actions are defined as governmental recognised

actions that address a violation or threatened violation of water quantity

or quality laws, regulations, policies or orders, and can result in

administrative penalty orders, administrative orders and judicial actions,

among others.

Violations shall be disclosed, regardless of their measurement methodology or

frequency. These include violations for:

4.1

Continuous discharges, limitations, standards and prohibitions that are

generally expressed as maximum daily, weekly and monthly averages; and

4.2

Non-continuous discharges, limitations that are generally expressed in

terms of frequency, total mass, maximum rate of discharge and mass or

concentration of specified pollutants.

IF-EU-140a.3. Description of water management risks and discussion of

strategies and practices to mitigate those risks

The entity shall describe its water management risks associated with water

withdrawals, water consumption and discharge of water or wastewater.

1.1

Risks associated with water withdrawals and water consumption include

risks to the availability of adequate, clean water resources, which include:

1.1.1

Environmental constraints—such as operating in water-stressed

regions,

drought,

concerns

aquatic

impingement

entrainment, interannual or seasonal variability, and risks from

the impact of climate change

1.1.2

Regulatory and financial constraints—such as volatility in water

costs, stakeholder perceptions and concerns related to water

withdrawals (for example, those from local communities, non-

governmental organisations and regulatory agencies), direct

competition with and impact from the actions of other users (for

example, commercial and municipal users), restrictions to

withdrawals because of regulations, and constraints on the entity’s

ability to obtain and retain water rights or permits

IFRS S2 INDUSTRY-BASED GUIDANCE

1.2

Risks associated with the discharge of water or wastewater include the

ability to obtain rights or permits related to discharges, regulatory

compliance related to discharges, restrictions to discharges, the ability to

maintain control over the temperature of water discharges, liabilities,

reputational risks and increased operating costs because of regulation,

stakeholder perceptions and concerns related to water discharges (for

example, those from local communities, non-governmental organisations

and regulatory agencies).

The entity may describe water management risks in the context of:

2.1

How risks may vary by withdrawal source, including 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; and

2.2

How risks may vary by discharge destinations, including surface water,

groundwater or wastewater utilities.

The entity may discuss the potential effects that water management risks may

have on its operations and the time line over which such risks are expected to

manifest.

3.1

Effects include those associated with costs, revenue, liabilities, continuity

of operations and reputation.

The entity shall discuss its short- and long-term strategies or plans to mitigate

water management risks, which include:

4.1

The scope of its strategy, plans, goals or targets, such as how they relate to

various business units, geographies or water-consuming operational

processes.

4.2

Any water management goals or targets it has prioritised, and an analysis

of performance against those goals or targets.

4.2.1

Goals and targets include those associated with reducing water

withdrawals,

reducing

water

consumption,

reducing

water

discharges, reducing aquatic impingements, improving the quality

of water discharges and regulatory compliance.

4.3

The activities and investments required to achieve the plans, goals or

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

the plans or targets.

4.4

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

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

period.

For water management targets, the entity shall additionally disclose:

5.1

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

denominator if it is an intensity-based target.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

5.2

The time lines for the water management activities, including the start

year, the target year and the base year.

5.3

The mechanism(s) for achieving the target, including:

5.3.1

Efficiency efforts, such as the use of water recycling or closed-loop

systems;

5.3.2

Product innovations, such as redesigning products or services to

require less water;

5.3.3

Process and equipment innovations, such as those that enable the

reduction of aquatic impingements or entrainments;

5.3.4

Use of tools and technologies (for example, the World Wildlife

Fund Water Risk Filter, the Global Water Tool and Water Footprint

Network Footprint Assessment Tool) to analyse water use, risks and

opportunities; and

5.3.5

Collaborations or programmes in place with the community or

other organisations.

5.4

The percentage reduction or improvement from the base year, in which

the base year is the first year against which water management targets are

evaluated towards the achievement of the target.

The entity shall discuss whether its water management practices result in any

additional lifecycle impacts or trade-offs in its organisation, including trade-offs

in land use, energy production and greenhouse gas (GHG) emissions, and why the

entity chose these practices despite lifecycle trade-offs.

End-Use Efficiency & Demand

Topic Summary

Energy efficiency is a low-lifecycle-cost method to reduce greenhouse gas (GHG)

emissions, because less electricity needs to be generated to provide the same end-use

energy services. Utilities can promote energy efficiency and conservation among their

customers. Such strategies may include offering rebates for energy-efficient appliances,

weatherising customers’ homes, educating customers on energy-saving methods, offering

incentives to customers to curb electricity use during times of peak demand (‘demand

response’), or investing in technology such as smart meters, which allow customers to

track their energy use. While saving consumers money, these efforts also may reduce

operating costs for electric utilities by decreasing peak demand. Furthermore, depending

on the utility regulatory framework, local jurisdictions may mandate that entities

develop energy efficiency plans before permitting new builds. Companies with effective

strategies to reduce the downside risks from demand fluctuations, may gain adequate

and timely returns on needed investments. Furthermore, reducing costs through

efficiency initiatives may earn higher, long-term risk-adjusted returns.

IFRS S2 INDUSTRY-BASED GUIDANCE

Metrics

IF-EU-420a.2. Percentage of electric load served by smart grid technology

The entity shall disclose the percentage of its electric load, in megawatt hours,

served by smart grid technology.

1.1

The electric load served by smart grid technology is defined as the amount

of electricity delivered to the entity’s customers that incorporates the use

of smart grid technologies to meet the electricity demand of the

consumer.

1.2

A smart grid is defined, consistent with the International Energy Agency

(IEA), as an electricity network that uses digital and other advanced

technologies to monitor and manage the transport of electricity from all

generation sources to meet the varying electricity demands of end users.

Smart grids coordinate the needs and capabilities of all generators, grid

operators, end users and electricity market stakeholders to operate all

parts of the system as efficiently as possible, minimising costs and

environmental impacts while maximising system reliability, resilience and

stability.

1.3

An electric load is considered to be served by smart grid technology when

the technology enables one or more of the distinguishing characteristics

defined by the IEA:

1.3.1

Enables informed participation by customers

1.3.2

Accommodates all generation and storage options

1.3.3

Enables new products, services and markets

1.3.4

Provides the power quality for the range of needs

1.3.5

Optimises asset utilisation and operation efficiency

1.3.6

Provides resiliency to disturbances, attacks and natural disasters

1.4

Examples of smart grid technologies may include wide-area monitoring

and control, information and communication technology integration,

renewable

and

distributed

generation

integration,

transmission

enhancement,

distribution

grid

management,

advanced

metering

infrastructure, electric vehicle charging infrastructure, and customer-side

systems.

The percentage of load served by smart grid technology shall be calculated as the

total amount of energy load, in megawatt hours, served by smart grid technology

divided by the total amount of energy load, in megawatt hours.

The entity may discuss the type of smart grid technology through which its

electric load is served, the customer types using the technology (for example,

residential, commercial or industrial), whether technologies are owned by the

utility or the customer, and any plans for further integration of smart grid

capabilities.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

Note to IF-EU-420a.2

The entity shall discuss the opportunities and challenges associated with the

development and operation of a smart grid, including, if relevant:

1.1

Demand-response and end-user efficiency opportunities (for example,

smoothing of the demand curve, increased cost-effective electric

generation, improved incorporation of distributed generation, and

increased generation and transmission efficiency)

1.2

Political and deployment challenges (for example, opposition to smart grid

development, disparate degrees of technology deployment and economic

disincentives)

IF-EU-420a.3. Customer electricity savings from efficiency measures, by market

The entity shall disclose the total amount of electricity savings delivered to

customers, in megawatt hours, from energy efficiency measures during the

reporting period, for each of its markets.

1.1

Markets are defined as those operations subject to distinct public utility

regulatory oversight.

1.2

Electricity savings are defined according to the gross savings approach as

the changes in energy consumption or demand that result from

programme-related actions taken by participants in an efficiency

programme, regardless of why they participated.

1.2.1

The entity may list those markets where it reports electricity

savings on a net electricity savings basis, and thus, may be different

from the figures disclosed here. Net electricity savings are defined

as changes in consumption specifically attributable to an energy

efficiency programme, and that would not have occurred in the

absence of the programme.

Electricity savings shall be calculated on a gross basis but consistent with the

methodology set forth in applicable jurisdictional evaluation, measurement and

verification (EM&V) regulations where such savings occur.

The scope of electricity savings from efficiency measures includes savings

delivered directly by the entity and, where regulations provide, savings

substantiated through purchases of efficiency savings credits.

3.1

For any savings from efficiency measures delivered directly by the entity,

any efficiency savings credits shall be retained (not sold) and retired or

cancelled on behalf of the entity for the entity to claim them as delivered

electricity savings.

3.2

For efficiency savings credits purchased, the agreement shall explicitly

include and convey that credits be retained and retired on behalf of the

entity for the entity to claim them.

Note to IF-EU-420a.3

The entity shall discuss regulations related to customer efficiency measures for

each of its relevant markets, including:

IFRS S2 INDUSTRY-BASED GUIDANCE

1.1

The amount or percentage of electricity savings from efficiency measures

required by regulations for each market.

1.2

Instances of non-compliance with electricity savings obligations.

1.3

In such instances, the entity shall disclose the difference between the

energy savings delivered and the amount required by the regulation.

1.4

Electricity savings delivered that exceed those required by regulations and

that resulted in the entity receiving energy efficiency performance

incentives, including the value of any such incentives.

The entity shall discuss the forms of policy, by each market, that allow for, or

incentivise, energy efficiency, including a discussion of the benefits, challenges

and financial effects associated with such regulations.

Relevant policy mechanisms to discuss may include:

3.1

Deferral decoupling

3.2

Current period decoupling

3.3

Single fixed variable rates

3.4

Lost revenue adjustments

3.5

Energy efficiency feebates

For markets lacking regulations that allow for, or incentivise, energy efficiency,

the entity shall discuss its stance on and efforts to manage risks and opportunities

relating to such regulation.

The entity may discuss any efforts to meet regulations through incentives it has

developed for its customers that promote end-use efficiency, including dynamic

pricing, energy efficiency rebates and other measures to subsidise customer

energy efficiency.

Nuclear Safety & Emergency Management

Topic Summary

Although rare, nuclear accidents can have significant human health and environmental

consequences because of their severity. Owners of nuclear power plants in many regions

have operated for decades without any major public safety incidents, but the occurrence

of infrequent but large-magnitude incidents anywhere in the world can have major

effects on the entire nuclear power industry. Entities that own and operate nuclear

plants may lose their licence to operate, as well as face many other financial

consequences in the event of an accident—though entities carry insurance and may have

legal protections from some liabilities. Failure to comply with the safety regulations can

be expensive to nuclear power operators; in extreme circumstances it may make the

continued operation of the plant uneconomical. Facing potentially significant financial

repercussions, both from ongoing safety compliance as well as tail risk incidents, entities

that own or operate nuclear plants must be vigilant in the safety compliance, best

practices and upgrades of their facilities. They also must maintain robust emergency

preparedness training for their staff and a strong safety culture. These measures can

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

reduce the probability that accidents will occur and enable an entity to effectively detect

and respond to such incidents.

Metrics

IF-EU-540a.1. Total number of nuclear power units, broken down by results of

most recent independent safety review

The entity shall disclose the total number of nuclear power units that it owns or

operates, where:

1.1

A nuclear power unit is defined as a nuclear reactor and associated

equipment necessary for electric power generation, including those

structures, systems and components required to provide reasonable

assurance that the facility can be operated without undue risk to the

health and safety of the public.

The entity shall provide a breakdown of nuclear power units that it owns or

operates by results of the most recent independent safety review.

2.1

A review is considered independent when conducted by third parties who

are not and have not been directly involved with the design or operation of

the nuclear power unit.

2.2

For applicable jurisdictions, the entity shall disclose the results of the most

recent independent safety review for both regulatory and peer reviews.

2.3

The entity shall disclose the applicable jurisdictional regulation, guideline

or standard under which the safety review was conducted.

IF-EU-540a.2. Description of efforts to manage nuclear safety and emergency

preparedness

The entity shall describe its efforts to manage nuclear safety and emergency

preparedness, including its efforts to identify, report and assess initiating events

and event sequences relating to nuclear safety and emergency preparedness.

1.1

Initiating events are defined as natural or human-induced events that

cause an event sequence.

1.2

An event sequence is defined as a series of actions or occurrences within

the natural and engineered components of a geologic repository operations

area that potentially could lead to exposure of individuals to radiation. An

event sequence includes one or more initiating events and associated

combinations of repository system component failures, including those

produced by the action or inaction of operating staff.

1.3

Disclosure may focus broadly on nuclear safety and emergency

management systems, but it specifically shall address the systems in place

to avoid and manage initiating events, accidents, emergencies and

incidents that could have catastrophic impacts on human health, the local

community and the environment.

IFRS S2 INDUSTRY-BASED GUIDANCE

The entity shall discuss how it manages nuclear safety and emergency

preparedness, such as through training, rules and guidelines (and their

enforcement), implementation of emergency plans and use of technology.

The entity shall discuss its efforts to create and maintain a culture of nuclear

safety and emergency preparedness, including efforts to institute the traits of a

positive safety culture, where the traits of a positive safety culture include:

3.1

Leadership safety values and actions

3.2

Problem identification and resolution

3.3

Personal accountability

3.4

Work process

3.5

Continuous learning

3.6

Environment for raising concerns

3.7

Effective safety communications

3.8

Respectful work environment

3.9

Questioning attitude

The entity may discuss implementation of the Institute of Nuclear Power

Operations’ (INPO) Principles for a Strong Nuclear Safety Culture or the

International Atomic Energy Agency’s (IAEA) Best Practices in the Utilization and

Dissemination of Operating Experience at Nuclear Power Plants.

Grid Resiliency

Topic Summary

Electricity is critical for the continued function of most elements of modern life, from

medicine to finance, creating a societal reliance on continuous service. Major disruptions

to electricity infrastructure may result in potentially high societal costs. Disruptions can

be caused by extreme weather events, natural disasters and cyberattacks. As the

frequency and severity of extreme weather events associated with climate change

continues to increase, all segments of electric utilities entities—and especially major

transmission and distribution (T&D) operations—will face increasing physical threats to

their infrastructure. Extreme weather events could result in frequent or significant

service disruptions, outages and require upgrade or repair of damaged or compromised

equipment, all of which may add substantial costs and damage brand reputation among

regulators and customers. The increased use of smart grid technology has several

benefits, including strengthening the resiliency of the grid to extreme weather events.

However, this technology may make the grid more vulnerable to cyberattacks, because it

provides hackers more entryways into infrastructure systems. Entities must implement

strategies that minimise the probability and magnitude of impacts from extreme weather

events and cyberattacks. To remain competitive in the face of increasing external

competition, entities must improve the reliability, resilience and quality of their

infrastructure.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

Metrics

IF-EU-550a.1. Number of incidents of non-compliance with physical or

cybersecurity standards or regulations

The entity shall disclose the total number of instances of non-compliance with

physical or cybersecurity standards or regulations applicable to electricity

infrastructure owned or operated by the entity.

1.1

The scope of physical or cybersecurity standards or regulations includes

mandatory, enforceable standards and regulations intended to mitigate

physical or cybersecurity risks related to the reliability or resiliency of

electricity infrastructure, including the electricity grid.

1.1.1

The entity may disclose instances of non-compliance with

voluntary physical or cybersecurity standards or regulations.

IF-EU-550a.2. (1) System Average Interruption Duration Index (SAIDI), (2) System

Average Interruption Frequency Index (SAIFI), and (3) Customer Average

Interruption Duration Index (CAIDI), inclusive of major event days

The entity shall disclose its (1) System Average Interruption Duration Index

(SAIDI), in minutes.

1.1

The SAIDI is defined as the total duration of an interruption for the

average customer during the period under reporting.

1.2

The entity shall calculate its SAIDI as the total number of customers

interrupted multiplied by the duration of interruptions (restoration time)

divided by the total number of customers served, written as ∑(ri × Ni) / NT

1.2.1

∑ = Summation function

1.2.2

ri = Restoration time, in minutes

1.2.3

Ni = Total number of customers interrupted

1.2.4

NT = Total number of customers served

The entity shall disclose its (2) System Average Interruption Frequency Index

(SAIFI).

2.1

SAIFI is defined as the average number of times that a system customer

experiences an outage during the period under reporting.

2.2

The entity shall calculate its SAIFI as the total number of customers

interrupted divided by the total number of customers served, written as ∑

(Ni ) / NT

2.2.1

∑ = Summation function

2.2.2

Ni= Total number of customers interrupted

2.2.3

NT = Total number of customers served

IFRS S2 INDUSTRY-BASED GUIDANCE

The entity shall disclose its (3) Customer Average Interruption Duration Index

(CAIDI).

3.1

The CAIDI is defined as the average amount of time required to restore

service once an outage has occurred.

3.2

The entity shall calculate its CAIDI as the total number of customers

interrupted multiplied by the duration of interruptions (restoration time

in minutes) divided by the sum of the number of customers interrupted,

written as ∑(Ni × ri) / ∑(Ni)

3.2.1

∑ = Summation function

3.2.2

ri = Restoration time, in minutes

3.2.3

Ni = Total number of customers interrupted

The entity shall disclose its SAIDI, SAIFI and CAIDI inclusive of major event days,

where:

4.1

Major event days are defined, according to IEEE Std 1366, as days in which

the daily SAIDI exceeds a threshold value, TMED, where TMED is calculated

as follows:

4.1.1

The entity should collect values of daily SAIDI for five sequential

years, ending on the last day of the last complete reporting period.

If fewer than five years of historical data are available, use all the

available historical data.

4.1.2

If any day in the data set has a value of zero for SAIDI, replace it

with the lowest non-zero SAIDI value in the data set—this permits

taking the logarithm of every day.

4.1.3

Take the natural logarithm (ln) of each daily SAIDI value in the

data set.

4.1.4

Find α (Alpha), the average of the logarithms (also known as the

logaverage) of the data set.

4.1.5

Find β (Beta), the standard deviation of the logarithms (also known

as the log-average) of the data set.

4.1.6

Compute the major event day threshold, TMED, using the equation:

TMED = e(α+β) .

4.1.7

Any day with daily SAIDI greater than the threshold value TMED

that occurs during the subsequent reporting period is a major

event day.

Note to IF-EU-550a.2

The entity shall discuss notable service disruptions such as those that affected a

significant number of customers, or disruptions of extended duration.

For such disruptions, the entity should provide:

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

2.1

Description and cause of the service disruption

2.2

The total generation or transmission capacity, in megawatts, and

population affected by the disruption

2.3

The costs associated with the service disruption

2.4

Actions taken to mitigate the potential for future service interruptions

2.5

Any other significant outcomes (for example, legal proceedings or related

fatalities).

IFRS S2 INDUSTRY-BASED GUIDANCE

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