Volume 44—Solar Technology & Project Developers

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

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 44—Solar Technology & Project Developers

Industry Description

Solar Technology & Project Developers industry entities manufacture solar energy

equipment, including solar photovoltaic (PV) modules, polysilicon feedstock, solar

thermal electricity-generation systems, solar inverters and other related components.

Entities also may develop, build and manage solar energy projects and offer financing or

maintenance services to customers. The industry uses two primary technologies: PV and

concentrated solar power (CSP). Within solar PV, two main technologies exist: crystalline

silicon-based solar and thin-film solar, which includes panels made using copper indium

gallium selenide and cadmium telluride. The primary markets for solar panels are

residential, non-residential (commercial and industrial) and utility-scale projects. Entities

in the industry operate globally.

Sustainability Disclosure Topics & Metrics

Table 1. Sustainability Disclosure Topics & Metrics

TOPIC

METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Total capacity of completed solar energy systems 74

Quantitative

Megawatts

(MW)

RR-ST-000.B

Total project development assets 75

Quantitative

Presentation

currency

RR-ST-000.C

Energy Management in Manufacturing

Topic Summary

Solar panel manufacturing typically uses electrical energy purchased from the grid.

Energy can account for a considerable share of the total cost of production. Considering

rising energy costs and regulatory uncertainty surrounding the future of fossil-based

energy, entities that diversify their energy sources may manage the associated risks and

maintain a reliable energy supply more effectively. Entities that minimise energy use

through effective energy management may reduce costs and gain a competitive

advantage through operational efficiency and competitive pricing of products.

Competitively priced products are particularly important given the intense price

competition within the solar technology industry.

Metrics

RR-ST-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.

Note to RR-ST-000.B – Solar energy systems are defined as any system that converts sunlight into

electrical energy, including photovoltaic (PV) systems and solar thermal electric systems.

Completed systems are defined by the entity, consistent with its existing public disclosure of

completed systems.

Note to RR-ST-000.C – Project development assets are defined by the entity, consistent with its

existing public disclosure of project development assets, regardless of terminology used by the

entity (e.g., “Project assets,” “Project assets—plants and land,” “Solar Energy Systems Held for

Development and Sale,” etc.). At a minimum, project development assets include assets that are

associated with solar energy systems that are under development or fully developed, owned by

the entity, and held for sale or intended to be sold to a third party prior to the execution of a

definitive sales agreement, and assets that consist primarily of capitalised costs incurred in

connection with the development of solar energy systems.

IFRS S2 INDUSTRY-BASED GUIDANCE

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.

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

jurisdictional renewable portfolio standard.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

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).

Water Management in Manufacturing

Topic Summary

Solar photovoltaic panel manufacturing can be water-intensive, and ultra-pure water is a

critical input in some processes. The manufacturing process also may generate

wastewater, which must be treated before disposal or reuse, and therefore may result in

incremental operating costs and capital expenditures. Furthermore, depending on the

location, solar equipment manufacturing facilities may face water scarcity and related

cost increases or operational disruptions. Water resource use may generate tension with

local water users and associated risks, potentially disrupting manufacturing operations

and adversely affecting brand value. To mitigate water supply and treatment risks,

entities may adopt various strategies such as recycling process water, improving

production techniques to lower water intensity, and improving water treatment systems.

Metrics

RR-ST-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 meters, that

was 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 meters, that

was 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

IFRS S2 INDUSTRY-BASED GUIDANCE

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 analyze all of its operations for water risks and identify activities

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

Extremely High (>80 percent) Baseline Water Stress as classified by the World

Resources Institute’s (WRI) Water Risk Atlas tool, Aqueduct.

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

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

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

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

RR-ST-140a.2. 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

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

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

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.

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

IFRS S2 INDUSTRY-BASED GUIDANCE

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.

Management of Energy Infrastructure Integration & Related

Regulations

Topic Summary

Entities in the industry have faced challenges in establishing solar energy as a cost-

competitive means of energy production and GHG reduction, and they have encountered

difficulty in capturing a greater market share of global energy generation. To promote

greater adoption of solar, the industry may benefit by preventing systemic disruptions to

the existing energy infrastructure and essential energy services. Entities are innovating to

overcome the technical challenges of increasing solar integration with the grid. They also

are engaging regulatory agencies and policymakers to reduce regulatory barriers to solar

energy adoption, many of which are emerging because of concerns regarding increasing

overall grid electricity costs and grid disruptions. Solar entities are investing in

innovative technologies to reduce hardware and installation costs, and they are pursuing

business-model innovation to reduce the cost of capital and facilitate the purchase of

solar energy systems. Solar technology entities may improve their competitiveness

through deploying one or more of these strategies successfully to ensure their ability to

scale over the long term.

Metrics

RR-ST-410a.1. Description of risks associated with integration of solar energy into

existing energy infrastructure and discussion of efforts to manage those risks

The entity shall describe risks, challenges and barriers surrounding the

integration of solar energy into the existing energy infrastructure in terms of its

products and services.

1.1

Relevant information to provide may include:

1.1.1

Technological barriers to increased integration of solar energy,

such as limited transmission network connectivity, lack of access

high-capacity

transmission

networks,

variability

interconnection

standards,

and

inverter

interconnection

requirements

1.1.2

Operational barriers to increased integration of solar energy, such

as curtailment and challenges associated with the variable nature

of solar energy

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

1.1.3

Customer

motivations

for

seeking

increased

solar

energy

integration, such as economic advantages, regulatory compliance,

risk mitigation, and public perception or reputational risk

The entity shall discuss its strategy and approach to design, development and

sales to integrate solar energy into the existing energy infrastructure.

2.1

Relevant strategies and approaches may include:

2.1.1

Technical product design

2.1.2

New product or product components development (for example,

smart inverters)

2.1.3

Technical innovation to reduce the cost of solar energy modules or

systems

2.1.4

Third-party partnerships and product integrations

2.1.5

Project design (for example, project siting in regions with reduced

curtailment risk)

2.1.6

Project risk transfer (for example, power purchase agreements

(PPAs) with curtailment caps)

2.1.7

Marketing and sales (for example, focus on regions or customer

segments with less grid integration risk)

2.1.8

Incorporating energy storage technology or ‘smart grid’ technology

into

solar

energy

systems,

whether

through

proprietary

technological development or collaboration with third parties

2.1.9

Products designed to operate ‘off-grid’ or as part of ‘micro-grids’

2.1.10 Innovation that decreases solar energy’s levelised cost of energy

(LCOE) through the reduction in ‘soft costs’, including financing,

leasing, customer acquisition and development costs

2.1.11 Innovation that increases the total addressable solar energy market

2.2

Relevant information to provide includes:

2.2.1

Whether the entity pursues more than one approach

2.2.2

Whether the entity’s approach varies by market

2.2.3

The intensity of R&D requirements for the entity’s approach and

strategy

2.2.4

The level of competition relative to the entity’s approach and

strategy

2.2.5

How the entity evaluates the success of its approach

The scope of disclosure shall include all the entity’s solar energy-related products,

product components, projects, project development efforts and services, as well as

the associated marketing and sales strategies, in the markets in which the entity

operates.

IFRS S2 INDUSTRY-BASED GUIDANCE

The entity may describe how energy infrastructure influences the establishment

of sales targets, strategies for specific product categories, technologies or

marketing practices in specific regions, research and development (R&D)

objectives, and partnerships.

RR-ST-410a.2. Description of risks and opportunities associated with energy

policy and its effect on the integration of solar energy into existing energy

infrastructure

The entity shall discuss the risks and opportunities associated with energy policy

and the effect energy policy has on solar energy integration into existing energy

infrastructure, in which:

1.1

Relevant risks and opportunities may include:

1.1.1

Direct or indirect government subsidization of solar energy

1.1.2

International trade policy disputes and agreements

1.1.3

Public policies that set out minimum requirements for renewable

energy generation (for example, renewable portfolio standards)

1.1.4

Public policies that affect the monetisation of solar energy

generation, which may include net metering, time-of-use rates,

feed-in tariffs, utility fixed fees and renewable energy priority

dispatch

1.1.5

Public policies that affect the financing and tax structure of solar

energy, which may include investment tax credits, property-

assessed clean energy, loan guarantees and depreciation schedules

1.1.6

Public policies pertaining to any external social costs created by

distributed solar energy generation

1.1.7

Policies pertaining to electricity transmission, which may include

regional transmission planning, interconnected transmission

networks,

interconnection

standards

and

high-capacity

transmission networks

1.1.8

Replacements to ageing energy generation and transmission

infrastructure

The entity shall identify the risks and opportunities related to legislation,

regulation, rule-making and the overall political environment (hereafter referred

to collectively as ‘regulatory and political environment’) regarding energy policy

and the integration of solar energy into energy infrastructure.

2.1

The scope shall include existing, emerging and known future risks and

opportunities.

2.2

The scope shall include risks and opportunities that may exist at each

jurisdictional level, international governmental organisations, and

regulatory organisations.

2.2.1

The scope shall include the relevant policies of utilities, rule-

makers and regulators.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

Relevant information to provide includes, but is not limited to, the impact on

demand for the entity’s solar energy products and services and the impact on

business viability related to risks and opportunities associated with energy policy

and the impact energy policy has on the integration of solar energy into the

existing energy infrastructure.

IFRS S2 INDUSTRY-BASED GUIDANCE

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