Volume 8—Construction Materials

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).

Disclaimer: To the extent permitted by applicable law, the ISSB and the IFRS Foundation

(Foundation) expressly disclaim all liability howsoever arising from this publication or

any translation thereof whether in contract, tort or otherwise to any person in respect of

any claims or losses of any nature including direct, indirect, incidental or consequential

loss, punitive damages, penalties or costs.

Information contained in this publication does not constitute advice and should not be

substituted for the services of an appropriately qualified professional.

Reproduction and use rights are strictly limited to personal non-commercial use, such as

corporate disclosure.

Any other use, such as – but not limited to – reporting software, investment analysis,

data services and product development is not permitted without written consent. Please

contact the Foundation for further details at sustainability_licensing@ifrs.org.

The Foundation has trade marks registered around the world (Marks) including ‘IAS®’,

‘IASB®’, the IASB® logo, ‘IFRIC®’, ‘IFRS®’, the IFRS® logo, ‘IFRS for SMEs®’, the IFRS for SMEs®

logo,

‘International

Accounting

Standards®’,

‘International

Financial

Reporting

Standards®’, the ‘Hexagon Device’, ‘NIIF®’, ‘SIC®’ and SASB®. Further details of the

Foundation’s Marks are available from the Foundation on request.

The Foundation is a not-for-profit corporation under the General Corporation Law of the

State of Delaware, USA and operates in England and Wales as an overseas company

(Company number: FC023235) with its principal office in the Columbus Building, 7

Westferry Circus, Canary Wharf, London, E14 4HD.

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 8—Construction Materials

Industry Description

Construction Materials entities have global operations and produce construction

materials for sale to construction entities or wholesale distributors. These primarily

include cement and aggregates, but also glass, plastic materials, insulation, bricks and

roofing material. Materials producers operate their own quarries, mining crushed stone

or sand and gravel. They may also purchase raw materials from the mining and

petroleum industries.

Note: Entities producing wood-building products are included the Building Products &

Furnishings (CG-BF) industry, Forestry Management industry (RR-FM), and Pulp & Paper

Products industry (RR-PP) under the Sustainable Industry Classification System (SICS) and

are not included in the Construction Materials standard.

Sustainability Disclosure Topics & Metrics

Table 1. Sustainability Disclosure Topics & Metrics

TOPIC

METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Production by major product line 8

Quantitative

Metric tons (t)

EM-CM-000.A

Greenhouse Gas Emissions

Topic Summary

The production of construction materials, particularly cement, generates significant

direct greenhouse gas (GHG) emissions from on-site fuel combustion and chemical

processes. The industry has achieved efficiency gains in reducing emissions per ton of

materials produced. At the same time, increasing production is associated with

increasing absolute emissions from cement production. The production of construction

materials remains carbon-intensive relative to other industries, exposing the industry to

higher operating and capital expenditures from emissions regulations. Strategies to

reduce GHG emissions include energy efficiency, use of alternative and renewable fuels,

carbon sequestration and clinker substitution. Operational efficiencies can be achieved

through the cost-effective reduction of GHG emissions. Such efficiencies can mitigate the

potential financial impact of increased fuel costs as well as direct emissions from

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

Metrics

EM-CM-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).

Note to EM-CM-000.A – Determination of major product line (e.g., cement and aggregates,

composites, roofing materials, fibreglass, brick, and tile, or others) should be based on revenue

generation, and may include a category of “other” construction materials products that

combines multiple smaller revenue streams.

IFRS S2 INDUSTRY-BASED GUIDANCE

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 US 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.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

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 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-CM-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:

IFRS S2 INDUSTRY-BASED GUIDANCE

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 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.

Air Quality

Topic Summary

On-site fuel combustion and production processes in the Construction Materials industry

emit criteria air pollutants and hazardous chemicals, including small quantities of

organic compounds and heavy metals. Emissions of particular concern include nitrogen

oxides, sulphur dioxides, particulate matter, heavy metals (for example, mercury),

dioxins and volatile organic compounds, among others. These air emissions can have

significant, localised human health and environmental impacts. Financial impacts

resulting from air emissions will vary depending on the specific location of operations

and the applicable air emissions regulations, but they could include higher operating or

capital expenditures and regulatory or legal penalties. Active management of the issue—

through technological and process improvements—may allow entities to limit the impact

of regulations and benefit from operational efficiencies that could lead to a lower cost

structure over time.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

Metrics

EM-CM-120a.1 Air emissions of the following pollutants: (1) NOx (excluding N2O),

(2) SOx, (3) particulate matter (PM10), (4) dioxins/furans, (5) volatile organic

compounds (VOCs), (6) polycyclic aromatic hydrocarbons (PAHs) and (7) heavy

metals

The entity shall disclose its emissions of air pollutants, in metric tons per

pollutant, released into the atmosphere.

1.1

The scope of disclosure includes air pollutants associated with the entity’s

direct air emissions resulting from all the entity’s activities and sources of

emissions, which may include stationary and mobile sources, production

facilities, office buildings and transportation fleets.

The entity shall disclose its emissions of (1) oxides of nitrogen (NOx), reported as

NOx.

2.1

The scope of NOx includes NO and NO2 but excludes N2O.

The entity shall disclose its emissions of (2) oxides of sulphur (SOx), reported as

SOx.

3.1

The scope of SOx includes SO2 and SO3.

The entity shall disclose its emissions of (3) particulate matter 10 micrometres or

less in diameter (PM10), reported as PM10.

4.1

PM10 is defined as any airborne finely divided solid or liquid material with

an aerodynamic diameter less than or equal to a nominal 10 micrometres.

The entity shall disclose its emissions of (4) dioxins/furans.

5.1

Dioxins/furans include, but are not limited to the sum of the 17 congeners

polychlorinated

dibenzodioxins

(PCDDs)

and

polychlorinated

dibenzofurans (PCDFs) that contain chlorine

The entity shall disclose its emissions of (5) non-methane volatile organic

compounds (VOCs).

6.1

VOCs are defined as any compound of carbon, excluding carbon monoxide,

carbon dioxide, carbonic acid, metallic carbides or carbonates, ammonium

carbonate and methane, that participates in atmospheric photochemical

reactions, except those designated under applicable jurisdictional law or

regulation as having negligible photochemical reactivity.

6.1.1

If applicable regulatory definitions of VOCs may conflict with this

definition, the entity may define VOCs in accordance with the

applicable regulatory definition.

The entity shall disclose its emissions of (6) polycyclic aromatic hydrocarbons

(PAHs).

IFRS S2 INDUSTRY-BASED GUIDANCE

7.1

PAHs are a large group of organic compounds containing two or more

fused aromatic (benzene) rings. A main source of emission is the

incomplete combustion or pyrolysis of organic material.

7.2

PAHs include those listed in the World Health Organization’s 2021 Human

health effects of polycyclic aromatic hydrocarbons as ambient air pollutants: report of

the Working Group on Polycyclic Aromatic Hydrocarbons of the Joint Task Force on

the Health Aspects of Air Pollution.

The entity shall disclose its emissions of (7) heavy metals.

8.1

The scope of heavy metals includes lead (Pb), mercury (Hg), and cadmium

(Cd).

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

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

engineering calculations or mass balance calculations.

Energy Management

Topic Summary

The production of construction materials requires significant energy, sourced primarily

from direct fossil fuel combustion as well as from purchased electricity. Energy-intense

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

can create indirect Scope 2 emissions. Construction materials entities also use alternative

fuels for kilns, such as scrap tyres and waste oil—often waste generated by other

industries. If properly managed, these can lower energy costs and greenhouse gas (GHG)

emissions. However, potentially negative impacts could occur, such as releases of

harmful air pollutants that entities need to minimise to obtain net benefits from using

such fuels. Decisions about use of alternative fuels, renewable energy and on-site

generation of electricity (versus purchases from the grid) can be important in influencing

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

energy is an important competitive factor in this industry, with purchased fuels and

electricity accounting for a significant proportion of total production costs. How a

construction materials entity manages energy efficiency, reliance on different types of

energy and associated sustainability risks, and access to alternative sources of energy may

influence its profitability.

Metrics

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

(3) percentage alternative and (4) 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.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

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 from alternative

sources, in terms of its energy content.

3.1

Alternative sources of energy include used tyres, spent solvents and waste

oils, processed municipal solid waste, household wastes, agricultural

wastes such as rice, peanut shells and coffee husks, animal meal and

sewage sludge.

The entity shall disclose (4) the percentage of energy it consumed that was

renewable energy.

4.1

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.

4.2

The percentage shall be calculated as renewable energy consumption

divided by total energy consumption.

4.3

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.

4.3.1

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.

4.3.2

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.

4.3.3

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.

IFRS S2 INDUSTRY-BASED GUIDANCE

4.4

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.

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

Topic Summary

Construction materials production requires substantial volumes of water. Entities face

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. Risks are likely

to be higher in regions of water scarcity because of potential 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, the adoption of technologies and processes that reduce water consumption

could lower operating risks and costs for entities by minimising the impact of

regulations, water supply shortages and community-related disruptions on entity

operations.

Metrics

EM-CM-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.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

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.

Waste Management

Topic Summary

Construction materials production recycling rates are high. However, waste from

production processes, pollution control devices and from hazardous waste management

activities present a regulatory risk and can increase operating costs. Cement kiln dust

(CKD)—consisting of fine-grained, solid, highly alkaline waste removed from cement kiln

exhaust gas by air pollution control devices—is the most significant waste category in the

industry. Regulatory risk remains high from evolving environmental laws. Entities that

reduce waste streams—hazardous waste streams in particular—and recycle by-products,

can reduce regulatory and litigation risks and costs.

Metrics

EM-CM-150a.1. Amount of waste generated, percentage hazardous and

percentage recycled

The entity shall disclose the amount of waste generated in metric tons.

1.1

Waste is defined as anything for which the entity has no further use, and

which is discarded or released to the environment.

1.2

The scope includes slags, dusts, sludges, used oil and other solid wastes

that meet the above definition.

1.3

The scope excludes gaseous waste.

IFRS S2 INDUSTRY-BASED GUIDANCE

The entity shall disclose the percentage of waste generated that was hazardous.

2.1

The percentage of hazardous waste shall be calculated as the weight

hazardous waste as defined in accordance with the applicable

jurisdictional, legal or regulatory framework where the waste was

generated divided by the total weight of waste material.

2.2

Hazardous waste generally displays the following characteristics:

ignitability, corrosivity, reactivity or toxicity.

2.3

The entity may use United Nations Environmental Programme (UNEP)

Basel Convention on the Control of Transboundary Movements of Hazardous Wastes

and Their Disposal for the purposes of defining hazardous waste for

operations located in jurisdictions that lack applicable legal or regulatory

definitions.

The entity shall disclose the percentage of waste generated that was recycled.

3.1

The percentage recycled shall be calculated as the weight of waste material

reused, plus the weight recycled or remanufactured (through treatment or

processing) by the entity, plus the amount sent externally for further

recycling, divided by the total weight of waste material.

3.1.1

Reused materials are defined as those recovered products or

components of products used for the same purpose for which they

were conceived.

3.1.2

Recycled and remanufactured materials are defined as waste

materials that have been reprocessed or treated by means of

production or manufacturing processes and made into a final

product or made into a component for incorporation into a

product.

3.1.3

The scope of recycled and remanufactured products includes

primary recycled materials, co-products (outputs of equal value to

primary recycled materials) and by-products (outputs of lesser

value to primary recycled materials).

3.1.4

Portions of products and materials discarded in landfills are not

considered recycled; only the portions of products directly

incorporated into new products, co-products or by-products shall

be included in the percentage recycled.

3.1.5

Materials sent for further recycling include those materials

transferred to a third party for the expressed purpose of reuse,

recycling or refurbishment.

3.2

Materials incinerated, including for energy recovery, shall not be

considered within the scope of recycled materials.

3.2.1

Energy recovery is defined as the use of combustible waste to

generate energy through direct incineration, with or without other

waste, but with recovery of the heat.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

3.2.2

The entity may separately disclose the percentage of hazardous

waste generated that was incinerated.

The entity shall disclose the legal or regulatory framework(s) used to define waste,

hazardous waste and recycled hazardous waste.

Product Innovation

Topic Summary

Innovations in building materials are an essential component in the growth of

sustainable construction. Consumer and regulatory trends are driving adoption of

sustainable building materials and processes that are more resource efficient and can

reduce health impacts of buildings throughout their lifecycle. This is creating new

business drivers for construction materials entities, with an opportunity to increase

revenue. Furthermore, some new products require less energy to produce, or use largely

recycled inputs, reducing production costs. Therefore, sustainable construction materials

can contribute to an entity’s long-term growth and competitiveness.

Metrics

EM-CM-410a.1 Percentage of products that qualify for credits in sustainable

building design and construction certifications

The entity shall calculate the percentage as the revenue during the reporting

period from products that qualify for credits in recognised sustainable design and

construction certifications divided by the total revenue from building products.

1.1

The scope of products excludes raw or intermediate materials that would

require additional manufacturing before being incorporated into a

building; the entity shall exclude these products from the numerator and

denominator of the calculation.

Recognised sustainable building design and construction certifications and

guidelines include BREEAM® (BRE Global), Green Globes® (Green Building

Initiative), LEED® (US Green Building Council) and ICC-700 National Green

Building Standard® (National Association of Home Builders).9

2.1

If the entity’s products can be used to obtain credits in certifications other

than those described above, it shall provide the name of the certification

and evidence of why it is equal to or more rigorous than those standards

listed here.

The entity may disclose and discuss which specific products contribute to

sustainable building practices, as well as its plans to address market demand for

these types of products.

The ISSB is not affiliated with any of the standards or organisations listed, and listing should not

be taken as an endorsement of any standard or organisation. Listing of standards is not meant to

imply that standards are identical in scope, underlying requirements or criteria, or that

standards are interchangeable.

IFRS S2 INDUSTRY-BASED GUIDANCE

EM-CM-410a.2. Total addressable market and share of market for products that

reduce energy, water or material impacts during usage or production

The entity shall provide an estimate of the total addressable market for products

that show reduced environmental impacts at various lifecycle stages, including

during material sourcing, manufacturing and product usage (hereafter, ‘reduced

environmental impact products’).

1.1

Total addressable market is defined as potential revenue should the entity

capture 100% of the market share of the product category (for example,

the global market for reduced environmental impact products).

The scope of products includes those:

2.1

With product attributes that reduce energy consumption or increase

energy efficiency for users, such as by providing improved insulation

compared to typical products

2.2

With process or product attributes that reduce the amount of water

required in manufacturing, during product assembly or product usage

2.3

That use secondary or recycled materials in place of virgin materials such

that upstream impacts are reduced

2.4

Made with design innovations that reduce carbon emissions during

manufacturing, such as use of renewable fuels, energy efficiency

improvements or the use of materials requiring less processing

If a significant difference exists between the total addressable market and the

market that the entity can serve through its existing or planned capabilities, sales

channels or products (the serviceable available market), then the entity should

disclose this information.

The entity shall disclose the share of the total addressable market for reduced

environmental impact products it currently captures with its products.

4.1

Market share shall be calculated as revenue from these products divided

by the size of the total addressable market.

The entity may provide a projection of growth of this market, where the projected

addressable market is represented—based on a reasonable set of assumptions

about changes in market conditions—as a percentage of year-on-year growth or as

an estimate of the market size after a defined period (the market size in 10 years).

5.1

The entity may disclose its target three-year market share as a

measurement of targeted growth, where the target is the percentage of the

total addressable market the entity plans to address over a three-year time

horizon.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

Columbus Building

7 Westferry Circus

Canary Wharf

London E14 4HD, UK

Tel

+44 (0) 20 7246 6410

Email sustainability_licensing@ifrs.org

ifrs.org

International Financial Reporting Standards®, IFRS Foundation®,

IFRS®, IAS®, IFRIC®, SIC®, IASB®, ISSBTM, IFRS for SMEs®