Title: Volume 5—Household & Personal Products
Category: Part B—Industry-based Guidance for IFRS S2
Source: IFRS Foundation (https://www.ifrs.org)
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Year: 2023
Type: Industry
Industry-based Guidance on implementing
Climate-related Disclosures
Volume 5—Household & Personal Products
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 Foundation 2023
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IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023
© IFRS Foundation
1
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
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
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
2
© IFRS Foundation
Volume 5—Household & Personal Products
Industry Description
Household & Personal Products industry entities manufacture a wide range of goods for
personal and commercial consumption, including cosmetics, household and industrial
cleaning supplies, soaps and detergents, sanitary paper products, household batteries,
razors and kitchen utensils. Household and personal products entities operate globally
and typically sell their products to mass merchants, grocery stores, membership club
and typically sell their products to mass merchants, grocery stores, membership club
stores, drug stores, high-frequency stores, distributors and e-commerce retailers. Some
entities sell products through independent representatives rather than third-party retail
establishments.
Sustainability Disclosure Topics & Metrics
Table 1. Sustainability Disclosure Topics & Metrics
TOPIC
METRIC
CATEGORY
UNIT OF
MEASURE
CODE
Water
Management
(1) Total water withdrawn, (2) total water
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 (%) CG-HP-140a.1 Description of water management risks and discussion of strategies and practices to mitigate those risks Discussion and Analysis n/a CG-HP-140a.2 Environmental& Social Impacts of Palm Oil Supply Chain Amount of palm oil sourced, percentage
Environmental& Social Impacts of Palm Oil Supply Chain Amount of palm oil sourced, percentage certified through the Roundtable on Sustainable Palm Oil (RSPO) supply chains as (a) Identity Preserved, (b) Segregated, (c) Mass Balance or (d) Book & Claim Quantitative Metric tons (t),Percentage (%) CG-HP-430a.1 Table 2. Activity Metrics
ACTIVITY METRIC
CATEGORY
UNIT OF
MEASURE
CODE
Units of products sold, total weight of products sold Quantitative Number,Metric tons (t) CG-HP-000.A
Quantitative Number,Metric tons (t) CG-HP-000.A Number of manufacturing facilities Quantitative Number CG-HP-000.B Water Management Topic Summary Water is vital to the Household & Personal Products industry, both as a coolant in manufacturing processes and as a main input for many of the industry’s products. Water is becoming a scarce resource around the world because of population growth and increasing consumption, rapid urbanisation, and declining supplies because of subsurface
increasing consumption, rapid urbanisation, and declining supplies because of subsurface aquifer depletion, drought and climate change. Many entities in this industry have operations in regions of the world facing water scarcity. Without careful planning,
entities could face increased costs or lose water access in these regions, which may be a IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023© IFRS Foundation 3
risk to production. Having rigorous checks in place to ensure a steady supply of water to all factories, as well as investing in technology to increase water use efficiency, will help entities reduce water-related risks as water scarcity becomes an increasingly global issue.
Metrics CG-HP-140a.1. (1) Total water withdrawn, (2) total water consumed; percentage of each in regions with High or Extremely High Baseline Water Stress 1
of each in regions with High or Extremely High Baseline Water Stress 1 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.
2
water supplies, water utilities or other entities.
2 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
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.
3 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
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.
4 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
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.
5 The entity shall disclose water withdrawn in locations with High or Extremely High Baseline Water Stress as a percentage of the total water withdrawn.
6 The entity shall disclose water consumed in locations with High or Extremely
6 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 INDUSTRY-BASED GUIDANCE 4© IFRS Foundation
CG-HP-140a.2. Description of water management risks and discussion of strategies and practices to mitigate those risks 1 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,
1.1.1
Environmental constraints—such as operating in water-stressed regions,drought,concerns of aquatic impingement or 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
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
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).
2
example, those from local communities, non-governmental organisations and regulatory agencies).
2 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
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.
3 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.
4
of operations and reputation.
4 The entity shall discuss its short- and long-term strategies or plans to mitigate water management risks, which include:IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023© IFRS Foundation 5
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
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.
5
that were ongoing (active) or reached completion during the reporting period.
5 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
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
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.
6
evaluated towards the achievement of the target.
6 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.
IFRS S2 INDUSTRY-BASED GUIDANCE 6© IFRS Foundation
Environmental & Social Impacts of Palm Oil Supply Chain Topic Summary Palm oil has increased in popularity as a cheap input for a wide range of goods in the Household & Personal Products industry, including cleaning products, candles and cosmetics. Palm oil harvesting in specific regions of the world may contribute to deforestation, GHG emissions and other environmental and social problems. If not sourced responsibly, palm oil materials contribute to environmental and social
sourced responsibly, palm oil materials contribute to environmental and social externalities that can present reputational and regulatory risks for entities. Furthermore,
entities in this industry are exposed to the risk of supply chain disruptions, input price increases and reputational damage associated with environmental and social externalities from palm oil sourcing. Entities face pressure to track and responsibly source palm oil
from palm oil sourcing. Entities face pressure to track and responsibly source palm oil and ensure minimum working condition standards in the supply chain, because palm oil production often is associated with labour issues. Implementing sourcing standards can reduce these risks, as can product-design phase innovations to reduce dependence on controversial materials such as palm oil.
Metrics CG-HP-430a.1. Amount of palm oil sourced, percentage certified through the
Metrics CG-HP-430a.1. Amount of palm oil sourced, percentage certified through the Roundtable on Sustainable Palm Oil (RSPO) supply chains as (a) Identity Preserved, (b) Segregated, (c) Mass Balance or (d) Book & Claim 1 The entity shall disclose the amount, in metric tons, of palm oil sourced during the reporting period.
1.1
The scope of palm oil includes palm kernel oil and palm kernel expeller.
2 The entity shall disclose the percentage, on a weight basis, of palm oil it sourced
2 The entity shall disclose the percentage, on a weight basis, of palm oil it sourced that has been third-party certified to bear a Roundtable on Sustainable Palm Oil (RSPO) claim for each of the RSPO supply chain models: (a) Identity Preserved (IP),
(b) Segregated (SG), (c) Mass Balance (MB) or (d) Book & Claim (B&C).
2.1
B&C transactions are represented by ‘RSPO Credits’ purchased in the RSPO PalmTrace platform.
2.2
The percentage shall be calculated as the weight in each respective RSPO
PalmTrace platform.
2.2
The percentage shall be calculated as the weight in each respective RSPO supply chain model (IP, SG, MB or B&C) of RSPO-certified palm oil sourced by the entity divided by the total weight, in metric tons, of palm oil sourced by the entity.
3 The entity may discuss other strategies, approaches and mechanisms used to manage risks and opportunities associated with the environmental and social impacts of palm oil sourcing.
IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023
impacts of palm oil sourcing.
IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023© IFRS Foundation 7
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