Title: Volume 50—Industrial Machinery & Goods
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 50—Industrial Machinery & Goods
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 50—Industrial Machinery & Goods
Industry Description
Industrial machinery and goods industry entities manufacture equipment for a variety of
industries including construction, agriculture, energy, utility, mining, manufacturing,
automotive and transportation. Products include engines, earth-moving equipment,
trucks, tractors, ships, industrial pumps, locomotives and turbines. Machinery
manufacturers use large amounts of raw materials for production, including steel,
manufacturers use large amounts of raw materials for production, including steel,
plastics, rubber, paints and glass. Manufacturers also may machine and cast parts before
final assembly. Demand in the industry is tied closely to industrial production, while
government emissions standards and customer demand are encouraging innovations to
improve energy efficiency and limit air emissions during product use.
Sustainability Disclosure Topics & Metrics
Sustainability Disclosure Topics & Metrics
Table 1. Sustainability Disclosure Topics & Metrics
TOPIC
METRIC
CATEGORY
UNIT OF
MEASURE
CODE
Energy
Management
(1) Total energy consumed,
(2) percentage grid electricity and
(3) percentage renewable Quantitative Gigajoules (GJ),Percentage (%) RT-IG-130a.1 Fuel Economy& Emissions in Use-phase Sales-weighted fleet fuel efficiency for medium- and heavy-duty vehicles Quantitative Litres per 100 tonne-kilometres RT-IG-410a.1
medium- and heavy-duty vehicles Quantitative Litres per 100 tonne-kilometres RT-IG-410a.1 Sales-weighted fuel efficiency for non-road equipment Quantitative Litres per hour RT-IG-410a.2 Sales-weighted fuel efficiency for stationary generators Quantitative Kilojoules per litre RT-IG-410a.3 Sales-weighted emissions of
(1) nitrogen oxides (NOx) and
(2) particulate matter (PM) for: (a) marine diesel engines, (b) locomotive diesel engines, (c) on-road medium-
and heavy-duty engines and (d) other
diesel engines, (c) on-road medium-
and heavy-duty engines and (d) other non-road diesel engines 86 Quantitative Grammes per kilojoule RT-IG-410a.4 Table 2. Activity Metrics
ACTIVITY METRIC
CATEGORY
UNIT OF
MEASURE
CODE
Number of units produced by product category 87 Quantitative Number RT-IG-000.A Number of employees Quantitative Number RT-IG-000.B 86 Note to RT-IG-410a.4 – The entity shall discuss how it manages fleet fuel economy and emissions risks and opportunities.
87
risks and opportunities.
87 Note to RT-IG-000.A – At a minimum, the entity should indicate the number of units produced for the following product categories: (1) vehicles and agricultural and construction equipment,
(2) engines and power generation equipment, and (3) parts and components.
IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023© IFRS Foundation 3
Energy Management Topic Summary Energy is a critical input in industrial machinery manufacturing. Purchased electricity is the largest share of energy expenditure in the industry, followed by purchased fuels. The type of energy used, amount consumed and energy management strategies depend on the type of products manufactured. Including the use of electricity generated on site, grid-
sourced electricity and alternative energy, an entity’s energy mix can influence the cost
sourced electricity and alternative energy, an entity’s energy mix can influence the cost and reliability of energy supply and, ultimately, affect the entity’s cost structure and regulatory risk.
Metrics RT-IG-130a.1. (1) Total energy consumed, (2) percentage grid electricity and
(3) percentage renewable 1 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,
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, heating, cooling and steam energy all are included within the scope of energy consumption.
1.2
The scope of energy consumption includes only energy directly consumed by the entity during the reporting period.
1.3
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).
2 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
2.1
The percentage shall be calculated as purchased grid electricity consumption divided by total energy consumption.
3 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
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 IFRS S2 INDUSTRY-BASED GUIDANCE 4
IFRS S2 INDUSTRY-BASED GUIDANCE 4© IFRS Foundation
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
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 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
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
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.
4 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).
from solar or wind energy).
Fuel Economy & Emissions in Use-phase Topic Summary Many of the Industrial Machinery & Goods industry’s products are powered by fossil fuels and release greenhouse gases (GHGs) and other air emissions during use. Customer preferences for improved fuel economy combined with regulations restricting emissions are increasing the demand for energy-efficient and lower-emission products in the
are increasing the demand for energy-efficient and lower-emission products in the industry. As such, entities that develop products with these characteristics may capture expanding market share, reduce regulatory risk and improve brand value.
Metrics RT-IG-410a.1. Sales-weighted fleet fuel efficiency for medium- and heavy-duty vehicles 1 The entity shall disclose its sales-weighted average fleet fuel efficiency for medium- and heavy-duty vehicles.
1.1
medium- and heavy-duty vehicles.
1.1
Fleet fuel efficiency is defined as the average fuel economy of its medium-
and heavy-duty commercial vehicles, weighted by the number of each sold during the reporting period and measured in litres per 100 tonne-kilometres.
IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023© IFRS Foundation 5
1.2
The scope of disclosure includes combination tractors (commonly known as semi-trucks or lorries), heavy-duty pickup trucks and vans, and vocational vehicles.
1.3
The scope of disclosure includes vehicles in the fleet that weigh a minimum of 3.5 metric tons or 8,500 pounds.
1.4
If fleet averages are calculated by model year for regulatory purposes, the entity shall use these performance data.
1.5
In the absence of regulatory guidance on calculating a fleet average, the
1.5
In the absence of regulatory guidance on calculating a fleet average, the entity shall calculate performance based on the fuel economy of vehicles sold during the reporting period, weighted by sales volume.
2 The entity shall disclose the sales-weighted fuel efficiency requirement for its medium- and heavy-duty vehicles pursuant to the entity’s applicable jurisdictional heavy-duty vehicle fuel emissions standards or regulations.
3
heavy-duty vehicle fuel emissions standards or regulations.
3 If the entity operates in more than one jurisdiction, the entity shall disclose the standard or regulation used to determine if a fuel is renewable.
RT-IG-410a.2. Sales-weighted fuel efficiency for non-road equipment 1 The entity shall disclose its sales-weighted average fuel efficiency for its non-road equipment and vehicles.
1.1
Fuel efficiency is defined as the average fuel economy of its non-road
equipment and vehicles.
1.1
Fuel efficiency is defined as the average fuel economy of its non-road equipment, weighted by the number of each unit sold during the reporting period and measured in litres of fuel consumed per hour of operation (litres per hour).
1.1.1
In calculating litres per hour, the entity shall use the model-rated fuel efficiency value for each piece of equipment if available.
1.1.2
If model-rated fuel efficiency values are not available, the entity
1.1.2
If model-rated fuel efficiency values are not available, the entity shall calculate the litres operational efficiency for the equipment,
assuming normal, reasonable operating conditions (for example,
for load factor, speed and environmental conditions).
1.2
Non-road equipment may include excavators and other construction equipment, farm tractors and other agricultural equipment, heavy forklifts, airport ground service equipment, and utility equipment such as
forklifts, airport ground service equipment, and utility equipment such as generators, pumps and compressors.
RT-IG-410a.3. Sales-weighted fuel efficiency for stationary generators 1 The entity shall disclose the sales-weighted average fuel efficiency of its stationary generators.
1.1
Sales-weighted fuel efficiency is the average fuel efficiency of stationary generators sold during the reporting period, measured in kilojoules per litre.
2
generators sold during the reporting period, measured in kilojoules per litre.
2 Sales-weighted fuel efficiency is calculated as the harmonic mean of design fuel efficiency in kilojoules per litre, in which:IFRS S2 INDUSTRY-BASED GUIDANCE 6© IFRS Foundation
2.1
The harmonic mean captures the average amount of fuel needed by each generator to produce a given amount of power.
2.2
The harmonic mean is the reciprocal of the average of the reciprocal values.
RT-IG-410a.4. Sales-weighted emissions of (1) nitrogen oxides (NOx) and
(2) particulate matter (PM) for: (a) marine diesel engines, (b) locomotive diesel engines, (c) on-road medium- and heavy-duty engines and (d) other non-road diesel engines 1
engines, (c) on-road medium- and heavy-duty engines and (d) other non-road diesel engines 1 The entity shall disclose the sales-weighted average emissions of (1) nitrogen oxides (NOx) and (2) particulate matter (PM) for each of these product categories:(a) marine diesel engines, (b) locomotive diesel engines, (c) on-road medium- and heavy-duty engines and (d) other non-road diesel engines.
1.1
Emissions are calculated as the average emissions of (1) NOx and (2) PM for
1.1
Emissions are calculated as the average emissions of (1) NOx and (2) PM for engines, weighted by the number of each sold during the reporting period and measured in grammes per kilojoule.
1.2
Marine diesel engines, locomotive diesel engines, on-road medium- and heavy-duty engines, and other non-road diesel engines shall be defined based on applicable jurisdictional laws or regulations.
1.2.1
Other non-road diesel engines may include: excavators and other
1.2.1
Other non-road diesel engines may include: excavators and other construction equipment, farm tractors and other agricultural equipment, heavy forklifts, airport ground service equipment, and utility equipment such as generators, pumps and compressors.
1.3
The entity shall state the calculation method used to calculate emissions.
1.4
The entity may disclose if any products do not meet current emissions standards established in applicable jurisdictional laws or regulations.
2
standards established in applicable jurisdictional laws or regulations.
2 The entity may discuss its progress towards, and readiness for, future jurisdictional emissions standards that could affect its products.
Note to RT-IG-410a.4 1 The entity shall discuss how it manages fleet fuel economy and emissions risks and opportunities.
2 Relevant aspects of the approach and strategy to discuss include improvements to existing products and technologies, the introduction of new technologies,
existing products and technologies, the introduction of new technologies,
research and development efforts into advanced technologies, and partnerships with peers, academic institutions or customers (including governmental customers).
IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023© IFRS Foundation 7
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