ifrs-s2-ibg-volume-54-electronic-manufacturing-services-and-original-design-manufacturing-part-b

Title: Volume 54—Electronic Manufacturing Services & Original Design Manufacturing

Category: Part B—Industry-based Guidance for IFRS S2

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Year: 2023

Type: Industry

Year: 2023

Type: Industry

Industry-based Guidance on implementing

Climate-related Disclosures

Volume 54—Electronic Manufacturing Services &

Original Design Manufacturing

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 54—Electronic Manufacturing Services & Original Design

Manufacturing

Industry Description

The Electronic Manufacturing Services (EMS) & Original Design Manufacturing (ODM)

industry consists of two main segments. EMS entities provide assembly, logistics and

after-market services for original equipment manufacturers. ODM entities provide

engineering and design services for original equipment manufacturers and may own

significant intellectual property. Although EMS & ODM entities produce equipment for a

variety of sectors, the industry is associated closely with the Hardware industry, which

consists of entities that design technology hardware products such as personal

computers, consumer electronics and storage devices for both personal consumers and

businesses.

computers, consumer electronics and storage devices for both personal consumers and

businesses.

Note: The Electronic Manufacturing Services & Original Design Manufacturing industry

does not include the design of technology hardware products. Entities that design and

manufacture technology hardware products should consider the disclosure topics and

metrics in the Hardware (TC-HW) industry.

Sustainability Disclosure Topics & Metrics

Table 1. Sustainability Disclosure Topics & Metrics

TOPIC

METRIC

Table 1. Sustainability Disclosure Topics & Metrics

TOPIC

METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Number of manufacturing facilities Quantitative Number TC-ES-000.A Area of manufacturing facilities Quantitative Square metres (m²) TC-ES-000.B Number of employees Quantitative Number TC-ES-000.C Water Management Topic Summary The manufacturing of computers, computer components and other electronics requires

Topic Summary The manufacturing of computers, computer components and other electronics requires significant volumes of water. Water is becoming a globally scarce resource because of increasing consumption from population growth, rapid urbanisation and climate change.

Without careful planning, water scarcity may result in higher supply costs, social IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023© IFRS Foundation 3

tensions with local communities and governments, or loss of access to water in water-

scarce regions thereby presenting a critical risk to production and revenue. Electronic Manufacturing Services (EMS) & Original Design Manufacturing (ODM) entities that improve water use efficiency may reduce operating costs and maintain a lower risk profile, ultimately affecting cost of capital and market valuation. Furthermore, entities

profile, ultimately affecting cost of capital and market valuation. Furthermore, entities that prioritise water use efficiency may reduce regulatory risks as applicable jurisdictional environmental laws or regulations place more emphasis on resource conservation.

Metrics TC-ES-140a.1. (1) Total water withdrawn, (2) total water consumed; percentage 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,

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 The entity may disclose portions of its supply by source if, for example, significant

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

Water obtained from a water utility in compliance with jurisdictional

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 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 included in the entity’s product or service

3.1.3

3.1.2

Water that is directly or indirectly included in 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 High (>80%) Baseline Water Stress as classified by the World Resources Institute’s

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

Product Lifecycle Management Topic Summary Entities in the Electronic Manufacturing Services (EMS) & Original Design Manufacturing (ODM) industry, along with the industry’s customers such as hardware entities, face increasing challenges associated with environmental externalities attributed to product

increasing challenges associated with environmental externalities attributed to product manufacturing, transport, use and disposal. Rapid obsolescence of hardware products may worsen such externalities. The industry’s products commonly contain hazardous materials, making safe end-of-life disposal a critical aspect to manage. Entities unable to minimise the environmental externalities of their products may face increased regulatory

minimise the environmental externalities of their products may face increased regulatory costs as jurisdictional environmental laws or regulations place more emphasis on resource conservation and waste management. Through product innovation that facilitates end-of-life product recovery and the use of less impactful materials, EMS &

ODM manufacturers can achieve improvements in lifecycle impacts, reduce regulatory risks and realise cost savings.

Metrics

risks and realise cost savings.

Metrics TC-ES-410a.1. Weight of end-of-life products and e-waste recovered; percentage recycled 1 The entity shall disclose the weight, in metric tons, of end-of-life material recovered, including through reverse logistics services, recycling services, product take-back programmes and refurbishment services.

1.1

End-of-life material recovered is defined as products, materials and parts,

including electronic waste material (e-waste), that at the end of their

including electronic waste material (e-waste), that at the end of their useful life would have otherwise been discarded as waste or used for energy recovery, but have instead been collected.

1.2

The scope of end-of-life material recovered includes materials physically handled by the entity.

1.3

The scope of end-of-life material recovered includes materials of which the entity did not take physical possession, but were collected by a third party

entity did not take physical possession, but were collected by a third party for the expressed purpose of reuse, recycling or refurbishment.

1.4

The scope of end-of-life material recovered excludes materials collected for repair or that are under warranty and subject to recall.

2 The entity shall disclose the percentage of end-of-life material recovered and subsequently recycled.

2.1

The percentage shall be calculated as the weight of end-of-life material

subsequently recycled.

2.1

The percentage shall be calculated as the weight of end-of-life material recovered and subsequently recycled divided by the total weight of end-of-

life material recovered.

2.2

Recycled material (including remanufactured material) is defined as waste material reprocessed or treated by means of production or manufacturing processes and made into a final product or a component for incorporation into a product.

2.3

The scope of recycled material includes material reused or reclaimed.

2.3.1

Reused material is defined as recovered products or components of products used for the same purpose for which they were conceived,

products used for the same purpose for which they were conceived,

including products donated or refurbished by the entity or by third parties.

2.3.2

Reclaimed material is defined as material processed to recover or regenerate a usable product.

2.4

The scope of recycled material includes primary recycled material, co-

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

products (outputs of lesser value to primary recycled materials) and

products (outputs of lesser value to primary recycled materials) and material sent externally for further recycling.

2.5

The scope of recycled material excludes portions of products and materials that are disposed of in landfills.

3 Electronic waste material (e-waste) shall be considered recycled only if the entity can demonstrate that this material was transferred to entities with third-party certification to a standard for e-waste recycling such as the e-Stewards® Standard

certification to a standard for e-waste recycling such as the e-Stewards® Standard for Responsible Recycling and Reuse of Electronic Equipment or the Responsible Recycling Practices (R2) Standard for Electronic Recyclers.

3.1

The entity shall disclose the standard(s) complied with by the entities to which it has transferred e-waste.

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