ifrs-s2-ibg-volume-57-semiconductors-part-b

Title: Volume 57—Semiconductors

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 57—Semiconductors

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 57—Semiconductors

Industry Description

Semiconductors industry entities design or manufacture semiconductor devices,

integrated circuits, their raw materials and components, or capital equipment. Some

entities in the industry provide outsourced manufacturing, assembly or other services for

designers of semiconductor devices.

Sustainability Disclosure Topics & Metrics

Table 1. Sustainability Disclosure Topics & Metrics

TOPIC

METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Total production 101 Quantitative See note TC-SC-000.A Percentage of production from owned facilities Quantitative Percentage (%) TC-SC-000.B Greenhouse Gas Emissions Topic Summary Entities in the Semiconductors industry generate greenhouse gas (GHG) emissions,

particularly those from perfluorinated compounds, from semiconductor manufacturing

particularly those from perfluorinated compounds, from semiconductor manufacturing operations. GHG emissions may create regulatory compliance costs and operating risks for semiconductors entities, although resulting financial effects may vary depending on the magnitude of emissions and the prevailing emissions regulations. Entities that cost-

effectively manage GHG emissions through greater energy efficiency, the use of

effectively manage GHG emissions through greater energy efficiency, the use of alternative chemicals or manufacturing process advances may benefit from improved operating efficiency and reduced regulatory risk.

Metrics TC-SC-110a.1. (1) Gross global Scope 1 emissions and (2) amount of total emissions from perfluorinated compounds 1 The entity shall disclose its (1) gross global Scope 1 greenhouse gas (GHG) emissions to the atmosphere of the seven GHGs covered under the Kyoto Protocol

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).

1.1

Emissions of all GHGs shall be consolidated and disclosed in metric tons of carbon dioxide equivalents (CO2-e) calculated in accordance with published 100-year time horizon global warming potential (GWP) values. To date, the

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.

2 The entity shall disclose its (2) gross global Scope 1 GHG emissions, in metric tons

2 The entity shall disclose its (2) gross global Scope 1 GHG emissions, in metric tons of CO2-e, originated from perfluorinated compounds.

101 Note to TC-SC-000.A – The entity shall disclose total production from its own manufacturing facilities and those with which it contracts for manufacturing services. For semiconductor equipment manufacturers the total production shall be reported on a per unit basis. For

equipment manufacturers the total production shall be reported on a per unit basis. For semiconductor device manufacturers the total production shall be reported consistent with International SEMATECH Manufacturing Initiative’s Semiconductor Key Environment Performance Indicators Guidance, Technology Transfer #09125069A-ENG.

IFRS S2 INDUSTRY-BASED GUIDANCE 4© IFRS Foundation

3 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).

3.1

Acceptable calculation methodologies include those that conform to the GHG Protocol as the base reference, but provide additional guidance, such as

GHG Protocol as the base reference, but provide additional guidance, such as industry- or region-specific guidance. Examples may include:

3.1.1

GHG Reporting Guidance for the Aerospace Industry published by the International Aerospace Environmental Group (IAEG)

3.1.2

Greenhouse Gas Inventory Guidance: Direct Emissions from Stationary Combustion Sources published by the US Environmental Protection Agency (EPA)

3.1.3

India GHG Inventory Program

3.1.4

ISO 14064-1

3.1.5

Agency (EPA)

3.1.3

India GHG Inventory Program

3.1.4

ISO 14064-1

3.1.5

Petroleum Industry Guidelines for reporting GHG emissions, 2nd edition,

2011, published by IPIECA

3.1.6

Protocol for the quantification of greenhouse gas emissions from waste management activities published by Entreprises pour l’Environnement (EpE)

3.2

GHG emissions data shall be consolidated and disclosed according to the approach with which the entity consolidates its financial reporting data,

approach with which the entity consolidates its financial reporting data,

which generally is aligned with the ‘financial control’ approach defined by the GHG Protocol, and the approach published by the Climate Disclosure Standards Board (CDSB) described in REQ-07, ‘Organisational boundary’, of the CDSB Framework for reporting environmental and social information.

4 The entity may discuss any change in its emissions from the previous reporting

4 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.

5 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.

scope and consolidation approach used, the entity may disclose those emissions.

However, primary disclosure shall be according to the guidelines described above.

6 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.

TC-SC-110a.2. Discussion of long- and short-term strategy or plan to manage

TC-SC-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 1 The entity shall discuss its long- and short-term strategy or plan to manage its Scope 1 greenhouse gas (GHG) emissions.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023© IFRS Foundation 5

1.1

Scope 1 emissions are defined according to 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),

Kyoto Protocol—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O),

hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6), and nitrogen trifluoride (NF3).

1.3

The entity shall specifically discuss its strategy or plan to manage Scope 1 GHG emissions that originate from perfluorinated compounds.

2 The entity shall discuss its emission reduction target(s) and analyse its performance against the target(s), including, if relevant:

2.1

performance against the target(s), including, if relevant:

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 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.

3 The entity shall discuss the activities and investments required to achieve the

reset.

3 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.

3.1

Relevant activities and investments may include energy efficiency efforts,

demand-response programmes and development of renewable energy portfolios consistent with the IPCC Fifth Assessment Report: Climate Change 2014: Mitigation of Climate Change, Contribution of Working Group III.

Change 2014: Mitigation of Climate Change, Contribution of Working Group III.

4 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.

5 The entity shall discuss whether its strategies, plans or reduction targets are related to, or associated with, emissions limiting or emissions reporting-based

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.

IFRS S2 INDUSTRY-BASED GUIDANCE 6© IFRS Foundation

6 Disclosure of strategies, plans or reduction targets shall be limited to activities that were ongoing (active) or reached completion during the reporting period.

Energy Management in Manufacturing Topic Summary Energy is a critical input for manufacturing semiconductor devices. The price of conventional grid electricity and volatility of fossil fuel prices may increase because of evolving climate change regulations and new incentives for energy efficiency and

evolving climate change regulations and new incentives for energy efficiency and renewable energy, among other factors, while alternative energy sources become more cost-competitive. Decisions regarding energy sourcing and type, as well as alternative energy use, may create trade-offs related to the energy supply’s cost and reliability for operations. As industry innovation adds complexity to manufacturing processes, new

operations. As industry innovation adds complexity to manufacturing processes, new technologies to manufacture semiconductors may consume more energy unless entities invest in the energy efficiency of their operations. The way an entity manages energy efficiency, reliance on different types of energy, the associated sustainability risks, and alternative energy source access may affect financial performance.

Metrics TC-SC-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,

including energy purchased from external sources and energy produced by the entity itself (self-generated). For example, direct fuel usage, purchased

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.

1.3

In calculating energy consumption from fuels and biofuels, the entity shall use higher heating values (HHV), also known as gross calorific values

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 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.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023© IFRS Foundation 7

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

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

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 outside the control or influence of the entity is excluded from the scope of renewable energy.

3.4

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

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.

4 The entity shall apply conversion factors consistently for all data reported under this disclosure, such as the use of HHVs for fuel use (including biofuels) and

this disclosure, such as the use of HHVs for fuel use (including biofuels) and conversion of kilowatt hours (kWh) to GJ (for energy data including electricity from solar or wind energy).

Water Management Topic Summary Water is critical to the semiconductor production process, which requires significant volumes of ‘ultra-pure’ water for cleaning purposes, to avoid trace molecules from affecting product quality. As manufacturing becomes more complex, entities in the

affecting product quality. As manufacturing becomes more complex, entities in the industry are discovering the importance of reducing ultra-pure water use. Water is becoming a scarce resource around the world, because of increasing consumption from population growth and rapid urbanisation, and reduced supplies because of climate change. Furthermore, water pollution in developing countries makes available water supplies unusable or expensive to treat. Without careful planning, water scarcity may

supplies unusable or expensive to treat. Without careful planning, water scarcity may result in higher supply costs, social tensions with local communities and governments, or loss of water access in water-scarce regions, thereby presenting a critical risk to IFRS S2 INDUSTRY-BASED GUIDANCE 8© IFRS Foundation

production. Semiconductor entities that increase water use efficiency during manufacturing may maintain a lower risk profile and face reduced regulatory risks as local, regional and national environmental laws place increasing emphasis on resource conservation.

Metrics TC-SC-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 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

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 of 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.

Product Lifecycle Management Topic Summary As an increasing number of devices become connected to each other and to the internet,

semiconductor entities face greater demand for products that increase computing power and decrease energy costs. Semiconductor machinery and device manufacturers may reduce the environmental and human health impacts of their products by increasing the energy-efficiency of equipment and chips and reducing the use of harmful materials in

energy-efficiency of equipment and chips and reducing the use of harmful materials in products. As consumer demand grows for energy-efficient devices that increase battery life, reduce heat output and decrease energy consumption, semiconductor manufacturers that satisfy these may gain a competitive advantage, driving revenue and market share growth. Entities also may benefit from reducing the use of toxic materials from chips

growth. Entities also may benefit from reducing the use of toxic materials from chips destined for consumer devices, which has implications for the end-of-life management of electronic waste, an issue of growing legislative importance in many countries.

Metrics TC-SC-410a.1. Percentage of products by revenue that contain IEC 62474 declarable substances 1 The entity shall disclose the percentage of products sold during the reporting period that contain declarable substances.

1.1

period that contain declarable substances.

1.1

A product contains a declarable substance if, according to the International Electrotechnical Commission’s

IEC

62474—Material Declaration for Products of and for the Electrotechnical Industry, it contains an amount of the declarable substance that is:

1.1.1

Above the ‘reporting threshold’

1.1.2

Within the scope of the ‘reporting application’ identified

1.1.3

Within the mandatory ’reporting requirement’

1.2

1.1.3

Within the mandatory ’reporting requirement’

1.2

The entity shall calculate the percentage as the revenue from electrical,

electronic and related technology products sold that contain a declarable substance(s) divided by total revenue from electrical, electronic and related technology products sold.

2 The scope of disclosure includes all electrical, electronic and related technology products, including products from an entity not required to declare, or otherwise

products, including products from an entity not required to declare, or otherwise make declarations, according to IEC 62474.

Note to TC-SC-410a.1 1 The entity shall describe how it manages the use of substances that appear as declarable substance groups or declarable substances in IEC 62474, including a discussion of specific operational processes during which use of these substances is considered as well as a discussion of actions the entity has taken to manage the use of these substances.

1.1

use of these substances.

1.1

Relevant management approaches and actions to describe may include:

1.1.1

Product design criteria for the exclusion of substances (for example, banned substances lists) IFRS S2 INDUSTRY-BASED GUIDANCE 10© IFRS Foundation

1.1.2

Use of material substitution assessments, materials and parts procurement guidelines,product safety testing,product declarations (for example, material safety data sheets), and product labelling 2 If the entity assesses and manages the impact of known or potentially toxic substances with reference to other regulations, industry norms or accepted chemical lists, it may identify those practices, and it shall describe the degree of overlap with IEC 62474.

overlap with IEC 62474.

TC-SC-410a.2. Processor energy efficiency at a system-level for: (1) servers,

(2) desktops and (3) laptops 1 The entity shall disclose the energy efficiency of its processors based on benchmarked performance per watt of energy consumed for (1) servers,

(2) desktops and (3) laptops, using the following parameters:

1.1

Representative product: The entity shall calculate performance using a representative product for each product category (servers, desktops,

representative product for each product category (servers, desktops,

laptops), in which a representative product typically would be the entity’s bestselling specification of processor in the product category. If the entity determines its representative product differently, it shall explain the criteria it used in this determination.

1.2

System-level testing: Testing shall be conducted—and disclosure shall be made—at the system-level for a computer integrating the entity’s

made—at the system-level for a computer integrating the entity’s processor and not at a component-level. The entity shall conduct testing using a representative computer system structure, such as the bestselling system using the entity’s processor or one that is widely commercially available.

1.3

Specified benchmark: At a minimum, the entity shall disclose performance to the benchmarks defined below for each product category;

the entity may disclose performance to additional benchmarks.

2 As described below, the entity shall conduct testing and disclose performance,

depending on product category, consistent with guidance provided by:

2.1

The Standard Performance Evaluation Entity (SPEC)

2.2

MobileMark®3 For (1) servers the entity shall conduct testing according to the SPEC Power SPECpower_sssj2008 and disclose the results as: overall ssj_ops/watt 4

SPECpower_sssj2008 and disclose the results as: overall ssj_ops/watt 4 For (2) desktop computers the entity shall conduct testing according to the SPEC CPU2006 benchmark and disclose results as both:

4.1

SPECspeed2017_int_base score/watt

4.2

SPECspeed2017_fp_basescore/watt 5 For (3) laptops the entity shall conduct testing according to the MobileMark® 2014 v1.5 and disclose results as both:

5.1

5.2

Battery life score (in minutes) 6 The entity shall consider the guidance references provided by SPEC and MobileMark® as normative references; thus any future updates made to them shall be considered updates to this guidance.

7 The entity may additionally disclose energy efficiency performance for other product categories, for which a benchmark is not specified above (for example,

workstations, netbooks, tablets, mobile phones, and storage), using a relevant benchmark.

7.1

workstations, netbooks, tablets, mobile phones, and storage), using a relevant benchmark.

7.1

The entity shall describe the parameters it used to select and test to applicable benchmarks.

Note to TC-SC-410a.2 1 The entity shall discuss how it incorporates product energy efficiency considerations into design for new and emerging usage patterns in all relevant product categories.

1.2

The discussion may include how, in the entity’s view, the energy efficiency

product categories.

1.2

The discussion may include how, in the entity’s view, the energy efficiency of processors is influenced by factors such as growth of new product categories (for example, machine-to-machine communication), new usage patterns (for example, increased data consumption via mobile devices),purchasing specifications or consumer demand (for example,

environmentally conscious consumers).

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