ifrs-s2-ibg-volume-60-air-freight-and-logistics-part-b

Title: Volume 60—Air Freight & Logistics

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

Source: IFRS Foundation (https://www.ifrs.org)

Navigator: https://www.ifrs.org/issued-standards/ifrs-sustainability-standards-navigator/sustainability-pdf-collection/

Model: https://www.ifrs.org/content/ifrs/home/issued-standards/ifrs-sustainability-standards-navigator/sustainability-pdf-collection/jcr:content/root/responsivegrid_1242322373/standarddocument.model.json

PDF: https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards-issb/english/2023/issued/part-b/ifrs-s2-ibg-volume-60-air-freight-and-logistics-part-b.pdf?bypass=on

Year: 2023

Type: Industry

Industry-based Guidance on implementing

Climate-related Disclosures

Volume 60—Air Freight & Logistics

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 60—Air Freight & Logistics

Industry Description

Air Freight & Logistics industry entities provide freight services and transportation

logistics to both businesses and individuals. The industry consists of three main

segments: air freight transportation, post and courier services, and transportation

logistics services. Entities in the industry earn revenue from one or more of the segments

and range from non-asset-based to asset-heavy. Transportation logistics services include

contracting with road, rail, marine and air freight entities to select and hire appropriate

transportation. Services also may include customs brokerage, distribution management,

vendor consolidation, cargo insurance, purchase order management and customised

logistics information. The industry is crucial to global trade, granting it a degree of

demand stability.

Sustainability Disclosure Topics & Metrics

demand stability.

Sustainability Disclosure Topics & Metrics

Table 1. Sustainability Disclosure Topics & Metrics

TOPIC

METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Revenue ton kilometres (RTK) for: (1) road transport and

(2) air transport 109

Quantitative

RTK

TR-AF-000.A Load factor for: (1) road transport and (2) air transport 110 Quantitative Rate TR-AF-000.B Number of employees, number of truck drivers Quantitative Number TR-AF-000.C 109 Note to TR-AF-000.A – Revenue ton kilometres (RTK) is defined as one metric ton of revenue

109 Note to TR-AF-000.A – Revenue ton kilometres (RTK) is defined as one metric ton of revenue traffic transported one kilometre. RTK is computed by multiplying the vehicle-kilometres travelled on each leg by the number of tons of revenue traffic carried on that leg.

110 Note to TR-AF-000.B – Load factor is a measure of capacity utilisation and is calculated as kilometres travelled by cargo divided by total kilometres travelled.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023© IFRS Foundation 3

Greenhouse Gas Emissions Topic Summary Air Freight & Logistics industry entities generate direct greenhouse gas (GHG) emissions that contribute to climate change. Emissions are generated from fuel combustion by both air and road freight operations. Given the altitude of the emissions from jet fuel, air freight makes an especially potent contribution to climate change. Management of GHG emissions is likely to affect air freight and logistics entities’ cost structure over time

emissions is likely to affect air freight and logistics entities’ cost structure over time because emissions are tied directly to fuel use, and thus to operating expenses. Fuel efficiency and alternative fuels usage may reduce fuel costs or limit exposure to volatile fuel pricing, future regulatory costs and other consequences of GHG emissions. While newer aircraft and trucks are generally more fuel efficient, existing fleets may be

newer aircraft and trucks are generally more fuel efficient, existing fleets may be retrofitted. Capital investments in more fuel-efficient aeroplanes or vehicles and emerging fuel-management technology may reduce fuel expenses and improve profitability. These investments also may help entities capture market share of customers seeking low-carbon shipping solutions.

Metrics TR-AF-110a.1. Gross global Scope 1 emissions 1

seeking low-carbon shipping solutions.

Metrics TR-AF-110a.1. Gross global Scope 1 emissions 1 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).

1.1

Emissions of all GHGs shall be consolidated and disclosed in metric tons of

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

for offsets, credits or other similar mechanisms that have reduced or compensated for emissions.

2 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

Development (WRI/WBCSD).

2.1

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 may include:

2.1.1

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

2.1.2

Greenhouse Gas Inventory Guidance: Direct Emissions from Stationary

2.1.2

Greenhouse Gas Inventory Guidance: Direct Emissions from Stationary Combustion Sources published by the U.S. Environmental Protection Agency (EPA) IFRS S2 INDUSTRY-BASED GUIDANCE 4© IFRS Foundation

2.1.3

India GHG Inventory Program

2.1.4

ISO 14064-1

2.1.5

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

2011, published by IPIECA

2.1.6

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

2.2

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.

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

3 The entity may discuss any change in 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.

4 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.

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

such as if data is from continuous emissions monitoring systems (CEMS),

engineering calculations or mass balance calculations.

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

TR-AF-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.

1.1

Scope 1 emissions are defined and shall be calculated according to the methodology contained in The Greenhouse Gas Protocol: A Corporate Accounting

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

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

2 The entity shall discuss its emission reduction target(s) and analyse its 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);

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

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

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 plans or targets, and any risks or limiting factors that might affect achievement of the plans or targets.

3.1

the plans or targets.

3.1

Aviation-related activities and investments may include fuel optimisation efforts such as the use of ground power and pre-conditioned air rather than auxiliary power units (APU) when parked at a gate, adjusting flight speed to optimise fuel efficiency, route design (for example, NextGen), use of winglets, reduction in aircraft weight and upgrading of the fleet with new aircraft.

3.2

Road transportation-related activities and investments may include fuel

new aircraft.

3.2

Road transportation-related activities and investments may include fuel optimisation efforts such as route and load optimisation, adoption of technology such as engine and powertrain efficiency and aerodynamic improvements, use of electric- or natural gas-powered vehicles, weight reduction, improved tyre rolling resistance, hybridisation and automatic engine shutdown.

4 The entity shall discuss the scope of its strategies, plans or reduction targets, such

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 programmes or regulations (for example, the EU Emissions Trading Scheme,

Quebec Cap-and-Trade System, California Cap-and-Trade Program), including

Quebec Cap-and-Trade System, California Cap-and-Trade Program), including regional, national, international or sectoral programmes.

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

TR-AF-110a.3. Fuel consumed by (1) road transport, percentage (a) natural gas and (b) renewable, and (2) air transport, percentage (a) alternative and (b) sustainable 1

and (b) renewable, and (2) air transport, percentage (a) alternative and (b) sustainable 1 The entity shall disclose the amount of fuel consumed as an aggregate figure, in gigajoules (GJ), categorised by (1) road transport-related operations, and separately, (2) air transport-related operations.

IFRS S2 INDUSTRY-BASED GUIDANCE 6© IFRS Foundation

1.1

The calculation methodology for fuel consumed shall be based on actual fuel consumed as opposed to design parameters.

1.2

Acceptable calculation methodologies for fuel consumed may include methodologies based on:

1.2.1

Adding fuel purchases made during the reporting period to beginning inventory at the start of the reporting period, less any fuel inventory at the end of the reporting period

1.2.2

Tracking fuel consumed by vehicles

1.2.3

Tracking fuel expenses 2

1.2.2

Tracking fuel consumed by vehicles

1.2.3

Tracking fuel expenses 2 In disclosing fuel consumed by (1) road transport-related operations, the entity additionally shall disclose the percentage of fuel consumed that was (a) natural gas.

2.1

The percentage shall be calculated as the amount of fuel consumed by road transport-related operations that was natural gas (in GJ) divided by the total amount of fuel consumed by road transport-related operations (in

GJ).

the total amount of fuel consumed by road transport-related operations (in

GJ).

3 In disclosing fuel consumed by (1) road transport-related operations, the entity shall additionally disclose the percentage of fuel consumed that was (b) renewable fuel.

3.1

Renewable fuel is generally defined as fuel that meets all of these requirements:

3.1.1

Produced from renewable biomass

3.1.2

Used to replace or reduce the quantity of fossil fuel present in a transportation fuel, heating oil or jet fuel

3.1.3

transportation fuel, heating oil or jet fuel

3.1.3

Achieved net greenhouse gas (GHG) emissions reduction on a life cycle basis.

3.2

The entity shall disclose the standard or regulation used to determine if a fuel is renewable.

3.3

The percentage shall be calculated as the amount of renewable fuel consumed by road transport-related operations (in GJ) divided by the total amount of fuel consumed by road transport-related operations (in GJ).

amount of fuel consumed by road transport-related operations (in GJ).

4 In disclosing fuel consumed by (2) air transport-related operations, the entity additionally shall disclose the percentage of fuel consumed that was (a) alternative fuel.

4.1

Alternative fuel is defined by the International Civil Aviation Organization (ICAO) as fuel from sources other than petroleum that has the potential to generate lower carbon emissions than petroleum-based fuel on a life cycle basis.

4.2

generate lower carbon emissions than petroleum-based fuel on a life cycle basis.

4.2

The percentage shall be calculated as the amount of alternative fuel consumed by air transport-related operations (in GJ) divided by the total amount of fuel consumed by air transport-related operations (in GJ).

5 In disclosing fuel consumed by (2) air transport-related operations, the entity shall additionally disclose the percentage of fuel consumed that was (b) sustainable fuel.

5.1

Sustainable fuel is defined as a subset of alternative fuel that meets all of the following criteria described by ICAO:

5.1.1

Achieves net greenhouse gas (GHG) emissions reduction on a life cycle basis

5.1.2

Avoids competition with food and water through utilisation of marginal or unviable land

5.1.3

5.1.2

Avoids competition with food and water through utilisation of marginal or unviable land

5.1.3

Contributes to local social and economic development, such as through expanded employment and revitalised infrastructure.

5.2

The percentage shall be calculated as the amount of sustainable fuel consumed by air transport-related operations (in GJ) divided by the total amount of fuel consumed by air transport-related operations (in GJ).

amount of fuel consumed by air transport-related operations (in GJ).

6 The scope of disclosure is limited to fuel the entity directly consumed.

7 In calculating energy consumption from fuels, 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).

8 The entity shall apply conversion factors consistently for all data reported under

8 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).

Supply Chain Management Topic Summary Many entities in the Air Freight & Logistics industry contract with large, complex networks of asset-based third-party providers to provide freight transportation services to their customers. Contracting is common among entities providing freight forwarding,

their customers. Contracting is common among entities providing freight forwarding,

logistics, brokerage and intermodal services. Contractors range across all modes of transport such as motor carriers, railroads, air freight and ocean carriers. Entities must manage contractor relationships to ensure contractor actions that may have environmental or social impacts do not result in material adverse effects on their own

environmental or social impacts do not result in material adverse effects on their own operations, such as decreased brand value. At the same time, entities that offer low-

carbon logistics solutions may capture market share from customers seeking to reduce the carbon footprint of their shipment.

Metrics TR-AF-430a.2. Total greenhouse gas (GHG) footprint across transport modes 1 The entity shall disclose the complete tank-to-wheels greenhouse gas (GHG)

1 The entity shall disclose the complete tank-to-wheels greenhouse gas (GHG) footprint in metric tons of CO2-e per metric ton-kilometre.

2 Tank-to-wheels emissions relate to vehicle processes and exclude upstream emissions associated with primary energy production (well-to-tank emissions).

2.1

The entity shall calculate its disclosure according to EN 16258:2012 –

Methodology for calculation and declaration of energy consumption and GHG emissions of transport services (freight and passengers).

2.1.1

Calculations shall be consistent with the methodology used to calculate the ‘tank-to-wheels GHG emissions (Gt)’ result that is described in EN 16258:2012.

2.1.2

Determination of transportation system scope, boundaries and any

described in EN 16258:2012.

2.1.2

Determination of transportation system scope, boundaries and any necessary allocations shall be consistent with the methodology described in EN 16258:2012.

3 The scope of disclosure includes emissions from all freight transportation and logistics activities, including those from the entity’s own assets (Scope 1) and those from contract carriers and outsourced freight forwarding services.

those from contract carriers and outsourced freight forwarding services.

4 The scope of disclosure includes emissions from all modes of transportation, such as road freight, air freight, barge transport, marine transport and rail transport.

5 Consistent with EN 16258:2012, disclosure may be based on calculations from a mix of categories of emissions values (specific measured values, transport operator vehicle-type- or route-type-specific values, transport operator fleet values

operator vehicle-type- or route-type-specific values, transport operator fleet values and default values).

6 If relevant and necessary for interpretation of disclosure, the entity shall describe its allocation methods, emissions values, boundaries, mix of transport services used and other information.

10© IFRS Foundation 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®