ifrs-s2-ibg-volume-61-airlines-part-b

Title: Volume 61—Airlines

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 61—Airlines

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 61—Airlines

Industry Description

Airlines industry entities provide air transportation globally to passengers for both

leisure and business purposes. This includes commercial full-service, low-cost and

regional airlines. Full-service carriers typically use a hub-and-spoke model to design their

routes within countries and internationally. Low-cost carriers usually offer a smaller

number of routes as well as no-frills service to their customers. Regional carriers typically

operate under contract to full-service carriers, expanding the network of the larger

carriers. Many airline entities also have a cargo segment in their operations to generate

additional revenue. Entities in the industry commonly form partnerships or join alliances

to increase network size. Operating as an alliance allows airlines to offer customers

access to international or otherwise underserved itineraries on more than one airline

under one ticket. At the same time, airlines share some overhead costs and increase their

competitive position in the global market without having to operate outside their home

country.

Sustainability Disclosure Topics & Metrics

Table 1. Sustainability Disclosure Topics & Metrics

TOPIC

METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Table 1. Sustainability Disclosure Topics & Metrics

TOPIC

METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Greenhouse

Gas

Emissions

Gross global Scope 1 emissions

Quantitative

Metric tons (t)

CO₂-e

TR-AL-110a.1

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

Discussion

and Analysis

n/a

TR-AL-110a.2

(1) Total fuel consumed, (2) percentage

alternative and (3) percentage sustainable Quantitative

(1) Total fuel consumed, (2) percentage alternative and (3) percentage sustainable Quantitative Gigajoules (GJ),Percentage (%) TR-AL-110a.3 Table 2. Activity Metrics

ACTIVITY METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Available seat kilometres (ASK) 111 Quantitative

ASK

TR-AL-000.A Passenger load factor 112 Quantitative Rate TR-AL-000.B Revenue passenger kilometres (RPK) 113 Quantitative

RPK

TR-AL-000.C continued...

Rate TR-AL-000.B Revenue passenger kilometres (RPK) 113 Quantitative

RPK

TR-AL-000.C continued...

111 Note to TR-AL-000.A – Available seat kilometres (ASK) is defined as the maximum potential cumulative kilometres travelled by passengers (that is, kilometres travelled by occupied and unoccupied seats).

112 Note to TR-AL-000.B – Load factor is a measure of capacity utilisation and is calculated as passenger kilometres travelled divided by available seat kilometres.

passenger kilometres travelled divided by available seat kilometres.

113 Note to TR-AL-000.C – Revenue passenger kilometres (RPK) is defined as the cumulative total kilometres travelled by revenue passengers. A revenue passenger is a passenger for whose transportation an air carrier receives commercial remuneration.

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

...continued

ACTIVITY METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Revenue ton kilometres (RTK) 114 Quantitative

RTK

TR-AL-000.D Number of departures Quantitative Number TR-AL-000.E Average age of fleet Quantitative Years TR-AL-000.F Greenhouse Gas Emissions Topic Summary As a result of a heavy reliance on hydrocarbon fuels, the Airlines industry generates significant emissions, more than 99% of which are in the form of carbon dioxide (CO2).

significant emissions, more than 99% of which are in the form of carbon dioxide (CO2).

Therefore, the industry is subject to compliance costs and risks associated with climate change mitigation policies. The main sources of greenhouse gas (GHG) emissions for airlines entities are aircraft fuel use and emissions, ground equipment and facility electricity. Aircraft fuel consumption is the largest contributor to total emissions from

electricity. Aircraft fuel consumption is the largest contributor to total emissions from the industry, and fuel management is a critical part of reducing emissions. Management of fuel-related environmental impacts includes increasing fuel efficiency through fleet upgrades, retrofits, and flight speed and route design optimisation, as well as using alternative and sustainable fuels. These initiatives require capital expenditures, but in the

alternative and sustainable fuels. These initiatives require capital expenditures, but in the long term, they may reduce fuel costs and decrease exposure to GHG emissions programmes and regulatory risk.

Metrics TR-AL-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),

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 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

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.

114 Note to TR-AL-000.D – Revenue ton kilometres (RTK) is defined as one metric ton of revenue traffic transported one kilometre. RTK is computed by multiplying the aircraft kilometres flown

traffic transported one kilometre. RTK is computed by multiplying the aircraft kilometres flown on each flight stage by the number of metric tons of revenue traffic carried on that flight stage (for example, passengers, baggage, freight, and mail).

IFRS S2 INDUSTRY-BASED GUIDANCE 4© IFRS Foundation

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

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:

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 Combustion Sources published by the U.S. Environmental Protection Agency (EPA)

2.1.3

India GHG Inventory Program

2.1.4

ISO 14064-1

2.1.5

Agency (EPA)

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 is generally 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 are from continuous emissions monitoring systems (CEMS),

engineering calculations or mass balance calculations.

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

TR-AL-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 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).

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);

2.2

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 time lines for the reduction activity, including the start year, the target year and the base year;

2.5

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

Relevant 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 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.

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

aircraft.

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,

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.

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-AL-110a.3. (1) Total fuel consumed, (2) percentage alternative and

(3) percentage sustainable 1 The entity shall disclose (1) the total amount of fuel consumed from all sources as an aggregate figure, in gigajoules (GJ).

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

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 The entity shall disclose (2) the percentage of fuel consumption that was alternative fuel.

2.1

2 The entity shall disclose (2) the percentage of fuel consumption that was alternative fuel.

2.1

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.

2.2

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

consumed (in GJ) divided by the total amount of fuel consumed (in GJ).

3 The entity shall disclose (3) the percentage of fuel consumed that was sustainable fuel.

3.1

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

3.1.1

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

3.1.2

Avoids competition with food and water through marginal or unviable land use

3.1.3

3.1.2

Avoids competition with food and water through marginal or unviable land use

3.1.3

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

3.2

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

4 The scope of disclosure is limited to fuel the entity directly consumes. In

4 The scope of disclosure is limited to fuel the entity directly consumes. 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, the US Department of Energy or the US Energy Information Agency.

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

5 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).

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