Volume 62—Auto Parts

Title: Volume 62—Auto Parts

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 62—Auto Parts

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 62—Auto Parts

Industry Description

Entities in the Auto Parts industry supply motor vehicle parts and accessories to original

equipment

manufacturers

(OEM).

Auto

parts

entities

typically

specialise

manufacturing and assembling parts or accessories, such as engine exhaust systems,

alternative drivetrains, hybrid systems, catalytic converters, aluminium wheels (rims),

tyres, rear-view mirrors, and onboard electrical and electronic equipment. Although the

larger automotive industry includes several tiers of suppliers that provide parts and raw

materials used to assemble motor vehicles, the scope of these Auto Parts industry

disclosures includes only Tier 1 suppliers that supply parts directly to OEMs. The scope of

the industry excludes captive suppliers, such as engine and stamping facilities, owned

and operated by OEMs. It also excludes Tier 2 suppliers, which provide inputs for the

Auto Parts industry.

Sustainability Disclosure Topics & Metrics

Table 1. Sustainability Disclosure Topics & Metrics

TOPIC

METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Number of parts produced Quantitative Number TR-AP-000.A Weight of parts produced Quantitative Metric tons (t) TR-AP-000.B Area of manufacturing plants Quantitative Square metres (m²)

Metric tons (t) TR-AP-000.B Area of manufacturing plants Quantitative Square metres (m²) TR-AP-000.C Energy Management Topic Summary Most energy consumed in the automobile manufacturing process occurs in the supply chain. Auto parts manufacturers use electricity and fossil fuels in their production processes, resulting in direct and indirect emissions of greenhouse gases (GHGs).

Purchased electricity is a majority of the energy used in the Auto Parts industry.

Sustainability initiatives such as incentives for energy efficiency and renewable energy are making alternative sources of energy more cost competitive. Regulators and consumers also are encouraging the industry to reduce GHG emissions. While managing the cost and risks associated with overall energy efficiency, reliance on various types of

the cost and risks associated with overall energy efficiency, reliance on various types of energy and access to alternative energy sources may become increasingly important.

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

Metrics TR-AP-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.

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

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 Certified utility or supplier programme, or other green power products that explicitly include RECs or GOs, or for which Green‐e Energy Certified

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 explicitly include and convey that RECs and GOs be retained or

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

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

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 Green-e regional standards or materials that are eligible for an applicable state renewable portfolio standard.

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

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 conversion of kilowatt hours (kWh) to GJ (for energy data including electricity from solar or wind energy).

Design for Fuel Efficiency Topic Summary Automobile manufacturers increasingly are demanding motor parts and components that reduce vehicle fuel consumption. Fuel-efficient components and parts are critical in

that reduce vehicle fuel consumption. Fuel-efficient components and parts are critical in reducing automobile tailpipe emissions through energy efficiency gains and weight reductions, among other factors. Auto parts entities that design and manufacture such parts may increase sales to auto manufacturers that increasingly are facing stricter environmental regulations and customer preferences for more environmentally friendly cars.

Metrics

environmental regulations and customer preferences for more environmentally friendly cars.

Metrics TR-AP-410a.1. Revenue from products designed to increase fuel efficiency or reduce emissions 1 The entity shall disclose total revenue from products designed to increase fuel efficiency or reduce emissions during their use phase.

1.1

Products designed to increase fuel efficiency or reduce emissions are defined as products the entity has tested, modelled or otherwise shown to

defined as products the entity has tested, modelled or otherwise shown to improve fuel efficiency or eliminate or lower emissions of greenhouse gases (GHG), nitrogen oxide (NOx), particulate matter (PM), sulphur oxides (SOx) and other air pollutants during their use phase.

1.2

The use phase is defined as the course over which the product is used by a customer or consumer as a final product or to generate a final product (for example, in a manufacturing or production process).

1.3

example, in a manufacturing or production process).

1.3

The disclosure scope includes products that provide incremental improvement to fuel efficiency or emission reduction, if the entity can demonstrate the improvement is meaningful, such as through alignment with the milestones set forth in Section 5, ‘Key Sectors/Ensuring efficient IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023© IFRS Foundation 5

mobility’, of the European Commission‘s Road Map to a Resource Efficient Europe or with EU Directive 2012/27/EU (Energy Efficiency Directive).

1.4

The scope of disclosure excludes products that offer improved fuel efficiency or reduced emissions in an ancillary or indirect way (for example, a conventional product that is slightly lighter than the previous generation of the product).

2 Examples of products that may increase fuel efficiency or reduce emissions may

2 Examples of products that may increase fuel efficiency or reduce emissions may include those relating to: electrification of auxiliary systems such as oil and water pumps, waste heat recovery, improved aerodynamics, hybrid and advanced fuel technologies, improvements to combustion efficiency, idle reduction, alternative cooling systems, electric power steering, hybrid-enabled braking technologies, low rolling resistance (LRR), new and retread tyre technologies, and engine

rolling resistance (LRR), new and retread tyre technologies, and engine management systems/products.

3 For products designed to both increase fuel efficiency and reduce emissions, the entity shall account only for the products’ revenue once.

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