ifrs-s2-ibg-volume-63-automobiles-part-b

Title: Volume 63—Automobiles

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-63-automobiles-part-b.pdf?bypass=on

Year: 2023

Type: Industry

Industry-based Guidance on implementing

Climate-related Disclosures

Volume 63—Automobiles

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 63—Automobiles

Industry Description

Automobiles industry entities manufacture passenger vehicles, light trucks and

motorcycles. Industry players design, build and sell vehicles that use a range of

traditional and alternative fuels and powertrains. They sell these vehicles to dealers for

consumer retail sales as well as sell directly to fleet customers, including car rental and

leasing entities, commercial fleets and governments. Because of the industry’s global

nature, nearly all entities have manufacturing facilities, assembly plants and service

locations in several countries around the world. The Automobiles industry is

concentrated, with a few large manufacturers and a diversified supply chain. Given the

industry’s reliance on natural resources and sensitivity to the business cycle, revenue is

typically cyclical.

Sustainability Disclosure Topics & Metrics

typically cyclical.

Sustainability Disclosure Topics & Metrics

Table 1. Sustainability Disclosure Topics & Metrics

TOPIC

METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Number of vehicles manufactured

Quantitative

Number

TR-AU-000.A

Number of vehicles sold

Quantitative

Number

TR-AU-000.B

Fuel Economy & Use-phase Emissions

Topic Summary

Quantitative

Number

TR-AU-000.B

Fuel Economy & Use-phase Emissions

Topic Summary

Motor vehicle fossil fuel combustion accounts for a significant share of the greenhouse

gas (GHG) emissions contributing to global climate change. Engine exhaust also generates

local air pollutants such as nitrogen oxides (NOx), volatile organic compounds (VOCs) and

particulate matter (PM), which can threaten human health and the environment. In this

context, vehicle emissions increasingly concern consumers and regulators around the

world. Although use-phase emissions are downstream from auto manufacturers,

regulations often focus on auto manufacturers to reduce these emissions, such as

through fuel economy standards. More stringent emissions standards and changing

consumer demands are driving electric vehicle and hybrid market expansion, as well as

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

for high fuel-efficiency conventional vehicles. Moreover, manufacturers are designing

innovative vehicles made with lighter-weight materials to improve fuel efficiency.

Entities that meet current fuel-efficiency and emissions standards and continue to

innovate to meet or exceed future regulatory standards in various markets may

strengthen their competitive position and expand their market share, while mitigating

the risk of reduced demand for conventional vehicles.

Metrics

the risk of reduced demand for conventional vehicles.

Metrics

TR-AU-410a.1. Sales-weighted average passenger fleet fuel economy, by region

The entity shall disclose the average fuel economy of its passenger and light-duty

vehicle fleet, weighted for the footprint of vehicles sold, by geographical region.

1.1

The average fuel economy shall be calculated by model year as required

for regulatory purposes.

1.2

In the absence of regulatory guidance on calculating a fleet average, the

1.2

In the absence of regulatory guidance on calculating a fleet average, the

entity shall calculate performance based on the fuel economy of vehicles

sold during the reporting period weighted by sales volume.

1.3

The calculation shall be made on a fleet-average basis regardless of

whether regulations are based on vehicle weight.

The entity shall disclose the percentage by geographic region.

2.1

Geographical regions are defined as the regions for which the entity

2.1

Geographical regions are defined as the regions for which the entity

conducts segment financial reporting and which are subject to fleet fuel

economy, fuel consumption or emissions standards.

Disclosure may be provided in various units for each geographical region, which

may include:

3.1

Grams of carbon dioxide per kilometre (gCO2/km) for (1) passenger cars

and (2) light commercial vehicles sold in the European Union

3.2

and (2) light commercial vehicles sold in the European Union

3.2

Litres of petrol per kilometre (L/km) for passenger vehicles sold in Japan

3.3

Miles per gallon (mpg) for (1) domestic passenger cars, (2) imported

passenger cars and (3) light trucks sold in the US and subject to Corporate

Average Fuel Economy (CAFE) standards, where these vehicle categories

are defined in US 49 CFR Part 523

3.4

Kilometres per litre (km/L) for passenger vehicles sold in New Zealand

3.4

Kilometres per litre (km/L) for passenger vehicles sold in New Zealand

The scope of disclosure shall include all vehicles subject to national passenger

vehicle standards for fleet fuel economy, fuel consumption or emissions.

The entity may disclose fleet performance for other vehicle segments such as:

5.1

Cargo vehicles in Japan

5.2

Heavy-duty vehicles in the US

5.3

Light commercial vehicles in the EU

IFRS S2 INDUSTRY-BASED GUIDANCE

TR-AU-410a.2. Number of (1) zero emission vehicles (ZEV), (2) hybrid vehicles

and (3) plug-in hybrid vehicles sold

The entity shall disclose the number of vehicles sold during the reporting period

classified as: (1) zero emission vehicles (ZEV), (2) hybrid vehicles and (3) plug-in

hybrid electric vehicles.

1.1

ZEVs are vehicles driven only by an electric motor that are powered by

advanced-technology batteries or hydrogen fuel cell, and they have no

tailpipe emissions over their entire lifetime under all possible operational

modes and conditions.

1.2

Hybrid vehicles (hybrid electric vehicle or HEVs) are vehicles that can draw

propulsion energy from both of these on-vehicle sources of stored energy:

(a) a consumable fuel and (b) an energy storage device such as a battery,

capacitor or flywheel.

1.3

capacitor or flywheel.

1.3

Plug-in hybrid electric vehicles are vehicles that offer electric driving with

an electric motor powered by a large battery pack that is charged by

plugging into a source of electricity.

The scope of disclosure includes all vehicles sold globally that are eligible to be

classified in accordance with the above guidance.

TR-AU-410a.3. Discussion of strategy for managing fleet fuel economy and

emissions risks and opportunities

The entity shall discuss its strategy for improving the fuel economy and reducing

the use-phase emissions of its fleet.

1.1

Use-phase emissions include greenhouse gases and air pollutants such as

carbon dioxide, nitrogen oxides, volatile organic compounds, and

particulate matter.

Relevant aspects of the strategy include improvements to existing vehicles and

technologies, the introduction of new technologies, research and development

efforts into advanced technologies, and partnerships with peers, academic

institutions or customers.

Relevant technologies may include those related to materials design and

engineering, advanced powertrains, renewable fuels, energy storage and batteries,

aerodynamic design, fuel injection systems, particulate filters, and products and

fuels that otherwise result in reduced emissions.

3.1

Advanced

powertrain

fuels that otherwise result in reduced emissions.

3.1

Advanced

powertrain

technologies

include

vehicles

and

vehicle

components that are electric, hybrid electric, plug-in hybrid, dual-fuel and

zero-emissions (for example, fuel cell).

3.2

Renewable fuels and energy technologies are those that operate on sources

capable of being replenished in a short time through ecological cycles,

including biomass (including ethanol, first-generation biofuels and

advanced biofuels).

3.3

including biomass (including ethanol, first-generation biofuels and

advanced biofuels).

3.3

Products that result in reduced emissions include any vehicle or

technology that achieves a significant reduction in fuel consumption.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

3.4

Fuels that result in reduced emissions include biodiesel, ethanol, natural

gas, propane and hydrogen.

3.5

Internal combustion engines include those equipped with technology (for

example, selective catalytic reduction) to reduce nitrogen oxide emissions.

3.6

Particulate filters (for example, wall-flow filter or partial-flow filter)

include those that reduce emissions (including carbon monoxide,

hydrocarbons and particulate matter).

3.6.1

hydrocarbons and particulate matter).

3.6.1

If relevant, the entity shall discuss the technologies it is prioritising

to improve the fuel economy and reduce emissions of its vehicles,

such as the specific type of fuel systems it is developing (for

example, hybrid, electric or fuel cell).

The entity shall discuss the factors influencing fuel economy and emissions

efforts, such as meeting customer demand or meeting regulatory requirements of

the markets it operates in or plans to operate in.

4.1

Relevant programmes and initiatives may include:

4.1.1

California Low-Emission Vehicle Program – LEV III

4.1.2

China VI emission standard

4.1.3

Euro 6 standards for light duty vehicles

4.1.4

US Clean Air Act

4.1.5

US Corporate Average Fuel Economy (CAFE) standards

The entity shall discuss whether it is complying with fuel economy and use-phase

regulatory obligations, whether such existing regulations require future

improvements, progress towards meeting such regulations and strategies to

maintain compliance with emerging regulations.

The scope of disclosure includes all vehicles subject to national and local vehicle

standards.

The entity may discuss the benchmarks used to measure improvements in fuel

economy and emissions reductions, including targets for fuel economy

improvements and emissions reductions.

IFRS S2 INDUSTRY-BASED GUIDANCE

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®