Volume 65—Cruise Lines

Title: Volume 65—Cruise Lines

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 65—Cruise Lines

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 65—Cruise Lines

Industry Description

Cruise

Lines

industry

entities

provide

passenger

transportation

and

leisure

entertainment, including deep sea cruises and river cruises. A few large entities dominate

the industry. Cruises provide a luxury resort experience for thousands of passengers at a

time. The Cruise Lines industry often has been the fastest-growing segment of the travel

industry, but it is very cyclical.

Sustainability Disclosure Topics & Metrics

Table 1. Sustainability Disclosure Topics & Metrics

TOPIC

METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Available lower berth kilometres (ALB-KM) 117 Quantitative

ALB-KM

TR-CL-000.A Average passenger cruise days (APCD) 118 Quantitative

APCD

TR-CL-000.B Number of shipboard employees 119 Quantitative Number TR-CL-000.C Cruise passengers 120 Quantitative Number TR-CL-000.D Number of vessel port calls Quantitative Number TR-CL-000.E 117 Note to TR-CL-000.A – Available lower berth (ALB) is a measure of the standard capacity of a cruise ship, usually assuming two people per available cabin. It accounts for changes in fleet size, itineraries, and passenger capacity. Available lower berth kilometres (ALB-KM) are computed by multiplying ALB on each leg by the number of kilometres travelled on that leg.

118 Note to TR-CL-000.B – Average passenger cruise days (APCD) is computed as the number of available lower berths on a ship multiplied by the number of days that those berths are available to passengers during the reporting period.

119 Note to TR-CL-000.C – Shipboard employees are those employees who work aboard the entity’s vessels (including direct and contract employees) during the reporting period.

120 Note to TR-CL-000.D – Cruise passengers is the number of passengers aboard the entity’s vessels,excluding employees.

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

Greenhouse Gas Emissions Topic Summary Cruise lines generate emissions mainly from the combustion of diesel in ship engines.

The industry’s reliance on heavy fuel oil (‘bunker fuel’) is of material concern because of rising fuel costs and intensifying greenhouse gas (GHG) regulations. Evolving environmental regulations are encouraging the adoption of more fuel-efficient engines,

engine retrofits and the use of cleaner-burning fuels. Fuel constitutes a major expense for industry players, providing a further incentive for investing in upgrades or retrofits to boost fuel efficiency. In addition, GHG regulation violations may result in fines and compliance costs.

Metrics TR-CL-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 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 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

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

2.1.3

India GHG Inventory Program

2.1.4

ISO 14064-1 IFRS S2 INDUSTRY-BASED GUIDANCE 4© IFRS Foundation

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,

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 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.

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-CL-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),

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

Whether the target is absolute or intensity-based, and the metric denominator if it is an intensity-based target;

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

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

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

Relevant activities and investments may include route optimisation, use of alternative fuels and energy sources, system improvements, optimisation of ship operation, improving efficiency through ship design and propulsion systems (including hull and propeller improvements), and upgrading the fleet with new ships.

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 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-CL-110a.3. (1) Total energy consumed, (2) percentage heavy fuel oil,

(3) percentage onshore power supply (OPS) and (4) 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 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 the entity directly consumed 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 (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 heavy fuel oil.

2.1

Heavy fuel oils are defined as heavier oils that remain after distillate fuel oils and lighter hydrocarbons are distilled away in refinery operations.

2.2

The percentage shall be calculated as heavy fuel oil consumption divided by total energy consumption.

3 The entity shall disclose (3) the percentage of energy it consumed that was onshore power supply (OPS).

3.1

OPS includes the shoreside electrical power consumed by a ship at berth while the main and auxiliary engines are turned off.

3.2

The percentage shall be calculated as OPS consumption divided by total energy consumption.

4 The entity shall disclose (4) the percentage of energy it consumed that was renewable energy.

4.1

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.

4.2

The percentage shall be calculated as renewable energy consumption divided by total energy consumption.

4.3

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 RECs are paired with grid electricity.

4.3.1

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.

4.3.2

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.

4.3.3

The renewable portion of the electricity grid mix outside the control or influence of the entity is excluded from the scope of renewable energy.

4.4

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

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 jurisdictional renewable portfolio standard.

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

TR-CL-110a.4. Average Energy Efficiency Design Index (EEDI) for new ships 1 The entity shall disclose the average Energy Efficiency Design Index (EEDI) for new ships in grammes of carbon dioxide per ton-nautical mile.

1.1

An EEDI value is the product of power installed, specific fuel consumption and carbon conversion, divided by the product of available capacity and vessel speed at design load

1.2

The entity shall calculate the average EEDI as a simple average of the EEDI value of all new ships added to the entity’s fleet during the reporting period.

1.2.1

New ships are limited to those built after 2013 and for which the International Maritime Organisation (IMO) has adopted EEDI as a metric.

1.3

The entity shall follow calculation methodologies outlined in IMO MEPC 66/21/Add.1, Annex 5, 2014 Guidelines on the Method of Calculation of the Attained Energy Efficiency Design Index (EEDI) For New Ships.

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