Volume 8—Construction Materials

Title: Volume 8—Construction Materials

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 8—Construction Materials

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 8—Construction Materials

Industry Description

Construction Materials entities have global operations and produce construction

materials for sale to construction entities or wholesale distributors. These primarily

include cement and aggregates, but also glass, plastic materials, insulation, bricks and

roofing material. Materials producers operate their own quarries, mining crushed stone

or sand and gravel. They may also purchase raw materials from the mining and

petroleum industries.

Note: Entities producing wood-building products are included the Building Products &

Furnishings (CG-BF) industry, Forestry Management industry (RR-FM), and Pulp & Paper

Products industry (RR-PP) under the Sustainable Industry Classification System (SICS) and

are not included in the Construction Materials standard.

Sustainability Disclosure Topics & Metrics

Table 1. Sustainability Disclosure Topics & Metrics

TOPIC

METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Production by major product line 8 Quantitative Metric tons (t) EM-CM-000.A Greenhouse Gas Emissions Topic Summary The production of construction materials, particularly cement, generates significant direct greenhouse gas (GHG) emissions from on-site fuel combustion and chemical processes. The industry has achieved efficiency gains in reducing emissions per ton of materials produced. At the same time, increasing production is associated with increasing absolute emissions from cement production. The production of construction materials remains carbon-intensive relative to other industries, exposing the industry to higher operating and capital expenditures from emissions regulations. Strategies to reduce GHG emissions include energy efficiency, use of alternative and renewable fuels,

carbon sequestration and clinker substitution. Operational efficiencies can be achieved through the cost-effective reduction of GHG emissions. Such efficiencies can mitigate the potential financial impact of increased fuel costs as well as direct emissions from regulations that limit—or put a price on—GHG emissions.

Metrics EM-CM-110a.1. Gross global Scope 1 emissions, percentage covered under emissions-limiting regulations 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).

8 Note to EM-CM-000.A – Determination of major product line (e.g., cement and aggregates,

composites, roofing materials, fibreglass, brick, and tile, or others) should be based on revenue generation, and may include a category of “other” construction materials products that combines multiple smaller revenue streams.

IFRS S2 INDUSTRY-BASED GUIDANCE 4© IFRS Foundation

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

These emissions include direct emissions of GHGs from stationary or mobile sources that include production facilities, office buildings and product transportation (marine, road and rail).

2.2

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 include:

2.2.1

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

2.2.2

Greenhouse Gas Inventory Guidance: Direct Emissions from Stationary Combustion Sources published by the US Environmental Protection Agency (EPA)

2.2.3

India GHG Inventory Program

2.2.4

ISO 14064-1

2.2.5

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

2011, published by IPIECA

2.2.6

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

2.3

GHG emission data shall be consolidated 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 provided by the Climate Disclosure Standards Board (CDSB) that is described in REQ-07, ‘Organisational boundary,’ of the CDSB Framework for reporting environmental and social information.

3 The entity shall disclose the percentage of its gross global Scope 1 GHG emissions covered under an emissions-limiting regulation or programme intended to limit or reduce emissions directly, such as cap-and-trade schemes, carbon tax/fee systems, and other emissions control (for example, command-and-control approach) and permit-based mechanisms.

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

3.1

Examples of emissions-limiting regulations include:

3.1.1

California Cap-and-Trade (California Global Warming Solutions Act)

3.1.2

European Union Emissions Trading Scheme (EU ETS)

3.1.3

Quebec Cap-and-Trade (Quebec Environment Quality Act)

3.2

The percentage shall be calculated as the total amount of gross global Scope 1 GHG emissions (CO2-e) covered under emissions-limiting regulations divided by the total amount of gross global Scope 1 GHG emissions (CO2-e).

3.2.1

For emissions subject to more than one emissions-limiting regulation, the entity shall not account for those emissions more than once.

3.3

The scope of emissions-limiting regulations excludes emissions covered under voluntary emissions-limiting regulations (for example, voluntary trading systems), as well as reporting-based regulations.

4 The entity may discuss any change in its 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.

5 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.

6 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.

EM-CM-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 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:IFRS S2 INDUSTRY-BASED GUIDANCE 6© IFRS Foundation

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;

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.

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.

Air Quality Topic Summary On-site fuel combustion and production processes in the Construction Materials industry emit criteria air pollutants and hazardous chemicals, including small quantities of organic compounds and heavy metals. Emissions of particular concern include nitrogen oxides, sulphur dioxides, particulate matter, heavy metals (for example, mercury),

dioxins and volatile organic compounds, among others. These air emissions can have significant, localised human health and environmental impacts. Financial impacts resulting from air emissions will vary depending on the specific location of operations and the applicable air emissions regulations, but they could include higher operating or capital expenditures and regulatory or legal penalties. Active management of the issue—

through technological and process improvements—may allow entities to limit the impact of regulations and benefit from operational efficiencies that could lead to a lower cost structure over time.

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

Metrics EM-CM-120a.1 Air emissions of the following pollutants: (1) NOx (excluding N2O),

(2) SOx, (3) particulate matter (PM10), (4) dioxins/furans, (5) volatile organic compounds (VOCs), (6) polycyclic aromatic hydrocarbons (PAHs) and (7) heavy metals 1 The entity shall disclose its emissions of air pollutants, in metric tons per pollutant, released into the atmosphere.

1.1

The scope of disclosure includes air pollutants associated with the entity’s direct air emissions resulting from all the entity’s activities and sources of emissions, which may include stationary and mobile sources, production facilities, office buildings and transportation fleets.

2 The entity shall disclose its emissions of (1) oxides of nitrogen (NOx), reported as NOx.

2.1

The scope of NOx includes NO and NO2 but excludes N2O.

3 The entity shall disclose its emissions of (2) oxides of sulphur (SOx), reported as SOx.

3.1

The scope of SOx includes SO2 and SO3.

4 The entity shall disclose its emissions of (3) particulate matter 10 micrometres or less in diameter (PM10), reported as PM10.

4.1

PM10 is defined as any airborne finely divided solid or liquid material with an aerodynamic diameter less than or equal to a nominal 10 micrometres.

5 The entity shall disclose its emissions of (4) dioxins/furans.

5.1

Dioxins/furans include, but are not limited to the sum of the 17 congeners of polychlorinated dibenzodioxins (PCDDs) and polychlorinated dibenzofurans (PCDFs) that contain chlorine 6 The entity shall disclose its emissions of (5) non-methane volatile organic compounds (VOCs).

6.1

VOCs are defined as any compound of carbon, excluding carbon monoxide,

carbon dioxide, carbonic acid, metallic carbides or carbonates, ammonium carbonate and methane, that participates in atmospheric photochemical reactions, except those designated under applicable jurisdictional law or regulation as having negligible photochemical reactivity.

6.1.1

If applicable regulatory definitions of VOCs may conflict with this definition, the entity may define VOCs in accordance with the applicable regulatory definition.

7 The entity shall disclose its emissions of (6) polycyclic aromatic hydrocarbons (PAHs).

IFRS S2 INDUSTRY-BASED GUIDANCE 8© IFRS Foundation

7.1

PAHs are a large group of organic compounds containing two or more fused aromatic (benzene) rings. A main source of emission is the incomplete combustion or pyrolysis of organic material.

7.2

PAHs include those listed in the World Health Organization’s 2021 Human health effects of polycyclic aromatic hydrocarbons as ambient air pollutants: report of the Working Group on Polycyclic Aromatic Hydrocarbons of the Joint Task Force on the Health Aspects of Air Pollution.

8 The entity shall disclose its emissions of (7) heavy metals.

8.1

The scope of heavy metals includes lead (Pb), mercury (Hg), and cadmium (Cd).

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

such as whether data are from continuous emissions monitoring systems (CEMS),

engineering calculations or mass balance calculations.

Energy Management Topic Summary The production of construction materials requires significant energy, sourced primarily from direct fossil fuel combustion as well as from purchased electricity. Energy-intense production has implications for climate change, and electricity purchases from the grid can create indirect Scope 2 emissions. Construction materials entities also use alternative fuels for kilns, such as scrap tyres and waste oil—often waste generated by other industries. If properly managed, these can lower energy costs and greenhouse gas (GHG) emissions. However, potentially negative impacts could occur, such as releases of harmful air pollutants that entities need to minimise to obtain net benefits from using such fuels. Decisions about use of alternative fuels, renewable energy and on-site generation of electricity (versus purchases from the grid) can be important in influencing both the costs and reliability of energy supply. Affordable, easily accessible and reliable energy is an important competitive factor in this industry, with purchased fuels and electricity accounting for a significant proportion of total production costs. How a construction materials entity manages energy efficiency, reliance on different types of energy and associated sustainability risks, and access to alternative sources of energy may influence its profitability.

Metrics EM-CM-130a.1. (1) Total energy consumed, (2) percentage grid electricity,

(3) percentage alternative 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.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023© IFRS Foundation 9

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 (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 from alternative sources, in terms of its energy content.

3.1

Alternative sources of energy include used tyres, spent solvents and waste oils, processed municipal solid waste, household wastes, agricultural wastes such as rice, peanut shells and coffee husks, animal meal and sewage sludge.

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 that is outside of the control or influence of the entity is excluded from the scope of renewable energy.

IFRS S2 INDUSTRY-BASED GUIDANCE 10© IFRS Foundation

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 the Green-e Framework for Renewable Energy Certification, Version 1.0 (2017) or Green-e regional standards, or materials 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 usage (including biofuels) and conversion of kilowatt hours (kWh) to GJ (for energy data including electricity from solar or wind energy).

Water Management Topic Summary Construction materials production requires substantial volumes of water. Entities face operational, regulatory and reputational risks associated with water scarcity, costs of water acquisition, regulations on effluents or amount of water used, and competition with local communities and other industries for limited water resources. Risks are likely to be higher in regions of water scarcity because of potential water availability constraints and price volatility. Entities unable to secure a stable water supply could face production disruptions, while rising water prices could directly increase production costs.

Consequently, the adoption of technologies and processes that reduce water consumption could lower operating risks and costs for entities by minimising the impact of regulations, water supply shortages and community-related disruptions on entity operations.

Metrics EM-CM-140a.1. (1) Total water withdrawn, (2) total water consumed; percentage of each in regions with High or Extremely High Baseline Water Stress 1 The entity shall disclose the amount of water, in thousands of cubic metres,

withdrawn from all sources.

1.1

Water sources include surface water (including water from wetlands,

rivers, lakes and oceans), groundwater, rainwater collected directly and stored by the entity, and water and wastewater obtained from municipal water supplies, water utilities or other entities.

2 The entity may disclose portions of its supply by source if, for example, significant portions of withdrawals are from non-freshwater sources.

2.1

Fresh water may be defined according to the local laws and regulations where the entity operates. If no legal definition exists, fresh water shall be considered to be water that has less than 1,000 parts per million of dissolved solids.

2.2

Water obtained from a water utility in compliance with jurisdictional drinking water regulations can be assumed to meet the definition of fresh water.

3 The entity shall disclose the amount of water, in thousands of cubic metres,

consumed in its operations.

3.1

Water consumption is defined as:

3.1.1

Water that evaporates during withdrawal, use and discharge

3.1.2

Water that is directly or indirectly incorporated into the entity’s product or service

3.1.3

Water that does not otherwise return to the same catchment area from which it was withdrawn, such as water returned to another catchment area or the sea 4 The entity shall analyse all its operations for water risks and identify activities that withdraw and consume water in locations with High (40–80%) or Extremely High (>80%) Baseline Water Stress as classified by the World Resources Institute’s (WRI) Water Risk Atlas tool, Aqueduct.

5 The entity shall disclose water withdrawn in locations with High or Extremely High Baseline Water Stress as a percentage of the total water withdrawn.

6 The entity shall disclose water consumed in locations with High or Extremely High Baseline Water Stress as a percentage of the total water consumed.

Waste Management Topic Summary Construction materials production recycling rates are high. However, waste from production processes, pollution control devices and from hazardous waste management activities present a regulatory risk and can increase operating costs. Cement kiln dust (CKD)—consisting of fine-grained, solid, highly alkaline waste removed from cement kiln exhaust gas by air pollution control devices—is the most significant waste category in the industry. Regulatory risk remains high from evolving environmental laws. Entities that reduce waste streams—hazardous waste streams in particular—and recycle by-products,

can reduce regulatory and litigation risks and costs.

Metrics EM-CM-150a.1. Amount of waste generated, percentage hazardous and percentage recycled 1 The entity shall disclose the amount of waste generated in metric tons.

1.1

Waste is defined as anything for which the entity has no further use, and which is discarded or released to the environment.

1.2

The scope includes slags, dusts, sludges, used oil and other solid wastes that meet the above definition.

1.3

The scope excludes gaseous waste.

2 The entity shall disclose the percentage of waste generated that was hazardous.

2.1

The percentage of hazardous waste shall be calculated as the weight hazardous waste as defined in accordance with the applicable jurisdictional, legal or regulatory framework where the waste was generated divided by the total weight of waste material.

2.2

Hazardous waste generally displays the following characteristics:ignitability, corrosivity, reactivity or toxicity.

2.3

The entity may use United Nations Environmental Programme (UNEP) Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal for the purposes of defining hazardous waste for operations located in jurisdictions that lack applicable legal or regulatory definitions.

3 The entity shall disclose the percentage of waste generated that was recycled.

3.1

The percentage recycled shall be calculated as the weight of waste material reused, plus the weight recycled or remanufactured (through treatment or processing) by the entity, plus the amount sent externally for further recycling, divided by the total weight of waste material.

3.1.1

Reused materials are defined as those recovered products or components of products used for the same purpose for which they were conceived.

3.1.2

Recycled and remanufactured materials are defined as waste materials that have been reprocessed or treated by means of production or manufacturing processes and made into a final product or made into a component for incorporation into a product.

3.1.3

The scope of recycled and remanufactured products includes primary recycled materials, co-products (outputs of equal value to primary recycled materials) and by-products (outputs of lesser value to primary recycled materials).

3.1.4

Portions of products and materials discarded in landfills are not considered recycled; only the portions of products directly incorporated into new products, co-products or by-products shall be included in the percentage recycled.

3.1.5

Materials sent for further recycling include those materials transferred to a third party for the expressed purpose of reuse,

recycling or refurbishment.

3.2

Materials incinerated, including for energy recovery, shall not be considered within the scope of recycled materials.

3.2.1

Energy recovery is defined as the use of combustible waste to generate energy through direct incineration, with or without other waste, but with recovery of the heat.

3.2.2

The entity may separately disclose the percentage of hazardous waste generated that was incinerated.

4 The entity shall disclose the legal or regulatory framework(s) used to define waste,

hazardous waste and recycled hazardous waste.

Product Innovation Topic Summary Innovations in building materials are an essential component in the growth of sustainable construction. Consumer and regulatory trends are driving adoption of sustainable building materials and processes that are more resource efficient and can reduce health impacts of buildings throughout their lifecycle. This is creating new business drivers for construction materials entities, with an opportunity to increase revenue. Furthermore, some new products require less energy to produce, or use largely recycled inputs, reducing production costs. Therefore, sustainable construction materials can contribute to an entity’s long-term growth and competitiveness.

Metrics EM-CM-410a.1 Percentage of products that qualify for credits in sustainable building design and construction certifications 1 The entity shall calculate the percentage as the revenue during the reporting period from products that qualify for credits in recognised sustainable design and construction certifications divided by the total revenue from building products.

1.1

The scope of products excludes raw or intermediate materials that would require additional manufacturing before being incorporated into a building; the entity shall exclude these products from the numerator and denominator of the calculation.

2 Recognised sustainable building design and construction certifications and guidelines include BREEAM® (BRE Global), Green Globes® (Green Building Initiative), LEED® (US Green Building Council) and ICC-700 National Green Building Standard® (National Association of Home Builders).9

2.1

If the entity’s products can be used to obtain credits in certifications other than those described above, it shall provide the name of the certification and evidence of why it is equal to or more rigorous than those standards listed here.

3 The entity may disclose and discuss which specific products contribute to sustainable building practices, as well as its plans to address market demand for these types of products.

9 The ISSB is not affiliated with any of the standards or organisations listed, and listing should not be taken as an endorsement of any standard or organisation. Listing of standards is not meant to imply that standards are identical in scope, underlying requirements or criteria, or that standards are interchangeable.

EM-CM-410a.2. Total addressable market and share of market for products that reduce energy, water or material impacts during usage or production 1 The entity shall provide an estimate of the total addressable market for products that show reduced environmental impacts at various lifecycle stages, including during material sourcing, manufacturing and product usage (hereafter, ‘reduced environmental impact products’).

1.1

Total addressable market is defined as potential revenue should the entity capture 100% of the market share of the product category (for example,

the global market for reduced environmental impact products).

2 The scope of products includes those:

2.1

With product attributes that reduce energy consumption or increase energy efficiency for users, such as by providing improved insulation compared to typical products

2.2

With process or product attributes that reduce the amount of water required in manufacturing, during product assembly or product usage

2.3

That use secondary or recycled materials in place of virgin materials such that upstream impacts are reduced

2.4

Made with design innovations that reduce carbon emissions during manufacturing, such as use of renewable fuels, energy efficiency improvements or the use of materials requiring less processing 3 If a significant difference exists between the total addressable market and the market that the entity can serve through its existing or planned capabilities, sales channels or products (the serviceable available market), then the entity should disclose this information.

4 The entity shall disclose the share of the total addressable market for reduced environmental impact products it currently captures with its products.

4.1

Market share shall be calculated as revenue from these products divided by the size of the total addressable market.

5 The entity may provide a projection of growth of this market, where the projected addressable market is represented—based on a reasonable set of assumptions about changes in market conditions—as a percentage of year-on-year growth or as an estimate of the market size after a defined period (the market size in 10 years).

5.1

The entity may disclose its target three-year market share as a measurement of targeted growth, where the target is the percentage of the total addressable market the entity plans to address over a three-year time horizon.

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