Carbon emissions
ESGFebruary 06, 2024

Common ground for reporting Scope 1, 2, and 3 emissions

Measuring and disclosing Scope 1, 2, and 3 greenhouse gas (GHG) emissions is not easy. There are numerous standards and regulations that companies must keep in mind, many dependent upon who is getting the report.

The waters have only gotten murkier as more government agencies try to get a handle on GHG emissions.

Two organizations are trying to clear the waters.

The Global Reporting Initiative (GRI) and the IFRS Foundation recently published an analysis and mapping resource, aptly named ‘Interoperability considerations for GHG emissions when applying GRI Standards and ISSB Standards’.

The publication points out areas of interoperability between GRI 305: Emissions 2016 (GRI 305) and IFRS S2 Climate-related Disclosures (IFRS S2) that a company should consider when measuring and disclosing Scope 1, Scope 2, and Scope 3 GHG emissions.

The document points out the following, for example:

  1. Both Standards require disclosure of gross Scope 1, Scope 2, and Scope 3 GHG emissions in metric tonnes of carbon dioxide equivalent (CO2e).
  2. For Scope 2, both Standards require disclosure of location-based emissions.
  3. For Scope 3, both require disclosure of the Scope 3 categories included in the measurement.
  4. The same greenhouse gases are covered in both: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6), and nitrogen trifluoride (NF3).
  5. GRI 305 and IFRS S2 also refer to the same consolidation or measurement approaches (equity share, operational control, and financial control) from the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004) (GHG Protocol Corporate Standard).
  6. Both Standards require transparency about how a company measures GHG emissions i.e. approach, methodologies, and inputs.

Make the right choices

The publication suggests that additional disclosures required in GRI 305 and IFRS S2 can be aligned depending on the choices a company makes in applying the Standards.

IFRS S2, for example, requires a company to apply the GHG Protocol Corporate Standard in measuring GHG emissions. Therefore, if a company elects to apply the GHG Protocol Corporate Standard in measuring its GHG emissions, its disclosures can be aligned with the requirements in both GRI 305 and IFRS S2.

The authors caution that while this document clearly points out many areas of interoperability, it is not a comprehensive assessment of the requirements in GRI 305 and IFRS S2, as there are differences between the two.

One such variation is that GRI 305 requires a company to disclose gross market-based Scope 2 GHG emissions in metric tonnes of CO2e, if applicable. While IFRS S2 does not require a company to disclose market-based emissions.

Therefore, when applying GRI or ISSB Standards, preparers must refer to the GRI and ISSB Standards respectively. 
In addition, the document lays out the requirements that have been assessed to compare Scope 1, Scope 2, and Scope 3 GHG emissions disclosures between GRI 305 and IFRS S2.

Check out the full document for more details.

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