Greenhouse gases (paragraph 29(a))Greenhouse gases (paragraph 29(a))

Greenhouse gases (paragraph 29(a))

Greenhouse gas emissions

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Aggregation of greenhouse gases into CO2 equivalent using global warming potential values

B20 Paragraph 29(a) requires an entity to disclose its absolute gross greenhouse gas emissions generated during the reporting period, expressed as metric tonnes of CO2 equivalent. To meet this requirement, the entity shall aggregate the seven constituent greenhouse gases into CO2 equivalent values.

B21 If an entity uses direct measurement to measure its greenhouse gas emissions, the entity is required to convert the seven constituent greenhouse gases into a CO2 equivalent value using global warming potential values based on a 100-year time horizon, from the latest Intergovernmental Panel on Climate Change assessment available at the reporting date. The requirement to use such global warming potential values applies unless the entity is required, in whole or in part, by a jurisdictional authority or an exchange on which it is listed to use different global warming potential values for converting the seven constituent greenhouse gases into a CO2 equivalent value. In such a case, the entity is instead permitted to use the global warming potential values required by such a jurisdictional authority or exchange for the part of the entity to which that requirement applies, for as long as that requirement applies to that part of the entity.

B22 If an entity uses emission factors to estimate its greenhouse gas emissions, the entity shall use—as its basis for measuring its greenhouse gas emissions—the emission factors that best represent the entity’s activity (see paragraph B29). If these emission factors have already converted the constituent gases into CO2 equivalent values, the entity is not required to recalculate the emission factors using global warming potential values based on a 100-year time horizon from the latest Intergovernmental Panel on Climate Change assessment available at the reporting date. However, if an entity uses emission factors that are not converted into CO2 equivalent values, then the entity shall use the global warming potential values based on a 100-year time horizon from the latest Intergovernmental Panel on Climate Change assessment available at the reporting date. The requirement to use such global warming potential values applies unless the entity is required, in whole or in part, by a jurisdictional authority or an exchange on which it is listed to use different global warming potential values for converting the seven constituent greenhouse gases into a CO2 equivalent value. In such a case, the entity is instead permitted to use the global warming potential values required by such a jurisdictional authority or exchange for the part of the entity to which that requirement applies, for as long as that requirement applies to that part of the entity.

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Greenhouse Gas Protocol

B23 Paragraph 29(a)(ii) requires an entity to disclose its greenhouse gas emissions measured in accordance with the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004). For the avoidance of doubt, an entity shall apply the requirements in the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004) only to the extent that they do not conflict with the requirements in this Standard. For example, the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004) does not require an entity to disclose its Scope 3 greenhouse gas emissions, however, the entity is required to disclose Scope 3 greenhouse gas emissions in accordance with paragraph 29(a).

B24 An entity is required to use the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004) unless the entity is required, in whole or in part, by a jurisdictional authority or an exchange on which it is listed to use a different method for measuring its greenhouse gas emissions. If the entity is required, in whole or in part, by a jurisdictional authority or an exchange on which it is listed to use a different method for measuring its greenhouse gas emissions, the entity is permitted to use this different method for the part of the entity to which that requirement applies, rather than using the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004) for as long as such the jurisdictional or exchange requirement applies to that part of the entity.

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Measurement approach, inputs and assumptions

Measurement approach, inputs and assumptions

B26 Paragraph 29(a)(iii) requires an entity to disclose the measurement approach, inputs and assumptions it uses to measure its greenhouse gas emissions. As part of this requirement, the entity shall include information about:

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Other methods and measurement approaches

B28 When an entity discloses its greenhouse gas emissions measured in accordance with another method, applying paragraphs 29(a)(ii), B24–B25 or C4(a), the entity shall disclose for each alternative method:

(a) the applicable method and measurement approach the entity uses to determine its greenhouse gas emissions; and

(b) the reason, or reasons, for the entity’s choice of method and measurement approach and how that approach relates to the disclosure objective in paragraph 27.

Scope 3 greenhouse gas emissions

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B37 An entity that participates in one or more financial activities associated with asset management, commercial banking and insurance shall disclose additional information about the financed emissions associated with those activities as part of the entity’s disclosure of its Scope 3 greenhouse gas emissions (see paragraphs B58–B63A AusB63.1).

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Financed emissions

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B59 Paragraph 29(a)(i)(3) requires an entity to disclose its absolute gross Scope 3 greenhouse gas emissions generated during the reporting period, including upstream and downstream emissions. An entity that participates in one or more of the following financial activities is required to disclose additional and specific information about its financed emissions (which are part of Category 15 greenhouse gas emissions): Category 15 emissions or those emissions associated with its investments which is also known as ‘financed emissions’:

(a) asset management (see paragraph B61);

(b) commercial banking (see paragraphs B62–B62A); and

(c) insurance (see paragraphs B63–B63A).

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Commercial banking

B62 An entity that participates in commercial banking activities shall disclose:

(a) its absolute gross financed emissions, disaggregated by Scope 1, Scope 2 and Scope 3 greenhouse gas emissions for each industry by asset class. When disaggregating by:

(i) industry—the entity shall use the Global Industry Classification Standard (GICS) 6-digit industry-level code for classifying counterparties, reflecting the latest version of the classification system available at the reporting date.

(ii) asset class—the disclosure shall include loans, project finance, bonds, equity investments and undrawn loan commitments. If the entity calculates and discloses financed emissions for other asset classes, it shall include an explanation of why the inclusion of those additional asset classes provides relevant information to users of general purpose financial reports.

(b) its gross exposure to each industry by asset class, expressed in the presentation currency of the entity’s financial statements. For:

(i) funded amounts—gross exposure shall be calculated as the funded carrying amounts (before subtracting the loss allowance, when applicable), whether prepared in accordance with Australian Accounting Standards or other GAAP.

(ii) undrawn loan commitments—the entity shall disclose the full amount of the commitment separately from the drawn portion of loan commitments.

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B62A When disaggregating information disclosed in accordance with paragraph B62(a)–(b) by:

(a) industry—an entity shall:

(i) select an industry-classification system that enables it to classify investees or counterparties in a manner that results in information that enables users of general purpose financial reports to understand the entity’s exposure to climate-related transition risks. A system that is commonly used by other entities such as those operating in the same industry or jurisdiction (commonly used system) is more likely to support the comparability of information than a system used only by the entity (entity-specific system). If a commonly used system enables the entity to provide useful information about its exposure to climate-related transition risks—with all else being equal—the entity shall prioritise that system. An entity that participates in both commercial banking and insurance activities need not use the same system to classify investees or counterparties for its commercial banking and insurance activities (see paragraph B63A(a)(i)).

(ii) disclose:

the industry-classification system it used to classify investees or counterparties; and
information that enables users of general purpose financial reports to understand how the entity’s selection of that system fulfils the requirements in paragraph B62A(a)(i).

(b) asset class—the disclosure shall include loans, project finance, bonds, equity investments and undrawn loan commitments. If the entity calculates and discloses financed emissions for other asset classes, it shall include an explanation of why the inclusion of those additional asset classes provides relevant information to users of general purpose financial reports.

Insurance

B63 An entity that participates in financial activities associated with the insurance industry shall disclose:

(a) its absolute gross financed emissions, disaggregated by Scope 1, Scope 2 and Scope 3 greenhouse gas emissions for each industry by asset class. When disaggregating by:

(i) industry—the entity shall use the Global Industry Classification Standard (GICS) 6-digit industry-level code for classifying counterparties, reflecting the latest version of the classification system available at the reporting date.

(ii) asset class—the disclosure shall include loans, bonds and equity investments, as well as undrawn loan commitments. If the entity calculates and discloses financed emissions for other asset classes, it shall include an explanation of why the inclusion of those additional asset classes provides relevant information to users of general purpose financial reports.

(b) the gross exposure for each industry by asset class, expressed in the presentation currency of the entity’s financial statements. For:

(i) funded amounts—gross exposure shall be calculated as the funded carrying amounts (before subtracting the loss allowance, when applicable), whether prepared in accordance with Australian Accounting Standards or other GAAP.

(ii) undrawn loan commitments—the entity shall disclose the full amount of the commitment separately from the drawn portion of loan commitments.

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AusB63.1 For the purposes of paragraphs B62(a)(i) and B63(a)(i), the latest version of the Global Industry Classification Standard (GICS) available at the reporting date means the version that incorporates amendments to August 2024.

B63A When disaggregating information disclosed in accordance with paragraph B63(a)–(b) by:

industry—an entity shall:

(i) select an industry-classification system that enables it to classify investees or counterparties in a manner that results in information that enables users of general purpose financial reports to understand the entity’s exposure to climate-related transition risks. A system that is commonly used by other entities such as those operating in the same industry or jurisdiction (commonly used system) is more likely to support the comparability of information than a system used only by the entity (entity-specific system). If a commonly used system enables the entity to provide useful information about its exposure to climate-related transition risks—with all else being equal—the entity shall prioritise that system. An entity that participates in both commercial banking and insurance activities need not use the same system to classify investees or counterparties for its commercial banking and insurance activities (see paragraph B62A(a)(i)).

(ii) disclose:

the industry-classification system it used to classify investees or counterparties; and
information that enables users of general purpose financial reports to understand how the entity’s selection of that system fulfils the requirements in paragraph B63A(a)(i).

(b) asset class—the disclosure shall include loans, bonds, equity investments and undrawn loan commitments. If the entity calculates and discloses financed emissions for other asset classes, it shall include an explanation of why the inclusion of those additional asset classes provides relevant information to users of general purpose financial reports.

Appendix C

Effective date and transition