IFRS Foundation and GRI publish summary of interoperability considerations for GHG emissions

Ongoing collaboration between the International Sustainability Standards Board (ISSB) and Global Reporting Initiative (GRI) has resulted in a January 2024 joint publication from these two bodies: Interoperability considerations for GHG emissions when applying GRI Standards and ISSB Standards.

The publication shows areas of interoperability between GRI standard 305 Emissions and IFRS S2 Climate-related Disclosures and is a useful resource for companies measuring and disclosing Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions in accordance with both standards.

Generally, there is a high degree of alignment between GRI 305 and IFRS S2, with both standards drawing on the GHG Protocol. Companies already measuring Scope 1, 2 and 3 GHG emissions using GRI 305 will therefore have a head start when reporting emissions under IFRS S2. Making certain choices when disclosing under GRI 305 will also help companies to simultaneously comply with IFRS S2.

Areas of alignment

The publication highlights the following areas where GRI 305 and IFRS S2 are aligned through:

  • Disclosure of gross Scope 1, Scope 2 and Scope 3 emissions in metric tonnes of carbon dioxide equivalent (CO2e)
  • Disclosure of location-based emissions for Scope 2
  • Disclosure of the categories included in measuring Scope 3 emissions
  • Coverage of the same greenhouse gases including carbon dioxide (CO2e), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3)
  • Consistent consolidation or measurement approaches – equity share, operational control and financial control.

It also illustrates additional areas where the two standards can be aligned if specific choices are made. These include:

  • Using the GHG Protocol to measure GHG emissions (IFRS S2 requires the GHG Protocol but GRI 305 is not prescriptive), including the fifteen categories for Scope 3 emissions
  • Using the global warming potential (GWP) rates from the latest Intergovernmental Panel on Climate Change (IPCC) assessment (IFRS S2 requires GWP values from the latest IPCC assessment available at reporting date, which may not be the most up-to-date published data when GHG emissions are calculated).

Areas of difference

GRI 305 and IFRS S2 each contain disclosures the other standard does not. Companies asserting compliance with both standards need to ensure that all relevant disclosures are included from both standards.

It is important to also note that the GRI concept of materiality is broader than for IFRS S2, focussing on the information needs of investors, but also other stakeholders.

GRI 305 disclosures not explicitly required by IFRS S2

GRI 305 also contains specific disclosure requirements not explicitly mentioned in IFRS S2, but which nevertheless may be required by other general requirements in IFRS S2. These include disclosure of:

  • Gross market-based Scope 2 GHG emissions in metric tonnes of CO2e, if applicable
  • Scope 1 and Scope 3 biogenic CO2 emissions separately from the total gross emissions
  • The gases included in calculations for working out Scope 1, Scope 2 and Scope 3 emissions, including disaggregation by sector if applicable
  • Description of Scope 3 activities included in measurement of Scope 3 emissions, calculation tools used and information about the base year
  • Sector disclosures and sector recommendations from GRI Topic Standards.

IFRS S2 disclosures not explicitly required by GRI 305

Similarly, IFRS S2 contains specific disclosure requirements not explicitly mentioned in GRI 305:

  • Disaggregation of Scope 1 and Scope 2 emissions between the consolidated accounting group and other investees
  • Information about contractual instruments that would inform investors' understanding of Scope 2 emissions (purchased electricity)
  • Entities participating in financial activities associated with asset management, commercial banking or insurance - additional information about financed emissions associated with these activities as part of Scope 3 emissions
  • An explanation of why the entity chose the measurement approach and how that approach relates to its disclosure objectives
  • The IFRS S2 requirement to consider disclosing industry-based metrics.

More information

The publication also contains a detailed mapping table comparing areas of difference between GRI 305 and IFRS S2. It does not contain all the requirements for measuring and disclosing GHG emissions, and users should refer to GRI 305 and IFRS S2 in full for more information.

How BDO can help 

If your organisation is looking to align GRI and IFRS S2 reporting, our sustainability reporting experts can help you to understand the impacts for your sustainability reporting efforts.
Contact us today.