In this article we will delve into IFRS Foundation SASB Standards S1 and S2. To make it more meaningful, we will assume these are being implemented at a large geographically spread manufacturing company.
IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information
Governance: Describe the governance structure related to sustainability, including the roles and responsibilities of the board and management in overseeing sustainability-related risks and opportunities.
Strategy: Explain how sustainability is integrated into the company's overall strategy, including how sustainability-related risks and opportunities are considered in business planning and decision-making.
Risk Management: Detail the processes for identifying, assessing, and managing sustainability-related risks and opportunities. This includes how the company monitors and controls these risks across its global locations.
Metrics and Targets: Report relevant sustainability metrics and targets, such as energy consumption, waste management, and water usage, across different plants, warehouses, and subsidiaries. Include progress towards these targets and any industry-specific metrics.
Performance: Provide information on the company's performance in relation to sustainability-related risks and opportunities, including any significant changes or trends over time.
Physical Risks: Describe the potential impacts of climate-related physical risks (e.g., extreme weather events) on the company's operations, supply chain, and infrastructure across its global locations.
Transition Risks: Explain how the company is managing risks related to the transition to a low-carbon economy, such as changes in regulations, market preferences, and technology advancements.
Scenario Analysis: Conduct and disclose scenario analysis to assess the resilience of the company's business model and strategy under different climate-related scenarios.
Greenhouse Gas Emissions: Report Scope 1, 2, and 3 greenhouse gas emissions for each location, including emissions from manufacturing processes, transportation, and supply chain activities.
Climate-related Metrics and Targets: Set and disclose climate-related metrics and targets, such as reducing carbon emissions, improving energy efficiency, and transitioning to renewable energy sources.
Tips for Robust Implementation
Centralized Reporting System: Implement a centralized reporting system to collect and manage reliable sustainability data from all global locations. (The most important element and probably easier said than done aspect of these standards)
Training and Awareness: Provide training and raise awareness among employees at all levels about the importance of sustainability reporting and their role in it.
Stakeholder Engagement: Engage with stakeholders, including investors, customers, and local communities, to understand their sustainability expectations and incorporate their feedback into reporting.
Continuous Improvement: Regularly review and update sustainability disclosures to reflect changes in regulations, industry standards, and company performance.
Third-party Assurance: Consider obtaining third-party assurance for sustainability disclosures to enhance credibility and transparency.
By following these guidelines, a manufacturing company can ensure comprehensive and accurate sustainability disclosures that align with these standards, as well as potentially other ESG regulatory initiatives.
This approach can be adapted to other type of enterprises as well.
Your comments are welcome.