Questions & Answers
It seems like in the disclosure requirements there is no distinction in GHG emissions based on fossil resources and non-fossil resources. Why is this, and would EFRAG recommend emphasising this difference in CSRD-reporting anyway?
- GHG emissions
- disaggregation
Background
ESRS E1 paragraph AR 41 states: ‘In line with ESRS 1 chapter 3.7, the undertaking shall disaggregate information on its GHG emissions as appropriate. For example, the undertaking may disaggregate its Scope 1, 2, 3, or total GHG emissions by country, operating segments, economic activity, subsidiary, GHG category (CO2, CH4, N2O, HFCs, PFCs, SF6, NF3, and other GHG considered by the undertaking) or source type (stationary combustion, mobile combustion, process emissions and fugitive emissions).’
ESRS 1 chapter 3.7 refers to the level of disaggregation applied to support a proper understanding of the material impacts, risks and opportunities of an undertaking. Specifically, ESRS 1 chapter 3.7 paragraph 55 states: ‘When defining the appropriate level of disaggregation for reporting, the undertaking shall consider the disaggregation adopted in its materiality assessment.’
ESRS E1 paragraph AR 39 states: ‘When preparing the information for reporting GHG emissions as required by paragraph 44, the undertaking shall:
(a) consider the principles, requirements and guidance provided by the GHG Protocol Corporate Standard (version 2004) …’
ESRS E1 paragraph 37 requires a breakdown of energy consumption between fossil, nuclear and renewable sources. Given that CO2 emissions are often associated with energy consumption, E1-5 can provide an indication on the fossil origin of emissions.
ESRS E1 paragraph AR 43 requires a disclosure on biogenic emissions of CO2 emissions from the combustion or biodegradation of biomass separately from Scope 1 GHG emissions, ESRS E1 paragraph AR 45 requires it separately from Scope 2 GHG emissions and ESRS E1 paragraph AR 46 separately from Scope 3 GHG emissions.
Answer
ESRS E1 paragraphs AR 43, 45 and 46 require disclosure of biogenic emissions of CO2 emissions from the combustion or biodegradation of biomass separately from the Scope 1, 2 and 3 GHG emissions.
In addition, the undertaking shall disaggregate the reported information when needed to support a proper understanding of its material impacts, risks and opportunities (ESRS 1 chapter 3.7 Level of disaggregation). It shall disaggregate information on its GHG emissions as appropriate (ESRS E1 paragraph AR 41). Therefore, the undertaking shall disaggregate its GHG emissions by the distinction between fossil and non-fossil resources if considered necessary for the understanding of the impacts, risks and opportunities linked to these emissions. As stated by ESRS 1 chapter 3.7 paragraph 55, the level of disaggregation used is the one adopted in the undertaking’s materiality assessment.
Also, ESRS E1-5 paragraph 37 requires a breakdown of energy consumption between fossil, nuclear and renewable sources. Given that CO2 emissions are often associated with energy consumption, ESRS E1 Disclosure Requirement E1-5 will often provide a reliable indication on the fossil origin of an undertaking’s emissions.
Overall, when calculating and reporting on GHG emissions, ESRS E1 paragraph AR 39 (a) states that the undertaking shall consider the principles, requirements and guidance provided by the GHG Protocol Corporate Standard (version 2004). ESRS do not specify these further but refer to the GHG Protocol.
See also answers to Question ID 81 - Subsidiaries and holding company - alignment for GHG protocol and Question ID 167 - GHG protocol scope 3; sector. These explanations elaborate on the relationship between the ESRS and the GHG Protocol as a methodology and for Scope 3 emissions.
Relations
Paragraph | Content |
|---|---|
When defining the appropriate level of disaggregation for reporting, the undertaking shall consider the disaggregation adopted in its materiality assessment. Depending on the undertaking’s specific facts and circumstances, a disaggregation by subsidiary may be necessary. | |
When preparing the information on gross Scope 1 GHG emissions required under paragraph 48 (a), the undertaking shall: | |
In line with ESRS 1 chapter 3.7, the undertaking shall disaggregate information on its GHG emissions as appropriate. For example, the undertaking may disaggregate its Scope 1, 2, 3, or total GHG emissions by country, operating segments, economic activity, subsidiary, GHG category (CO2, CH4, N2O, HFCs, PFCs, SF6, NF3, and other GHG considered by the undertaking) or source type (stationary combustion, mobile combustion, process emissions and fugitive emissions). | |
When preparing the information for reporting GHG emissions as required by paragraph 44, the undertaking shall: | |
The disclosure required by paragraph 35 shall include the total energy consumption in MWh related to own operations disaggregated by: | |
When preparing the information on gross Scope 1 GHG emissions required under paragraph 48 (a), the undertaking shall: | |
In line with ESRS 1 chapter 3.7, the undertaking shall disaggregate information on its GHG emissions as appropriate. For example, the undertaking may disaggregate its Scope 1, 2, 3, or total GHG emissions by country, operating segments, economic activity, subsidiary, GHG category (CO2, CH4, N2O, HFCs, PFCs, SF6, NF3, and other GHG considered by the undertaking) or source type (stationary combustion, mobile combustion, process emissions and fugitive emissions). | |
When preparing the information for reporting GHG emissions as required by paragraph 44, the undertaking shall: | |
The disclosure required by paragraph 35 shall include the total energy consumption in MWh related to own operations disaggregated by: | |
When defining the appropriate level of disaggregation for reporting, the undertaking shall consider the disaggregation adopted in its materiality assessment. Depending on the undertaking’s specific facts and circumstances, a disaggregation by subsidiary may be necessary. |