Climate-Related Financial Disclosure
Introduction and Scope
Rise Baking Company LLC (RBC) has developed this disclosure to outline our approach to identifying, assessing, and managing climate-related risks and opportunities. This disclosure covers the reporting period for calendar years 2024 and 2025 and is aligned with the International Financial Reporting Standards S2: Climate-related Disclosures (IFRS S2) framework, a widely recognized standard for reporting on climate risks and opportunities that may influence our operations. Where possible, we have provided the information specified in Table 1: IFRS S2. Any exclusions are due to limitations in data availability at this time. We are committed to ongoing evaluation and aim to enhance future disclosures.
RBC conducted a physical climate risk assessment evaluating the effect of wildfires, inland flooding, heatwaves, water stress, sea level rise, and tropical cyclones for 20 high-value manufacturing locations (100% of our total operating locations) throughout the U.S. and Canada (these locations were deemed critical to business operations from a revenue and capital expenditure [CAPEX] standpoint). Of the 20 locations modeled, two facilities were modeled as high risk for water stress, one as high risk of inland flooding, and four locations were modeled with a high risk of tropical cyclones.
Additionally, RBC assessed climate-related transition risks to its business.
The following transition risks were identified as high risk for RBC:
- Mandated emissions reporting and climate/environmental, social, and governance (ESG) related disclosure obligations,
- Increased input costs due to climate effects or ESG regulations, and
- Increased stakeholder concern or feedback.
The following transition risks were identified as medium risk for RBC:
- Increased pricing of greenhouse gas (GHG) emissions,
- High upfront capital costs for sustainable technology and/or packaging,
- High energy equipment becoming obsolete or outdated,
- Shifting customer behavior, and
- Lack of clarity or unclear direction in market trends.
As a result of the risk assessments, RBC also identified various opportunities, including developing a GHG program where we evaluate our energy consumption, identifying packaging opportunities that minimize waste and increase recyclability or reuse, and working with key customers to collaborate on climate or other ESG opportunities.
Governance
In 2023, RBC formalized governance for our ESG Program, which includes oversight of climate-related risks. Our Senior Leadership Team (SLT), who reports to the Board on a quarterly basis, provides strategic oversight to the program, including development of strategy, plans, and targets in relation to ESG, whereas our ESG Working Group supports the program with execution throughout operations. The ESG Working Group, led by our Senior Director of Regulatory Compliance, reports ESG Program updates and initiatives to senior leadership on a semi-annual basis. Our ESG Working Group is responsible for continuously managing all of RBC’s material ESG topics, including climate-related risks and opportunities. Roles are delegated to specific individuals based on the ESG topics we have identified as material for our business (e.g., GHG management) and the individual’s knowledge/background, as we have informally assessed appropriate skillsets and competencies. For all of our material topics, we manage an internal roadmap that identifies multiple key performance indicators (KPIs) relevant to RBC and a prioritized list of initiatives to drive continued progress. Future evaluation will be conducted to determine whether there’s a need for more mature controls and/or tools to measure progress.
Specifically, for GHG management, team members monitor KPIs such as annual emissions to ensure that climate related commitments are being met. We calculate our carbon footprint annually and have established ongoing initiatives over the next five years related to emission reductions, data collection methodology, and increased focus on data quality. In addition, RBC evaluates a range of climate-related risks and opportunities, including current and emerging regulations, and customer and investor expectations, to inform our strategic planning and decision-making processes. For instance, in response to customer requests, we implemented an annual process to calculate and report our GHG emissions. These processes not only meet stakeholder expectations but also serve as a foundation for broader sustainability commitments. Building on this, we are planning to evaluate our energy consumption as it relates to our carbon footprint to further align our operations with climate-related priorities and long-term resilience. RBC intends to conduct a scenario analysis on material assets every year, in addition to considering the incorporation of climate risk assessments into the broader due diligence process.
As necessary, RBC works with an external sustainability advisory firm to manage climate related risks and opportunities that could potentially impact the business. In the near future, we plan to develop more robust role descriptions and will consider expanding our internal team.
Strategy
Climate-related Risks and Opportunities
RBC has completed a scenario analysis to determine climate-related risks and opportunities for the following physical and transition categories.
| Physical | Transition |
|---|---|
| Acute | Policy |
| Chronic | Technology |
| Market | |
| Reputation |
RBC also considered the relevance of industry-based disclosure topics related to food manufacturing, including:
- Exposure to extreme weather events,
- Regulatory shifts impacting emissions and packaging, and
- Evolving market and consumer sustainability expectations, as outlined in guidance such as IFRS S2 Implementation Guidance.
RBC conducted the scenario analysis using a combination of publicly available data, third party predictive modeling, and historical site level events. Forward looking projections assessed risks over a 30-year period (2025-2055) and identified climate risks based on modeled probabilities and anticipated financial impact.
As a private company, our planning aligns with the goals of our private equity ownership. As such, short-term is defined as 0-1 year; medium-term is defined as 2-3 years; and long-term is defined as 4-6 years.
- Short-term examples: Extreme weather events like inland flooding or tropical cyclones may temporarily halt production and disrupt cash flow. In addition, we could be impacted by changes to national and international legislation (e.g., Extended Producer Responsibility [EPR]). We account for these risks through business continuity planning.
- Medium-term examples: Rising insurance costs and infrastructure damage may require unplanned expenses. We try to proactively manage these impacts through preventative maintenance, routine internal facility inspections, and annual Global Food Safety Initiatives (GFSI) audits.
- Long-term examples: Climate risks are factored into financial planning to support resilient operations and prevent value chain disruptions at high-risk sites. We have implemented plans for chronic physical weather impacts in areas of high risk.
The results of the 2025 scenario analysis are outlined below.
Physical Risks
- Acute: We identified an elevated risk for tropical cyclones and/or inland flooding at five RBC manufacturing or warehouse locations. These risks could impact RBC’s business on short- to long-term time horizons.
- Chronic: We identified a risk of water stress/rationing of municipal water supply at 12 locations, heatwaves affecting outdoor workforce and/or facility equipment at 10 locations, and potential droughts at suppliers. These risks could impact RBC’s business on the medium- to long-term time horizons.
Transition Risks
- Policy: Changes to legislation could impact RBC’s business over the short-term.
- Technology: Transition to recyclable plastic packaging, increased renewable content, and increased recycled content could impact RBC’s business on the short- to long-term time horizons.
- Market: Cost/availability of certified sustainable materials and raw materials; cost/availability of recycled or renewable packaging content could impact RBC’s business on the short- to long-term time horizons.
- Reputation: Increased stakeholder concern could impact RBC’s business over the short-term.
Opportunities
- Physical: Developing a GHG program that includes data tracking, GHG commitments, and various facility-specific initiatives.
- Policy: Integrating ESG/climate-related emerging regulations into business planning and strategy.
- Market: Increasing sourcing from certified sources. Evaluating increased renewable, reusable, or recyclable content in product packaging.
- Reputation: Aligning our climate-related commitments and initiatives to our customers’ goals and commitments.
Physical climate related risks like inland flooding, water stress, heatwaves, and tropical cyclones may disrupt operations, increase insurance costs, and drive capital expenditures, such as roof replacements and HVAC upgrades. However, they did not impact RBC during the reporting period.
Business Model and Value Chain
RBC’s business model and value chain are exposed to climate related physical and transition risks that could disrupt production, disrupt sales, increase costs (e.g., compliance, operating expenses, capital expenditures), or require operational adjustments. These include physical impacts like tropical cyclones and inland flooding that threaten facility uptime, and transition pressures like regulatory changes and shifting consumer expectations that may affect product packaging, emissions compliance, and sourcing strategies. RBC’s operations are also at risk to policy/legal, market, and reputational risks if the company does not comply with emerging climate regulations and customer requests. RBC has worked to turn these risks into climate-related opportunities that we are prioritizing as part of our strategy. RBC anticipates minimal impacts to operations from these physical or transition risks as a result of our business continuity planning and proactive ESG Program management.
RBC’s business model incorporates risk mitigation strategies such as:
- Evaluating facility infrastructure,
- Monitoring policy changes,
- Adopting lower emission technologies to improve resilience against transition climate risks,
- Ensuring redundancy in our supply chain (e.g., dual sourced materials wherever feasible), and
- Ensuring facility redundancy in relation to major categories (e.g., cookies, pies, icing) within our direct operations.
RBC has evaluated the impact of climate-related risks on our entire value chain (upstream, downstream, and direct operations). For example, climate-related physical risks are most concentrated in RBC’s physical production facilities, particularly in Kansas, California, Georgia, Pennsylvania, and Massachusetts, which face higher exposure to inland flooding, water stress, and tropical cyclones. Transition risks such as emerging regulations, evolving emissions reporting, and shifting customer preferences impact upstream, direct operations, and downstream activities (e.g., sourcing, manufacturing, and retail distribution).
Strategy, Decision Making, and Resource Planning
RBC considers climate related risks when making strategic decisions, particularly in relation to regulatory compliance, site investments, and resilience planning for facilities in high-risk regions. We continuously re-evaluate climate related risks and opportunities with our ESG Program, including GHG emissions reduction planning, energy efficiency efforts, and physical and transition climate risk assessments to guide future decision-making.
RBC considers the need for additional investment (whether through current operating expenses or capital expenditures) based on a specific climate-related risk or opportunity. A few examples include:
- Implementing a standardized GHG emissions calculation process including any necessary disclosure procedures.
- Onboarding a packaging data specification system to accurately track our packaging information and inform future packaging decision making.
- Engaging with suppliers on ESG requirements such as traceability and compliance protocols.
- Engaging with customers on climate-related disclosure and alignment with goal setting.
- Planning to review our energy consumption as it relates to our carbon footprint.
Some of RBC’s current direct efforts include establishing a carbon reduction goal; developing a consistent process for the annual calculation of our Scope 1 and 2 GHG emissions; implementing tracking mechanisms for KPIs; conducting quarterly supplier reviews; holding monthly internal meetings to ensure timely execution and progress; and planning for emerging regulations and disclosure requirements.
Some of RBC’s current indirect efforts include requiring new suppliers to align with RBC’s Supplier Code of Conduct; increasing sourcing of certified sustainable ingredients; developing ESG related supplier scorecards and corrective action plans for noncompliance; and setting GHG reduction commitments and establishing a plan to achieve them.
RBC does not currently have a climate-related transition plan, but we will consider developing one in the future. We anticipate taking the following measures:
- Review year-over-year GHG data to analyze trends, specifically evaluating our energy consumption as it relates to our carbon footprint and carbon reduction goal.
- Enhance internal controls and supplier data collection to enable complete and accurate GHG emission calculations each year.
- Implement operational changes such as energy, waste, and other resources efficiency measures.
- Improve accountability by integrating progress reviews and stakeholder engagement into the ESG program.
Financial Position, Financial Performance, and Cash Flows
RBC started formalizing our ESG Program in 2023. Since then, we have been implementing measures and collecting data to more formally evaluate our climate-related risks and opportunities. We have qualitatively reviewed the impacts to our business.
Short-term:
- Rising costs from upcoming regulatory compliance.
- Potential for supply chain delays or higher material costs from extreme weather events.
- Potential for CAPEX associated with infrastructure repairs/replacements due to extreme weather events.
Medium-term:
- Increased capital expenditures for GHG emissions reduction projects and adapting facilities to withstand extreme heat or storm events (roof repairs, etc.).
- Increased insurance premiums.
Long-term:
- Declining profitability if RBC cannot keep pace with the market and customer expectations for low carbon products.
- Financial loss if climate conditions impact overall facility performance.
In the future, we will consider performing a quantitative analysis that evaluates any potential financial implications of climate-related risks or opportunities. We have not yet performed a quantitative analysis because we did not have the right tools or resources.
Climate Resilience
Our scenario analysis did not identify any immediate impacts to the business that were not already being addressed. We anticipate potential impacts to occur in the long-term, and we plan to develop a more robust, strategic approach prior to those impacts occurring.
We plan to enable the adjustment and adaptation of our business model as follows:
- RBC maintains flexible financial resources that would enable a swift response to climate-related risks and opportunities.
- RBC is equipped to efficiently redeploy, repurpose, upgrade, or decommission assets to align with evolving sustainability goals and operational needs.
- RBC is actively investing in Scope 1, 2, and 3 emissions monitoring, which will help our business align with emerging climate regulations and reduce long-term costs. Additionally, we ensure alignment of our business operations to our customers’ goals (e.g., GHG reduction goals, sustainable product design).
RBC conducted a physical climate risk assessment for 20 high-value manufacturing locations (100% of our total operating locations which were deemed critical to business operations from a revenue and CAPEX standpoint), utilizing Sust Global’s platform, Climate Explorer. The physical impacts were modeled over a 30-year time horizon (2025 – 2055) using three forward-looking scenarios (SSP1-RCP2.6, SSP2-RCP4.5, and SSP5-RCP8.5). These scenarios are aligned with the latest international agreement on climate change and model global mean temperatures rising approximately 1.8°C, 2.4°C, and 4.3°C by 2100, respectively. The Strong Mitigation Scenario (SSP1-RCP2.6) assumes that carbon emissions begin to decline around 2020, and global mean temperatures rise approximately 1.8°C by 2100, which is a key goal of the Paris Climate Agreement (aims to limit global warming to well below 2°C above pre-industrial levels). Although all three scenarios were modeled, RBC chose to focus on the MOTRS (SSP2-RCP4.5) as we believe it reflects the likely scenario if governments and policy reflect a sense of urgency toward climate change. Our assessment time horizon of 30 years covers RBC’s internally defined short-, medium-, and long-term time horizons.
Sust Global’s Climate Explorer only covers physical climate risks; however, RBC also conducted a qualitative transition risk assessment utilizing publicly available information and data to evaluate the most pressing transition risks and opportunities to our operations and business including qualitative trends in policy/legal, technology, market, and reputation risks. These risks were assessed for the reporting year (2025) as well as for RBC’s short- and medium-term time horizons.
During the transition risk assessment, RBC evaluated different carbon tax regimes that may be applicable to operations. RBC operates in the following geographic regions with ETS systems: California (Cap-and-Trade Program); Colorado (GHG and Energy Management for Manufacturing); and Canada & British Columbia (Output-Based Pricing System).
In addition, we accounted for other regulatory schemes that may apply to our business, including:
- Extended Producer Responsibility,
- California Senate Bill 253, and
- California Senate Bill 261.
No key assumptions were made regarding macroeconomic trends. RBC did not identify any significant areas of uncertainty in our analysis.
The physical climate risk assessment accounts for variable climate patterns across geographies and the transition risk assessment accounts for market and policy/legal implications based on both regional and national trends.
For the GHG emission calculations, fuel combustion emission factors were sourced from the US Environmental Protection Agency (US EPA) and electricity emission factors were sourced based on regional energy mix.
Risk Management
RBC has not yet formalized our process for managing climate-related risks, but we have begun building awareness through informal practices. We have identified risks through operational observations, stakeholder engagement and input, and industry trends, with preliminary assessments based on professional judgment and short- to medium-term concerns. RBC has assessed the following inputs:
- Publicly available climate data,
- Existing and emerging regulatory requirements,
- Internal operational insights, and
- A focus on high-risk locations.
We intend to develop a more structured approach over time, which we anticipate will include conducting a physical climate risk assessment every year and incorporating climate-related risk questions in our due diligence process.
The physical climate risk determined the quantitative risk associated with each physical hazard based on maximum risk exposure to each asset evaluated. RBC qualitatively assessed the likelihood of each transition risk; the qualitative factors that we considered were customer expectations, operational disruption, financial exposure, and reputational concerns. The physical and transition risks presented a low overall risk to the business compared to other business risks.
Our ESG Working Group regularly meets to review customer requests, existing and emerging regulations, and any other stakeholder requests. RBC identifies and monitors climate related opportunities by focusing on improving operational efficiency, supplier engagement, and sustainable sourcing. Both the physical and transition climate risk assessments helped identify proactive future opportunities, such as optimizing water use at facilities in areas prone to water stress, proactively inspecting roofs at facilities that are prone to tropical cyclones and periodically reviewing emerging regulatory requirements.
RBC’s process for evaluating climate-related risks and opportunities has not been formally included in our enterprise risk management approach; however, we plan to review and consider how to align the processes in the future.
Metrics and Targets
After reviewing the IFRS S2 industry specific standards for the Food and Beverage industry (Agricultural Products; Meat, Poultry, and Dairy; and Processed Foods), we have determined that the following metrics are relevant for our organization to track and report on:
- Gross global Scope 1 and 2 GHG emissions (currently tracking),
- Fleet fuel consumed, percentage renewable (currently tracking),
- Operational energy consumed (currently tracking),
- Percentage grid electricity (currently tracking)
- Percentage renewable (currently tracking)
- Total water withdrawn (not yet tracking),
- Number of incidents of non-compliance associated with water quantity and/or quality permits, standards, and regulations (currently tracking),
- Percentage of food ingredients sourced that are certified to third-party environmental and/or social standards, and percentages by standard (currently tracking), and
- GHG emission reduction goals (not yet tracking).
Climate-related Metrics
In 2025, RBC calculated Scope 1 and 2 emissions following the GHG protocol. We relied primarily on actual utility and fuel consumption data, and where actual data was not available, we made estimations based on best engineering practices in order to obtain the most accurate and complete Scope 1 and 2 emissions. The following assumptions were made:
- Natural gas usage for heating and electricity usage was estimated for nine locations based on square footage; a U.S. average intensity by square footage for administrative/professional offices, mixed-use offices, nonrefrigerated warehouses, and warehouses was used to estimate usage where data was not provided (sourced from the US EIA’s Commercial Building Energy Consumption Survey).
- Mobile sources fuel usage was estimated based on mileage, type of vehicle, and average fuel economy.
Our GHG emissions for 2024 and 2023 are listed as follows:
| Metric | 2024 | 2023 |
|---|---|---|
| Scope 1 GHG Emissions (MT CO2e) | 27,898 | 21,322 |
| Scope 2 GHG Emissions (location-based; MT CO2e) | 35,271 | 35,994 |
| Scope 2 GHG Emissions (market-based; MT CO2e) | 39,645 | 36,351 |
We calculated our GHG emissions in accordance with the World Resource Institute’s Greenhouse Gas Protocol Corporate Standard and considered:
- US EPA Emission Factors,
- IPCC GWP factors derived from IPCC’s AR6 Synthesis Report,
- EPA eGRID energy mixes, and
- Residual mix emission factors from Green-e.
For this reporting period, RBC did not calculate our Scope 3 emissions; however, we determined which categories are relevant to our business and plan to calculate these emissions starting in 2026 for the 2025 calendar year.
At this time, we do not:
- Apply carbon pricing in decision making.
- Evaluate climate-related considerations in executive remuneration.
Climate Related Targets
In 2025, we reviewed two consecutive years of Scope 1 and 2 emissions data. In 2026, we intend to calculate our Scope 3 emissions for the first time with data from calendar year 2025. In 2025, we also established our absolute carbon reduction goal of 7% in Scope 1 and 2 GHG emissions by 2027.
Table 1: IFRS S2. The table refers to the IFRS S2 standard, the primary framework for climate-related risks and opportunities which was expanded upon from the Task Force on Climate-related Financial Disclosure (TCFD). The above text is aligned with the topics included in this table.
| Disclosure # | Disclosure Description |
| Objective | |
| 1 | The objective of IFRS S2 Climate-related Disclosures is to require an entity to disclose information about its climate-related risks and opportunities that is useful to primary users of general purpose financial reports in making decisions relating to providing resources to the entity. |
| 2 | This Standard requires an entity to disclose information about climate-related risks and opportunities that could reasonably be expected to affect the entity’s cash flows, its access to finance or cost of capital over the short, medium or long term. For the purposes of this Standard, these risks and opportunities are collectively referred to as ‘climate-related risks and opportunities that could reasonably be expected to affect the entity’s prospects. |
| Scope | |
| 3(a) | This standard applies to climate-related risks to which the entity is exposed, which are: |
| 3(a)(i) | Climate related physical risks |
| 3(a)(ii) | Climate related transition risks |
| 3(b) | This standard applies to climate-related opportunities available to the entity |
| 4 | Climate-related risks and opportunities that could not reasonably be expected to affect an entity’s prospects are outside the scope of this Standard. |
| Governance | |
| 5 | The objective of climate-related financial disclosures on governance is to enable users of general purpose financial reports to understand the governance processes, controls and procedures an entity uses to monitor, manage and oversee climate-related risks and opportunities. |
| 6 | To achieve this objective, an entity shall disclose information about: |
| 6(a) | The governance body(s) (which can include a board, committee or equivalent body charged with governance) or individual(s) responsible for oversight of climate-related risks and opportunities. |
| 6(a)(i) | How responsibilities for climate-related risks and opportunities are reflected in the terms of reference, mandates, role descriptions and other related policies applicable to that body(s) or individual(s) |
| 6(a)(ii) | How the body(s) or individual(s) determines whether appropriate skills and competencies are available or will be developed to oversee strategies designed to respond to climate related risks and opportunities |
| 6(a)(iii) | How and how often the body(s) or individual(s) is informed about climate-related risks and opportunities |
| 6(a)(iv) | How the body(s) or individual(s) takes into account climate related risks and opportunities when overseeing the entity’s strategy, its decisions on major transactions and its risk management processes and related policies, including whether the body(s) or individual(s) has considered trade-offs associated with those risks and opportunities |
| 6(a)(v) | How the body(s) or individual(s) oversees the setting of targets related to climate-related risks and opportunities, and monitors progress towards those targets including whether and how related performance metrics are included in remuneration policies |
| 6(b) | Management’s role in the governance processes, controls and procedures used to monitor, manage and oversee climate-related risks and opportunities, including information about: |
| 6(b)(i) | Whether the role is delegated to a specific management-level position or management level committee and how oversight is exercised over that position or committee |
| 6(b)(ii) | Whether management uses controls and procedures to support the oversight of climate-related risks and opportunities and, if so, how these controls and procedures are integrated with other internal functions |
| 7 | In preparing disclosures to fulfil the requirements in paragraph 6, an entity shall avoid unnecessary duplication in accordance with IFRS 1 General Requirements for Disclosure of Sustainability-related Financial Information (IFRS S1). For example, although an entity shall provide the information required by paragraph 6, if oversight of sustainability-related risks and opportunities is managed on an integrated basis, the entity would avoid duplication by providing integrated governance disclosures instead of separate disclosures for each sustainability-related risk and opportunity. |
| Strategy | |
| 8 | The objective of climate-related financial disclosures on strategy is to enable users of general purpose financial reports to understand an entity’s strategy for managing climate-related risks and opportunities. |
| 9 | Specifically, an entity shall disclose information to enable users of general purpose financial reports to understand: |
| 9(a) | The climate-related risks and opportunities that could reasonably be expected to affect the entity’s prospects |
| 9(b) | The current and anticipated effects of those climate-related risks and opportunities on the entity’s business model and value chain |
| 9(c) | The effects of those climate-related risks and opportunities on the entity’s strategy and decision-making, including information about its climate-related transition plan |
| 9(d) | The effects of those climate-related risks and opportunities on the entity’s financial position, financial performance and cash flows for the reporting period, and their anticipated effects on the entity’s financial position, financial performance and cash flows over the short, medium and long term, taking into consideration how those climate-related risks and opportunities have been factored into the entity’s financial planning |
| 9(e) | The climate resilience of the entity’s strategy and its business model to climate-related changes, developments and uncertainties, taking into consideration the entity’s identified climate-related risks and opportunities |
| Climate-related Risks and Opportunities | |
| 10 | An entity shall disclose information that enables users of general purpose financial reports to understand the climate-related risks and opportunities that could reasonably be expected to affect the entity’s prospects. Specifically, the entity shall: |
| 10(a) | Describe climate-related risks and opportunities that could reasonably be expected to affect the entity’s prospects |
| 10(b) | Explain, for each climate-related risk the entity has identified, whether the entity considers the risk to be a climate-related physical risk or climate-related transition risk |
| 10(c) | Specify, for each climate-related risk and opportunity the entity has identified, over which time horizons—short, medium or long term—the effects of each climate-related risk and opportunity could reasonably be expected to occur |
| 10(d) | Explain how the entity defines ‘short term’, ‘medium term’ and ‘long term’ and how these definitions are linked to the planning horizons used by the entity for strategic decision-making |
| 11 | In identifying the climate-related risks and opportunities that could reasonably be expected to affect an entity’s prospects, the entity shall use all reasonable and supportable information that is available to the entity at the reporting date without undue cost or effort, including information about past events, current conditions and forecasts of future conditions. |
| 12 | In identifying the climate-related risks and opportunities that could reasonably be expected to affect an entity’s prospects, the entity shall refer to and consider the applicability of the industry-based disclosure topics defined in the Industry-based Guidance on Implementing IFRS S2. |
| Business Model and Value Chain | |
| 13 | An entity shall disclose information that enables users of general purpose financial reports to understand the current and anticipated effects of climate-related risks and opportunities on the entity’s business model and value chain. Specifically, the entity shall disclose: |
| 13(a) | A description of the current and anticipated effects of climate-related risks and opportunities on the entity’s business model and value chain |
| 13(b) | A description of where in the entity’s business model and value chain climate-related risks and opportunities are concentrated (for example, geographical areas, facilities and types of assets) |
| Strategy, Decision Making, and Resource Planning | |
| 14 | An entity shall disclose information that enables users of general purpose financial reports to understand the effects of climate-related risks and opportunities on its strategy and decision-making. Specifically, the entity shall disclose: |
| 14(a) | How the entity has responded to, and plans to respond to, climate-related risks and opportunities in its strategy and decision-making, including how the entity plans to achieve any climate-related targets it has set and any targets it is required to meet by law or regulation |
| 14(a)(i) | Current and anticipated changes to the entity’s business model, including its resource allocation, to address climate-related risks and opportunities (for example, these changes could include plans to manage or decommission carbon-, energy- or water-intensive operations; resource allocations resulting from demand or supply-chain changes; resource allocations arising from business development through capital expenditure or additional expenditure on research and development; and acquisitions or divestments) |
| 14(a)(ii) | Current and anticipated direct mitigation and adaptation efforts (for example, through changes in production processes or equipment, relocation of facilities, workforce adjustments, and changes in product specifications) |
| 14(a)(iii) | Current and anticipated indirect mitigation and adaptation efforts (for example, through working with customers and supply chains) |
| 14(a)(iv) | Any climate-related transition plan the entity has, including information about key assumptions used in developing its transition plan, and dependencies on which the entity’s transition plan relies |
| 14(a)(v) | How the entity plans to achieve any climate-related targets, including any greenhouse gas emissions targets |
| 14(b) | Information about how the entity is resourcing, and plans to resource, the activities disclosed |
| 14(c) | Quantitative and qualitative information about the progress of plans disclosed in previous reporting periods |
| Financial Position, Financial Performance, and Cash Flows | |
| 15 | An entity shall disclose information that enables users of general purpose financial reports to understand: |
| 15(a) | The effects of climate-related risks and opportunities on the entity’s financial position, financial performance and cash flows for the reporting period (current financial effects) |
| 15(b) | The anticipated effects of climate-related risks and opportunities on the entity’s financial position, financial performance and cash flows over the short, medium and long term, taking into consideration how climate-related risks and opportunities are included in the entity’s financial planning (anticipated financial effects) |
| 16 | Specifically, an entity shall disclose quantitative and qualitative information about: |
| 16(a) | How climate-related risks and opportunities have affected its financial position, financial performance and cash flows for the reporting period |
| 16(b) | The climate related risks and opportunities identified in paragraph 16(a) for which there is a significant risk of a material adjustment within the next annual reporting period to the carrying amounts of assets and liabilities reported in the related financial statements; |
| 16(c) | How the entity expects its financial position to change over the short, medium and long term, given its strategy to manage climate-related risks and opportunities, taking into consideration: |
| 16(c)(i) | its investment and disposal plans (for example, plans for capital expenditure, major acquisitions and divestments, joint ventures, business transformation, innovation, new business areas, and asset retirements), including plans the entity is not contractually committed to |
| 16(c)(ii) | its planned sources of funding to implement its strategy |
| 16(d) | How the entity expects its financial performance and cash flows to change over the short, medium and long term, given its strategy to manage climate-related risks and opportunities (for example, increased revenue from products and services aligned with a lower-carbon economy; costs arising from physical damage to assets from climate events; and expenses associated with climate adaptation or mitigation) |
| 17 | In providing quantitative information, an entity may disclose a single amount or a range. |
| 18 | In preparing disclosures about the anticipated financial effects of a climate-related risk or opportunity, an entity shall: |
| 18(a) | Use all reasonable and supportable information that is available to the entity at the reporting date without undue cost or effort |
| 18(b) | Use an approach that is commensurate with the skills, capabilities and resources that are available to the entity for preparing those disclosures. |
| 19 | An entity need not provide quantitative information about the current or anticipated financial effects of a climate-related risk or opportunity if the entity determines that: |
| 19(a) | Those effects are not separately identifiable |
| 19(b) | The level of measurement uncertainty involved in estimating those effects is so high that the resulting quantitative information would not be useful. |
| 20 | In addition, an entity need not provide quantitative information about the anticipated financial effects of a climate-related risk or opportunity if the entity does not have the skills, capabilities or resources to provide that quantitative information. |
| 21 | If an entity determines that it need not provide quantitative information about the current or anticipated financial effects of a climate-related risk or opportunity applying the criteria set out in paragraphs 19–20, the entity shall: |
| 21(a) | Explain why it has not provided quantitative information |
| 21(b) | Provide qualitative information about those financial effects, including identifying line items, totals and subtotals within the related financial statements that are likely to be affected, or have been affected, by that climate-related risk or opportunity |
| 21(c) | Provide quantitative information about the combined financial effects of that climate-related risk or opportunity with other climate-related risks or opportunities and other factors unless the entity determines that quantitative information about the combined financial effects would not be useful. |
| Climate Resilience | |
| 22 | In providing quantitative information, the entity may disclose a single amount or a range. Specifically, the entity shall disclose: |
| 22(a) | The entity’s assessment of its climate resilience as at the reporting date, which shall enable users of general purpose financial reports to understand: |
| 22(a)(i) | The implications, if any, of the entity’s assessment for its strategy and business model, including how the entity would need to respond to the effects identified in the climate-related scenario analysis |
| 22(a)(ii) | The significant areas of uncertainty considered in the entity’s assessment of its climate resilience |
| 22(a)(iii) | The entity’s capacity to adjust or adapt its strategy and business model to climate change over the short, medium and long term, including: |
| 22(a)(iii)(1) | The availability of, and flexibility in, the entity’s existing financial resources to respond to the effects identified in the climate-related scenario analysis, including to address climate-related risks and to take advantage of climate-related opportunities; |
| 22(a)(iii)(2) | The entity’s ability to redeploy, repurpose, upgrade or decommission existing assets |
| 22(a)(iii)(3) | The effect of the entity’s current and planned investments in climate-related mitigation, adaptation and opportunities for climate resilience |
| 22(b) | How and when the climate-related scenario analysis was carried out, including: |
| 22(b)(i) | Information about the inputs the entity used, including: |
| 22(b)(i)(1) | Which climate-related scenarios the entity used for the analysis and the sources of those scenarios |
| 22(b)(i)(2) | Whether the analysis included a diverse range of climate-related scenarios |
| 22(b)(i)(3) | Whether the climate related scenarios used for the analysis are associated with climate-related transition risks or climate-related physical risks |
| 22(b)(i)(4) | Whether the entity used, among its scenarios, a climate-related scenario aligned with the latest international agreement on climate change |
| 22(b)(i)(5) | Why the entity decided that its chosen climate-related scenarios are relevant to assessing its resilience to climate-related changes, developments, or uncertainties |
| 22(b)(i)(6) | The time horizons the entity used in the analysis |
| 22(b)(i)(7) | What scope of operations the entity used in the analysis (for example, the operating locations and business units used in the analysis) |
| 22(b)(ii) | The key assumptions the entity made in the analysis, including assumptions about: |
| 22(b)(ii)(1) | Climate-related policies in the jurisdictions in which the entity operates |
| 22(b)(ii)(2) | Macroeconomic trends |
| 22(b)(ii)(3) | National or regional level variables |
| 22(b)(ii)(4) | Energy use and mix |
| 22(b)(ii)(5) | Developments in technology |
| 22(b)(iii) | The reporting period in which the climate related scenario analysis was carried out |
| 23 | In preparing disclosures to meet the requirements in paragraphs 13–22, an entity shall refer to and consider the applicability of cross-industry metric categories, as described in paragraph 29, and industry-based metrics associated with disclosure topics defined in the industry-based Guidance on Implementing IFRS S2 as described in paragraph 32. |
| Risk Management | |
| 24 | The objective of climate-related financial disclosures on risk management is to enable users of general purpose financial reports to understand an entity’s processes to identify, assess, prioritize and monitor climate-related risks and opportunities, including whether and how those processes are integrated into and inform the entity’s overall risk management process. |
| 25 | To achieve this objective, an entity shall disclose information about: |
| 25(a) | The process and related policies the entity uses to identify, assess, prioritize and monitor climate related risks, including information about: |
| 25(a)(i) | The inputs and parameters the entity uses (for example, information about data sources and the scope of operations covered in the process) |
| 25(a)(ii) | Whether and how the entity uses climate-related scenario analysis to inform its identification of climate related risks |
| 25(a)(iii) | How the entity assesses the nature, likelihood, and magnitude of the effects of those risks (for example, whether the entity considers qualitative factors, quantitative thresholds, or other criteria) |
| 25(a)(iv) | Whether and how the entity prioritizes climate related risks relative to other types of risk |
| 25(a)(v) | How the entity monitors climate related risks |
| 25(a)(vi) | Whether and how the entity has changed the processes it uses compared with the previous reporting period |
| 25(b) | The processes the entity uses to identify, assess, prioritize, and monitor climate related opportunities, including information about whether and how the entity uses climate related scenario analysis to inform its identification of climate related opportunities |
| 25(c) | The extent to which, and how, the processes for identifying, assessing, prioritizing, and monitoring climate related risks and opportunities are integrated into and inform the entity’s overall risk management process |
| 26 | In preparing disclosures to fulfil the requirements in paragraph 25, an entity shall avoid unnecessary duplication in accordance with IFRS S1. |
| Metrics and Targets | |
| 27 | The objective of climate-related financial disclosures on metrics and targets is to enable users of general purpose financial reports to understand an entity’s performance in relation to its climate-related risks and opportunities, including progress towards any climate-related targets it has set, and any targets it is required to meet by law or regulation. |
| 28 | To achieve this objective, an entity shall disclose: |
| 28(a) | Information relevant to the cross-industry metric categories |
| 28(b) | Industry-based metrics that are associated with particular business models, activities, or other common features that characterize participation in an industry |
| 28(c) | Targets set by the entity, and any targets it is required to meet by law or regulation, to mitigate or adapt to climate-related risks or take advantage of climate-related opportunities, including metrics used by the governance body or management to measure progress towards these targets |
| Climate Related Metrics | |
| 29 | An entity shall disclose information relevant to the cross-industry metric categories of: |
| 29(a) | Greenhouse gases- the entity shall: |
| 29(a)(i) | Disclose its absolute gross greenhouse gas emissions generated during the reporting period, expressed as metric tons of CO2 equivalent, classified as: |
| 29(a)(i)(1) | Scope 1 greenhouse gas emissions |
| 29(a)(i)(2) | Scope 2 greenhouse gas emissions |
| 29(a)(i)(3) | Scope 3 greenhouse gas emissions |
| 29(a)(ii) | Measure its greenhouse gas emissions in accordance with the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004) unless required by a jurisdictional authority or an exchange on which the entity is listed to use a different method for measuring its greenhouse gas emissions |
| 29(a)(iii) | Disclose the approach it uses to measure its greenhouse gas emissions including: |
| 29(a)(iii)(1) | the measurement approach, inputs and assumptions the entity uses to measure its greenhouse gas emissions |
| 29(a)(iii)(2) | The reason why the entity has chosen the measurement approach, inputs and assumptions it uses to measure its greenhouse gas emissions |
| 29(a)(iii)(3) | Any changes the entity made to the measurement approach, inputs and assumptions during the reporting period and the reasons for those changes |
| 29(a)(iv) | For Scope 1 and Scope 2 greenhouse gas emissions disclosed in accordance with paragraph 29(a)(i)(1)-(2), disaggregate emissions between: |
| 29(a)(iv)(1) | The consolidated accounting group (for example, for an entity applying IFRS Accounting Standards, this group would comprise the parent and its consolidated subsidiaries) |
| 29(a)(iv)(2) | Other investees excluded from paragraph 29(a)(iv)(1) (for example, for an entity applying IFRS Accounting Standards, these investees would include associates, joint ventures and unconsolidated subsidiaries) |
| 29(a)(v) | For Scope 2 greenhouse gas emissions; disclose its location-based Scope 2 greenhouse gas emissions, and provide information about any contractual instruments that is necessary to inform users’ understanding of the entity’s Scope 2 greenhouse gas emissions |
| 29(a)(vi) | For Scope 3 greenhouse gas emissions disclosed in accordance with paragraph 29(a)(i)(3), disclose: |
| 29(a)(vi)(1) | The categories included within the entity’s measure of Scope 3 greenhouse gas emissions, in accordance with the Scope 3 categories described in the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011) |
| 29(a)(vi)(2) | Additional information about the entity’s Category 15 greenhouse gas emissions or those associated with its investments (financed emissions) |
| 29(b) | Climate-related transition risks—the amount and percentage of assets or business activities vulnerable to climate-related transition risks |
| 29(c) | Climate-related physical risks—the amount and percentage of assets or business activities vulnerable to climate-related physical risks |
| 29(d) | Climate-related opportunities—the amount and percentage of assets or business activities aligned with climate-related opportunities |
| 29(e) | Capital deployment—the amount of capital expenditure, financing or investment deployed towards climate-related risks and opportunities |
| 29(f) | Internal carbon prices- the entity shall disclose: |
| 29(f)(i) | An explanation of whether and how the entity is applying a carbon price in decision-making (for example, investment decisions, transfer pricing and scenario analysis) |
| 29(f)(ii) | The price for each metric ton of greenhouse gas emissions the entity uses to assess the costs of its greenhouse gas emissions |
| 29(g) | Remuneration—the entity shall disclose: |
| 29(g)(i) | A description of whether and how climate-related considerations are factored into executive remuneration |
| 29(g)(ii) | The percentage of executive management remuneration recognized in the current period that is linked to climate related considerations |
| 30 | In preparing disclosures to meet the requirements in paragraph 29(b)–(d), an entity shall use all reasonable and supportable information that is available to the entity at the reporting date without undue cost or effort. |
| 31 | In preparing disclosures to meet the requirements in paragraph 29(b)–(g), an entity shall refer to paragraphs B64–B65. |
| 32 | An entity shall disclose industry-based metrics that are associated with one or more particular business models, activities or other common features that characterize participation in an industry. In determining the industry-based metrics that the entity discloses, the entity shall refer to and consider the applicability of the industry-based metrics associated with disclosure topics described in the industry-based Guidance on Implementing IFRS S2. |
| Climate Related Targets | |
| 33 | An entity shall disclose the quantitative and qualitative climate-related targets it has set to monitor progress towards achieving its strategic goals, and any targets it is required to meet by law or regulation, including any greenhouse gas emissions targets. For each target, the entity shall disclose: |
| 33(a) | The metric used to set the target |
| 33(b) | The objective of the target (for example, mitigation, adaptation or conformance with science-based initiatives); |
| 33(c) | The part of the entity to which the target applies (for example, whether the target applies to the entity in its entirety or only a part of the entity, such as a specific business unit or specific geographical region) |
| 33(d) | The period over which the target applies |
| 33(e) | The base period from which progress is measured |
| 33(f) | Any milestones and interim targets |
| 33(g) | If the target is quantitative, whether it is an absolute target or an intensity target |
| 33(h) | How the latest international agreement on climate change, including jurisdictional commitments that arise from that agreement, has informed the target |
| 34 | An entity shall disclose information about its approach to setting and reviewing each target, and how it monitors progress against each target, including: |
| 34(a) | Whether the target and the methodology for setting the target has been validated by a third party |
| 34(b) | The entity’s processes for reviewing the target |
| 34(c) | The metrics used to monitor progress towards reaching the target |
| 34(d) | Any revisions to the target and an explanation for those revisions |
| 35 | An entity shall disclose information about its performance against each climate-related target and an analysis of trends or changes in the entity’s performance |
| 36 | For each greenhouse gas emissions target disclosed, an entity shall disclose: |
| 36(a) | Which greenhouse gases are covered by the target |
| 36(b) | Whether Scope 1, Scope 2 or Scope 3 greenhouse gas emissions are covered by the target |
| 36(c) | Whether the target is a gross greenhouse gas emissions target or net greenhouse gas emissions target. If the entity discloses a net greenhouse gas emissions target, the entity is also required to separately disclose its associated gross greenhouse gas emissions target |
| 36(d) | Whether the target was derived using a sectoral decarbonization approach |
| 36(e) | The entity’s planned use of carbon credits to offset greenhouse gas emissions to achieve any net greenhouse gas emissions target |
| 36(e)(i) | The extent to which, and how, achieving any net greenhouse gas emissions target relies on the use of carbon credits |
| 36(e)(ii) | Which third-party scheme(s) will verify or certify the carbon credits |
| 36(e)(iii) | The type of carbon credit, including whether the underlying offset will be nature-based or based on technological carbon removals, and whether the underlying offset is achieved through carbon reduction or removal |
| 36(e)(iv) | Any other factors necessary for users of general-purpose financial reports to understand the credibility and integrity of the carbon credits the entity plans to use (for example, assumptions regarding the permanence of the carbon offset) |
| 37 | In identifying and disclosing the metrics used to set and monitor progress towards reaching a target described in paragraphs 33–34, an entity shall refer to and consider the applicability of cross-industry metrics (see paragraph 29) and industry-based metrics (see paragraph 32), including those described in an applicable IFRS Sustainability Disclosure Standard, or metrics that otherwise satisfy the requirements in IFRS S1. |
Appendix
Table 2: Example climate-related risks and opportunities that were assessed as part of this disclosure.
| Risk types and primary environmental risk driver |
|
Policy
Liability
Technology
Market
Reputation
Acute physical
Chronic physical
|