ISSB Metrics and Targets 2 — Questions and Answers
Question 1: Under IFRS S2, what is the significance of reporting GHG emissions in 'CO2 equivalent' (CO2e)?
- It allows different greenhouse gases to be compared on a common basis using their global warming potential (Correct answer)
- It converts all emissions to carbon dioxide by removing non-CO2 gases from calculations
- It satisfies only voluntary reporting frameworks
- It measures only emissions from fossil fuel combustion
Correct answer: It allows different greenhouse gases to be compared on a common basis using their global warming potential
CO2 equivalent (CO2e) allows different GHGs to be expressed on a common basis by weighting each gas according to its global warming potential relative to CO2.
Question 2: When an entity discloses a climate-related target under IFRS S2, what type of target must be disclosed if one is aligned with limiting global warming?
- A science-based target with reference to the relevant scientific basis (Correct answer)
- An aspirational target without a specific baseline year
- An internal management target not subject to external verification
- A relative intensity target only
Correct answer: A science-based target with reference to the relevant scientific basis
IFRS S2 requires that if a climate target is aligned with limiting global warming (e.g., net zero), the entity must disclose the scientific basis used to set that target.
Question 3: Which global warming potential (GWP) values must entities use when calculating CO2e under IFRS S2?
- Those from the most recent IPCC assessment report available when reporting (Correct answer)
- Those published by the ISSB in its annual metrics update
- A fixed set from the original Kyoto Protocol
- Any GWP values the entity considers appropriate
Correct answer: Those from the most recent IPCC assessment report available when reporting
IFRS S2 requires entities to use GWP values from the most recent IPCC assessment report available at the time of reporting to ensure scientific currency.
Question 4: Under IFRS S2, when must an entity disclose the percentage of Scope 3 emissions verified by a third party?
- When the entity has had its Scope 3 emissions independently assured (Correct answer)
- At all times, regardless of whether assurance has been obtained
- Only when required by local regulators
- Only for publicly listed entities
Correct answer: When the entity has had its Scope 3 emissions independently assured
Disclosure of the percentage of GHG emissions subject to third-party verification is only required when the entity has actually obtained such verification.
Question 5: What is meant by an 'absolute' GHG target as distinguished from an 'intensity-based' target?
- An absolute target sets a fixed total emissions level, while an intensity target is expressed relative to a business metric such as revenue or output (Correct answer)
- An absolute target applies only to Scope 1, while an intensity target includes Scope 3
- An absolute target is set by external regulators, while an intensity target is set internally
- An absolute target covers all GHGs, while an intensity target covers CO2 only
Correct answer: An absolute target sets a fixed total emissions level, while an intensity target is expressed relative to a business metric such as revenue or output
An absolute target specifies a total emissions reduction in tonnes CO2e, while an intensity target expresses emissions relative to a business metric (e.g., per unit of revenue), allowing comparison as business scales.
Question 6: Under IFRS S2, which approach may an entity use to measure Scope 2 emissions?
- Either the location-based or the market-based method, or both (Correct answer)
- Only the location-based method
- Only the market-based method
- A blended average of both methods combined into one figure
Correct answer: Either the location-based or the market-based method, or both
IFRS S2 allows entities to use either the location-based or the market-based method—or both—for measuring Scope 2 GHG emissions, consistent with the GHG Protocol Scope 2 Guidance.
Question 7: In the context of IFRS S1 and IFRS S2 metrics, what is the purpose of a 'baseline year'?
- It establishes a reference point against which progress toward targets is measured over time (Correct answer)
- It is the first year in which ISSB standards become mandatory for the entity
- It marks the year the entity's board formally approves the sustainability strategy
- It is the year the entity's auditors first verified the sustainability data
Correct answer: It establishes a reference point against which progress toward targets is measured over time
A baseline year is the reference period used to calculate emissions reductions and measure progress toward targets, making it essential for assessing how much improvement has been achieved.
ISSB Metrics and Targets 2
Under IFRS S2, what is the significance of reporting GHG emissions in 'CO2 equivalent' (CO2e)?