IFRS S2's illustrative guidance includes three worked examples of GHG emissions disaggregation (IE1 to IE24), with Example 3 split into two industry sub-cases. These examples show exactly when and how to break down emissions beyond the minimum requirements, demonstrating the standard's flexibility while maintaining investor relevance. (Illustrative Examples 4 and 5, covering financed emissions at IE25 to IE38, are addressed in the next module.)
When Does Disaggregation Add Value?
The minimum IFRS S2 requirement is to disclose total Scope 1, Scope 2 (location-based), and Scope 3 emissions. But in many cases, additional disaggregation (by investee type, by Scope 3 category, or by constituent gas) provides materially useful information to investors.
The illustrative guidance (IE1 to IE24) provides three numbered examples (with Example 3 covering two industry sub-cases) that demonstrate when additional disaggregation is appropriate and how to present it.
Example 1: Scope 1 and Scope 2 by Consolidated Group vs Other Investees (IE3 to IE5)
Scenario: An entity uses the equity share approach and holds a 40% stake in an associate (excluded from the consolidated financial statements).
Why disaggregate? Para 29(a)(iv) requires this disaggregation. It is not optional. Investors need to see which emissions are within the consolidated entity (subject to full management control) and which reflect investees where control is more limited.
Worked example (metric tonnes CO2e):
| Scope 1 | Scope 2 | Total | |
|---|---|---|---|
| Consolidated accounting group | 4,900 | 830 | 5,730 |
| Other investees (associate, 40% equity share) | 2,450 | 490 | 2,940 |
| Total (equity share basis) | 7,350 | 1,320 | 8,670 |
Example 2: Scope 3 by Category (IE6 to IE12)
Scenario: An entity considers whether to separately disclose Category 1 (purchased goods and services) and Category 11 (use of sold products).
Decision factors for Category 1:
- Accounts for 60% of total Scope 1+2+3 emissions
- The entity has a supply chain emissions reduction target
- Subject to strict supplier regulations
Decision factors for Category 11:
- The entity has a 3-year plan to improve product emission efficiency
- Accounts for more than 25% of total emissions
Worked table (metric tonnes CO2e):
| Category | Current year (20X1) | Prior year (20X0) |
|---|---|---|
| Category 1: Purchased goods and services | 34,000 | 35,000 |
| Category 11: Use of sold products | 13,000 | 14,600 |
| All other Scope 3 categories (combined) | 8,500 | 8,700 |
| Total Scope 3 | 55,500 | 58,300 |
Disaggregating by category is like a company separately breaking out its largest cost line items rather than disclosing only "total costs." If 60% of your emissions are from purchased goods, investors need to see that number to assess your supply chain transition risk, just as they need to see cost of goods sold separately from administrative costs to understand your margin structure.
Example 3A: Scope 1 by Constituent Gas, Oil and Gas (IE13 to IE18)
Scenario: An oil and gas entity considers disaggregating methane from its Scope 1 emissions.
Why it matters: Methane leaks from gas infrastructure are a major climate issue. Methane has a GWP of 29.8, nearly 30 times more warming than CO2 over 100 years. Regulators and investors increasingly scrutinise methane specifically, and the industry-based guidance for oil and gas (Volume 11 of the ISSB's industry guidance) specifically calls for methane disclosure.
Worked table (metric tonnes CO2e):
| Scope 1 Component | 20X1 | 20X0 |
|---|---|---|
| Methane (CH4) | 23,000 | 24,000 |
| Other Scope 1 gases | 142,000 | 148,000 |
| Total Scope 1 | 165,000 | 172,000 |
Example 3B: Scope 3 Category 11 by Constituent Gas, Automobiles (IE19 to IE24)
Scenario: An automobile manufacturer considers separately disclosing CO2 and N2O from vehicle tailpipe emissions (Scope 3, Category 11, use of sold products).
Why it matters: N2O from catalytic converters is a significant source of GHG for automakers; some markets subsidise low-N2O vehicles. Industry guidance (Volume 63, Automobiles) calls for fleet-level gas-specific disclosure.
Worked table (metric tonnes CO2e):
| Scope 3 Cat 11 Component | 20X1 | 20X0 |
|---|---|---|
| CO2 | 46,000 | 48,000 |
| N2O | 1,000 | 1,020 |
| Total use-phase emissions | 47,000 | 49,020 |
The Disaggregation Decision Framework
The illustrative examples suggest a consistent set of factors to consider when deciding whether additional disaggregation adds investor value:
| Factor | Suggests Disaggregation |
|---|---|
| Concentration | One category or gas accounts for a large percentage of total emissions |
| Regulatory focus | Specific emissions type subject to distinct regulation or policy |
| Target linkage | Entity has targets or reduction plans for the specific component |
| Industry guidance | Sector-specific ISSB guidance calls for the metric |
| Remuneration | Executive pay is linked to a specific emissions metric |
Key Takeaways
- 1Disaggregation of Scope 1 and 2 between consolidated group and other investees (Example 1) is mandatory under Para 29(a)(iv)
- 2Scope 3 disaggregation by category (Example 2) is discretionary but valuable when one category dominates total emissions or is subject to specific targets
- 3Constituent gas disaggregation (Example 3) is sector-relevant - methane for oil and gas, N2O for automobile manufacturers - and driven by industry-based guidance
- 4Five factors guide the disaggregation decision: concentration (large percentage), regulatory focus, target linkage, industry guidance, and remuneration linkage
- 5Comparative period data must be presented alongside current-year figures to show trends in disaggregated emissions