Key takeaway
GHG emissions (29(a)) are just one of seven cross-industry metric categories required by IFRS S2. The remaining six categories, covering physical and transition risk exposure, opportunities, capital deployment, internal carbon pricing, and executive remuneration, round out the quantitative picture of an entity's climate performance.
The Six Remaining Cross-Industry Metric Categories
All entities must disclose metrics in each of the seven cross-industry categories. Modules 5 and this lesson together cover the complete set. Categories (b) through (g) are introduced here:
29(b): Climate-Related Transition Risks
What: The amount and percentage of assets or business activities vulnerable to climate-related transition risks.
Purpose: Shows investors the scale of financial exposure to transition risks, including how much of the entity's balance sheet could be affected by carbon pricing, regulatory changes, or shifting market preferences.
Examples (from Illustrative Guidance):
- Volume of real estate collateral exposed to transition risk (banks)
- Concentration of credit exposure to carbon-related assets
- Percentage of revenue from coal mining or high-carbon products
- Percentage of passenger kilometres not covered by carbon offset schemes (airlines)
29(c): Climate-Related Physical Risks
What: The amount and percentage of assets or business activities vulnerable to climate-related physical risks.
Purpose: Shows the scale of balance sheet exposure to physical climate events (floods, droughts, heatwaves, sea level rise).
Examples:
- Proportion of property or infrastructure assets in flood-prone, heat-stressed, or water-stressed areas
- Proportion of real assets exposed to material climate hazards (quantified using physical risk assessment tools)
- Number and value of mortgage loans in 100-year flood zones
- Revenue from operations in water-stressed regions
29(d): Climate-Related Opportunities
What: The amount and percentage of assets or business activities aligned with climate-related opportunities.
Purpose: Balances the risk picture with the opportunity side, showing how much of the entity's business is positioned to benefit from the transition.
Examples:
- Revenue from products or services supporting the low-carbon transition
- Net premiums written for energy efficiency or lower-carbon technology
- Number of zero-emission, hybrid, or plug-in hybrid vehicles sold (auto manufacturers)
- Proportion of green-building certified homes (developers)
29(e): Capital Deployment
What: Amount of capital expenditure, financing, or investment deployed toward climate-related risks and opportunities.
Purpose: Shows whether the entity is putting financial resources behind its climate strategy. Commitments without capital backing are strategic aspiration, not strategic reality.
Examples:
- Annual capex on renewable energy or efficiency improvements
- Percentage of annual revenue invested in R&D for lower-carbon products
- Green and sustainability-linked bonds issued
- Investment in climate adaptation (flood barriers, drought-resistant equipment)
Analogy
Categories (b) to (e) work together like a corporate risk and opportunity balance sheet. Categories 29(b) and (c) show the "liabilities" side: how much of the business is exposed to transition and physical risks. Categories 29(d) and (e) show the "asset" side: how much of the business is positioned to benefit, and how much capital is being invested to capture those opportunities.
29(f): Internal Carbon Prices
What: Whether and how the entity uses an internal carbon price in its decision-making, and the price per metric tonne of GHG emissions.
Purpose: Internal carbon pricing is one of the most powerful tools for embedding climate into business decisions. An entity that prices carbon internally is forcing its investment committees and project teams to account for future carbon costs in their analyses.
IFRS S2 recognises two types of internal carbon price:
- Shadow price (notional): A hypothetical price used in financial modelling and investment decisions but not collected as an actual fee
- Internal fee or tax: An actual charge levied on business units for their emissions, creating a fund for climate investments
If the entity does not use an internal carbon price, it must disclose that fact (which is itself informative to investors).
29(g): Remuneration
What: Whether and how climate-related considerations are factored into executive remuneration; the percentage of executive management remuneration linked to climate-related considerations.
Purpose: Remuneration linkage is a governance metric. It signals whether management has personal financial incentives aligned with climate commitments. An entity that links 25% of executive pay to emissions targets is structurally more committed than one with no remuneration linkage.
This connects back to the governance disclosures in Para 6(a)(v), where the board's oversight of remuneration policy is described.
Application Guidance B64 to B65
B64 confirms that entities must disclose information relevant to all cross-industry metric categories, not just GHG emissions.
B65 provides guidance on preparing (b) to (g) disclosures: consider time horizons, where in the value chain concentrations exist, financial effects, relevant industry-based metrics, and connections to the financial statements.
| Category | Unit of Measure | Key Disclosure |
|---|---|---|
| (b) Transition risk exposure | Amount (currency) and % | Which assets or revenues are vulnerable and by how much |
| (c) Physical risk exposure | Amount (currency) and % | Which assets or revenues are exposed and by how much |
| (d) Opportunities | Amount (currency) and % | Which assets or activities are climate-aligned |
| (e) Capital deployment | Amount (currency) | Capex, investment, or financing toward climate |
| (f) Internal carbon price | Currency per tCO2e | Price used; type (shadow vs fee); whether used |
| (g) Remuneration | Percentage | % of executive pay linked to climate metrics |
Climate-Related Risk and Opportunity Exposure in Practice
For categories 29(b) through 29(e), which cover risk exposure and capital deployment, companies in sectors with significant physical assets (such as real estate, infrastructure, and mining) often present visually rich disclosures that combine geographic maps, asset-level data, and investment plans.
Worked example
Illustrative disclosure (real estate company):
The company has assessed the vulnerability of its developments and properties to both climate-related physical and transition risks. The assessment highlights exposure to acute and chronic physical risks (such as flooding and heat stress), as well as transition risks related to policy, market, and technology shifts.
Key findings:
- 17% of operating assets (CU24.7m) are exposed to climate-related physical risks, affecting 15% of operating capacity
- 12% of operating assets (CU17.6m) are exposed to climate-related transition risks, affecting 10% of operating capacity
To strengthen asset resilience and capture climate-related opportunities, the company has identified three key investment priorities between 2026 and 2030:
| Investment Area | Projected Cumulative Savings to 2030 | Planned Capex to 2030 |
|---|---|---|
| Climate-proofing properties (flood defences, storm-resistant materials, efficient cooling) | CU36.5m | CU13.4m (2026: 6.7, 2028: 4.4, 2030: 2.3) |
| Renewable add-ons (solar, wind, energy storage) | CU13.3m | CU13.3m (2026: 5.4, 2028: 3.8, 2030: 4.1) |
| Energy-efficiency optimisations (smart systems, LED, sensor controls) | CU9.1m | CU9.1m (2026: 3.0, 2028: 3.4, 2030: 2.7) |
This type of disclosure satisfies paragraphs 29(b) through 29(e) by showing both the risk exposure (as amounts and percentages of assets) and the capital being deployed to address those risks and pursue opportunities.
Key Takeaways
- Categories 29(b) and 29(c) quantify transition and physical risk exposure as amounts and percentages of assets or business activities vulnerable to climate risks
- Category 29(d) balances the risk picture by showing the amount and percentage of assets aligned with climate-related opportunities
- Category 29(e) reveals whether climate strategy is backed by real capital deployment - capex, financing, or investment toward climate risks and opportunities
- Internal carbon pricing (29(f)) requires disclosure of whether a shadow price or internal fee is used, the price per tCO2e, and which decisions it applies to
- Remuneration (29(g)) requires the percentage of executive pay linked to climate metrics - a direct governance signal of whether management has personal financial stakes in climate outcomes
Knowledge Check
Test what you just learned
4 questions · check each one as you go
Cross-industry metric category (e) covers 'capital deployment.' What type of capital does this metric capture?
An entity discloses that 75% of its revenues come from products that help customers reduce their emissions. Which cross-industry metric category does this primarily address?
An entity has no internal carbon price. What does IFRS S2 require it to disclose for category (f)?
Category (g) requires disclosure of the percentage of executive remuneration linked to climate. Why is a PERCENTAGE more informative than just describing what climate metrics are used?