As part of its climate change project, GRI has issued an exposure draft to review changes to its topical standard GRI 302: Energy 2016.
The review and public comment period ends February 29, 2024.
According to GRI, the objectives of the revised energy-related disclosures will enable an organization to disclose publicly its most significant impacts on energy and how it manages these impacts.
As stated in Notable 6, the GRI Standards have two types of disclosures associated with a significant impact. Topic management and specific topic metrics make up the two. To reiterate why topic management is important…
If your company determines one of their impacts on the economy, environment, or society to be significant, it should be managing it. It is key for an organization to mitigate its negative material impacts or enhance its positive ones. In keeping with this rationale, organizations that publish a sustainability report in accordance with the GRI Standards are required to describe how they manage each of their identified material impacts in accordance with GRI 3-3. GRI 3-3 is applied to all material topics. In addition to GRI 3-3, the proposed Energy Standard has its own management disclosure requirement.
What is the new management disclosure on energy management?
Topic management disclosures
Disclosure EN-1 Energy policies and commitments
This requirement is intended to describe the role that energy policies and commitments have in helping the organization transition to a decarbonized economy.
What are some examples?
In the “guidance” section of this disclosure, there are some are recommendations. As in all the GRI Standards disclosures, “should” indicates recommendations, not requirements. “Shall” is used to indicate a requirement. Recommendations can be viewed as best practice that in the future may be required.
Here is what some of the guidance says:
“The organization should include the following in this disclosure:
Short-, medium-, and long-term targets aimed at:
GRI
• increasing energy efficiency;
• increasing the use of renewable energy, including whether and how contractual instruments are taken into account in renewable energy target setting and monitoring; …”
Let’s look at the topic disclosures.
Disclosure EN-2 Energy consumption and generation within the organization:
This disclosure extends the current requirements in GRI 302 Energy 2016 on energy consumption and generation. One significant update of the standard involves purchased and self-generated electricity consumption and sold electricity. The organization will be required to include a breakdown by energy source and type (i.e., renewable, or non-renewable).
Disclosure EN-3 Upstream and downstream energy consumption:
This disclosure requires a breakdown of significant energy consumption in the organization’s value chain by upstream and downstream Scope 3 categories. To determine this breakdown, the organization can refer to the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard, which has 15 categories. To read more about the 15 Scope 3 categories, visit this link.
By quantifying energy consumption from non-renewable sources upstream and downstream in the organization’s value chain, an organization has a basis for calculating Scope 3 GHG emissions in other required disclosures.
Disclosure EN-4 Energy intensity:
Energy intensity ratios provide organization-specific metrics and are calculated by dividing the energy consumption by organization-specific metrics. Examples metrics include units of product, production volume (e.g., metric tons, liters, or MWh), size (e.g., floor space), employees, or revenues.
Disclosure EN-5 Reduction of energy consumption:
This requirement involves whether the energy reductions occur within the organization and/or at which stage of the value chain. This works to increase an organization’s awareness and responsibility of its energy consumption throughout its value chain.
Next time, I will offer an overview of the European Sustainability Reporting Standards (ESRS).