The Intersection of Recycled Materials and Climate-Related Disclosures in IFRS Standards

Alfred Tang

Hatched by Alfred Tang

Jan 17, 2024

3 min read


The Intersection of Recycled Materials and Climate-Related Disclosures in IFRS Standards


The International Financial Reporting Standards (IFRS) provide a framework for financial reporting that is used by companies worldwide. Two key IFRS standards, IFRS-S2-IBG and ISSB-2023-A, address the topics of recycled materials and climate-related disclosures, respectively. While these standards may appear to be unrelated at first glance, a closer examination reveals commonalities and interconnections between the two. This article aims to explore the intersection of recycled materials and climate-related disclosures in IFRS standards, highlighting the importance of both topics and offering actionable advice for companies.

Recycled Materials and Their Definition:

According to IFRS-S2-IBG, recycled material refers to waste material that has undergone reprocessing or treatment through production or manufacturing processes to be made into a final product or a component for incorporation into a product. This definition encompasses both recycled and reclaimed materials. Reused material refers to recovered products or components used for the same purpose for which they were conceived, while reclaimed material is processed to recover or regenerate a usable product. These definitions underline the significance of incorporating recycled materials into production processes to minimize waste and promote sustainability.

Climate-Related Disclosures and Greenhouse Gas Emissions:

On the other hand, ISSB-2023-A focuses on climate-related disclosures, particularly in relation to greenhouse gas emissions. This standard requires companies to disclose their absolute gross greenhouse gas emissions using the Greenhouse Gas Protocol categories, which include industry-based metrics and CO2 equivalents. Additionally, companies must assess climate-related risks and opportunities throughout their value chain in the event of significant changes or circumstances. This includes considering activity data emission factors from all relevant entities within the reporting company's scope.

The Link between Recycled Materials and Climate-Related Disclosures:

Although the connection may not be immediately apparent, the link between recycled materials and climate-related disclosures is rooted in the common goal of sustainability. By incorporating recycled materials into their production processes, companies can reduce their reliance on virgin resources, thereby minimizing greenhouse gas emissions associated with extraction and manufacturing. Moreover, using recycled materials often requires less energy compared to producing new materials, leading to further reductions in carbon footprints. Thus, companies that prioritize recycled materials contribute to climate mitigation efforts and can showcase their commitment through climate-related disclosures.

Actionable Advice for Companies:

  • 1. Embrace a Circular Economy Approach: Adopting a circular economy approach involves designing products for reuse, recycling, and remanufacturing. By considering the entire lifecycle of a product, companies can identify opportunities to incorporate recycled materials and reduce waste generation. This approach not only aligns with sustainability goals but also enhances the credibility of climate-related disclosures.
  • 2. Strengthen Supply Chain Transparency: To accurately assess greenhouse gas emissions and climate-related risks, it is crucial for companies to have transparent and reliable data from their entire value chain. Establishing partnerships with third-party certified entities, such as e-waste recyclers with recognized standards like the e-Stewards® Standard or the Responsible Recycling Practices (R2) Standard, can provide assurance regarding the proper management of end-of-life materials. This, in turn, strengthens the credibility of climate-related disclosures.
  • 3. Engage Stakeholders and Share Best Practices: Collaboration and knowledge-sharing among companies, industry associations, and regulatory bodies are vital for driving sustainable practices and effective climate-related disclosures. Engaging stakeholders through initiatives such as industry forums, sustainability reporting platforms, or partnerships can facilitate the exchange of best practices and foster innovation in the use of recycled materials. Sharing success stories and lessons learned can inspire others to adopt similar approaches and contribute to a more sustainable future.


The intersection of recycled materials and climate-related disclosures in IFRS standards highlights the interconnectedness of environmental and financial reporting. By incorporating recycled materials, companies can contribute to climate mitigation efforts and demonstrate their commitment to sustainability. Additionally, accurate and transparent climate-related disclosures provide stakeholders with valuable information to assess a company's environmental performance and sustainability practices. By embracing a circular economy approach, strengthening supply chain transparency, and engaging stakeholders, companies can enhance their efforts in both areas, ultimately driving positive environmental and financial outcomes.

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