IFRS Foundation

Rail Transportation

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Current language: English
Rail Transportation industry entities provide rail freight shipping and support services. Important activities include shipping containerised and bulk freight, including consumer goods and commodities. Rail entities typically own, maintain and operate their rail networks, which may require significant capital expenditures. The industry exhibits economies of density because of its network effects, potentially fostering natural monopoly conditions. Together with the large sunk costs of rail infrastructure, this provides a competitive advantage to incumbent entities in the industry and creates barriers to entry for new entities.

Relevant Issues (5 of 26)

Why are some issues greyed out? The SASB Standards vary by industry based on the different sustainability-related risks and opportunities within an industry. The issues in grey were not identified during the standard-setting process as the most likely to be useful to investors, so they are not included in the Standard. Over time, as the ISSB continues to receive market feedback, some issues may be added or removed from the Standard. Each company determines which sustainability-related risks and opportunities are relevant to its business. The Standard is designed for the typical company in an industry, but individual companies may choose to report on different sustainability-related risks and opportunities based on their unique business model.

Disclosure Topics

What is the relationship between General Issue Category and Disclosure Topics? The General Issue Category is an industry-agnostic version of the Disclosure Topics that appear in each SASB Standard. Disclosure topics represent the industry-specific impacts of General Issue Categories. The industry-specific Disclosure Topics ensure each SASB Standard is tailored to the industry, while the General Issue Categories enable comparability across industries. For example, Health & Nutrition is a disclosure topic in the Non-Alcoholic Beverages industry, representing an industry-specific measure of the general issue of Customer Welfare. The issue of Customer Welfare, however, manifests as the Counterfeit Drugs disclosure topic in the Biotechnology & Pharmaceuticals industry.
General Issue Category
(Industry agnostic)

Disclosure Topics (Industry specific) for: Rail Transportation

GHG Emissions
  • Greenhouse Gas Emissions

    The Rail Transportation industry generates emissions mainly through the combustion of diesel in locomotive engines. Despite relatively low emissions compared to other transportation industries, fuel management has implications for industry entities in terms of operating costs and regulatory compliance. Greenhouse gases (GHGs) including carbon dioxide (CO2) are of particular importance to government regulators concerned about climate change. Intensifying regulation of locomotive exhaust emissions and high fuel costs encourage rail entities to invest in fuel efficiency enhancements to manage emissions. These investments can improve an entity’s operational efficiency and cost structure, with effects on value and competitive position both within the industry and compared to other modes of transport.
Air Quality
  • Air Quality

    Rail operations emit several types of air pollutants that are regulated under national and international laws, including hazardous air pollutants (HAPs), criteria air pollutants (CAPs), and volatile organic compounds (VOCs). These pollutants tend to have localised environmental and health impacts. For example, locomotive engines idling at rail yards may be a health concern for nearby human populations as HAPs such as benzene are known human carcinogens, while nitrogen oxides (NO?) are a major component of smog and acid rain. At the same time, fuel is a significant industry cost. Rail entities that implement fuel efficiency enhancements and manage emissions may see impacts to their costs in both the short and longer term.
Employee Health & Safety
  • Employee Health & Safety

    Moving freight by rail is associated with the risk of accidents and unintended releases of hazardous materials. These can harm the health and well-being of employees as well as have negative financial impacts on entities, such as reduced productivity, higher employee turnover, and increased insurance costs. Rail operators are likely to be impacted by accidents, and in some cases, poor health may also cause accidents. A healthy workforce, strong safety culture, thorough and systematic approach to safety, risk management programs (including emergency preparedness and response), and operational integrity at all levels of an entity can help lower the probability and magnitude of rail accidents.
Competitive Behavior
  • Competitive Behaviour

    Industry consolidation and prior allegations of anti-competitive practices in relation to captive shippers, among other reasons, create pressure on antitrust immunity granted to railroads in some regions. Some of the proposed policy changes could lead to significant costs or impede investment in the industry. Rail entities operating at the limits of allowable charges in areas where they could be found to have market dominance, or those not complying with regulations about reasonable rates, are likely to face increased regulatory scrutiny. Any associated fines or penalties may negatively affect an entity’s valuation by increasing its cost of capital. In an environment of increased concerns about the market power and pricing practices of rail entities, it is in their interest to continue to ensure competitive pricing and transparency in rate-setting while achieving adequate returns on their investments.
Critical Incident Risk Management
  • Accident & Safety Management

    Rail accidents and unintended releases of hazardous materials can have repercussions for the environment and communities along railroad tracks, as well as financial impacts on entities themselves. Increasingly stringent safety regulations and the potential for significant costs following major accidents provide incentives for entities to manage their safety performance through a robust safety management system. In addition, the loss of consumer confidence after such events can result in lower revenues and potentially damage an entity’s social license to operate, increasing its cost of capital.

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Current Industry: Rail Transportation

Consumer Goods
Extractives & Minerals Processing
Food & Beverage
Health Care
Renewable Resources & Alternative Energy
Resource Transformation
Technology & Communications

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