Are you wondering how to categorise your carbon emissions if you rent office space or apartments and have data on electricity and gas usage? You're in the right place! This guide will help you understand which emissions fall under Scope 2 and which should be reported as Scope 3 (Category 8) emissions. Let’s break it down:
What Are Scope 2 and Scope 3 Emissions?
Scope 2 Emissions: These are indirect emissions from the electricity, heating, cooling, and steam you purchase and consume. Even though these emissions occur off-site (like at a power plant), they are considered part of your company’s footprint because they are a result of your energy consumption.
Scope 3 Emissions: These cover all other indirect emissions that occur in your value chain, both upstream (e.g., purchased goods and services) and downstream (e.g., use of sold products). In particular, Scope 3, Category 8: "Upstream Leased Assets" includes emissions from leased assets you operate but don't own, especially when you don't directly pay for or control the energy use.
Where to Report Your Emissions:
If You Pay for Electricity and Gas Directly for Offices:
Example: Your company rents an office space, and you receive and pay the bills for electricity and gas directly to the utility provider.
Where to Report: Scope 2. Since your company has control over the energy consumption and directly pays for these utilities, the emissions from this energy use should be reported under Scope 2. This means they are a direct part of your company’s energy footprint, and you have control over how much energy you use.
If Utilities Are Included in Your Rent or Paid by the Property Owner:
Example: Your company rents an office, but the electricity and gas usage are included in your lease agreement, and you do not receive separate utility bills. The property owner or landlord manages and pays for these utilities.
Where to Report: Scope 3, Category 8: Upstream Leased Assets. Since you don’t have direct control over the utility payments or how energy is consumed (it’s bundled into your rent), these emissions are considered upstream leased assets. They are part of your broader value chain but not directly controlled by you.
If the Company Pays Utility Bills for a Non-Operational Apartment (e.g., for Employee Benefits):
Example: Your company rents an apartment for an employee benefit (not for operational use), and the company directly pays for the electricity and gas bills.
Where to Report: Scope 3, Category 8: Upstream Leased Assets. Even though the company pays the utility bills directly, the apartment is not used for operational purposes but as a benefit for employees. As such, emissions from this energy use should be reported under Scope 3, Category 8. This aligns with the principle of differentiating between operational energy use (Scope 2) and non-operational/benefit-related use (Scope 3).
Why Does This Matter?
Accurate Reporting: Knowing whether emissions fall under Scope 2 or Scope 3 helps you accurately report and manage your carbon footprint.
Regulatory Compliance: Proper categorization ensures you comply with reporting standards and guidelines, like the GHG Protocol, and meet investor or stakeholder expectations.
Better Management: Understanding which emissions are under your direct control can help you implement effective energy-saving measures and improve sustainability efforts.
Quick Reference:
Scope 2: Report emissions here if your company pays the utility bills directly for operational office space.
Scope 3, Category 8: Report emissions here if your utilities are included in the rent, paid by the landlord, or if the space is rented for non-operational purposes like employee benefits.
If you need further assistance, the Key ESG team is here to help. You can reach out to us via the in-platform chat function or by emailing support@keyesg.com.
By following this simple guide, you can ensure your carbon emissions reporting is accurate and aligns with best practices. If you have any further questions, feel free to reach out—we’re here to help!