Category 8: Upstream leased assets
This category includes emissions from the operation of assets that are leased by the reporting company in the reporting year and not already included in scope 1 and scope 2 inventories. This category is only applicable to companies that operate leased assets.
A reporting company’s scope 3 emissions from upstream leased assets include scope 1 and scope 2 emissions of the lessors. The lessor (the party leasing out the asset) is responsible for the emissions associated with manufacturing, maintaining and running the asset, but the reporting company (lessee) reports the emissions based on the use of the asset.
There are three methods that can be used to calculate emissions from upstream assets.
Asset-specific method. This involves collecting fuel and energy use data from specific assets or scope 1 and scope 2 emissions from individual leased assets.
Lessor-specific method. This involves collecting the scope 1 and scope 2 emissions from lessors and allocating these emissions to the relevant leased assets.
Average-data method. This involves using secondary average data to estimate emissions for each leased asset e.g. average emissions per asset type or floor space.
The figure below shows a decision tree that acts as a guidance for selecting which method to use.
Method 1: Asset-specific
This method involves collecting fuel and energy use data from specific assets or scope 1 and scope 2 emissions from individual leased assets.
Data sources for this data may include utility bills, purchase records, meter readings and internal IT systems.
The emission factors needed are site or regionally specific emission factors for energy sources per unit of consumption e.g. kg CO2e/kWh for electricity, kg CO2e/liter for diesel.
Data sources for emission factors include:
- Life cycle databases such as those hosted on the GHG Protocol website
- Company developed emission factors
- Government agencies
- Industry associations
To calculate scope 3 emissions from leased assets, the company needs to aggregate the scope 1 and scope 2 emissions across all of its leased assets using the formula below:
In cases where the company leases a portion of the building and energy use is not separately sub-metered, it can estimate energy use using its share of the building’s total floor space and the total building energy consumption i.e.
See the example below for a demonstration on how to calculate upstream emissions of leased assets using the asset-specific method.
Method 2: Lessor-specific
This method applies where several lessees operate one leased assets and energy consumption is not sub-metered. In this case, the company collects building-level scope 1 and scope 2 emissions from the lessor(s) and allocates them to the leased assets.
Companies should collect either scope 1 and scope 2 emissions data from the lessor, or activity data on the total fuel and electricity use, fugitive emissions (e.g. from refrigirants) and process emissions if available.
The emission factors required here include site or regionally specific emission factors for energy sources, e.g. fuel and electricity, per unit of consumption (e.g. kg CO2e/kWh for electricity and kg CO2e/litre for diesel).
To allocate emissions, companies should acquire data on the total area/volume/quantity of their leased assets and the total area/volume/quantity of lessors assets.
The formula below should be used to calculate emissions using the lessor-specific method.
Method 3: Average-data
This final method should be used when purchase records, electricity bills, or meter readings of fuel or energy use are not available or applicable. The method involves estimating the emissions of each leased asset based on average statistics and secondary data, such as average emissions per asset type or floor space. This method is less accurate than the first two and limits the ability of companies to track their performance of GHG reduction actions.
There are two approaches that a company could use to calculate emissions using this method. One is to estimate them based on occupied floor space by asset / building type (for leased buildings). The other is to estimate them based on the number and type of leased assets.
The activity data needed to calculate emissions using this method include:
- Floor space for each leased building
- Number of leased buildings by building type (e.g. office, retail, warehouse, factory, etc)
- Number and type of leased assets other than buildings that give rise to scope 1 and scope 2 emissions (e.g. company cars and trucks).
The energy factors needed here include:
- Average emission factors by floor space, expressed in units of emissions per square meter, square foot occupied (e.g. kg CO2e/m2/year).
- Average emission factors by building type, expressed in units of emissions per building (e.g. kg CO2/small office block / year).
- Emission factors by asset type, expressed in units of emissions per asset (e.g. kg CO2e/car/year).
Companies should use the following formula to calculate emissions for leased buildings
.. and the one below for leased assets other than buildings and for leased buildings where floor space data is not available.
