Measuring carbon emissions plays a key part of any well-formed sustainability strategy. As we know, the built environment accounts for as much as 40 per cent of carbon emissions across the planet and with an increasing number of real estate companies and investors committing to achieve net-zero carbon by 2030, it is crucial that the sector has a clear understanding of their emissions baseline. This is essential to assessing the scale of measures that need to be undertaken in order to realise these goals.
Carbon emissions are categorised into Scope 1,2 and 3 emissions:
- Scope 1 refers to direct emissions from the activities of an organisation or those that are under their control
- Scope 2 looks at indirect emissions from electricity, heat or steam purchased and used by the organisation
- Scope 3 incorporates all other indirect emissions that occur from sources an organisation does not own or control, such as the purchasing of products and services.
Many companies already record their Scope 1 and 2 emissions, and as of April 2019 it was also made compulsory for large businesses in the UK to report emissions under the government’s Streamlined Energy and Carbon Reporting (SECR) initiative.
This requires businesses to declare their emissions across all three categories. However, owing to the complexity of building a true picture of Scope 3 emissions, the mandatory requirements remain limited, relating only to emissions generated from business travel, leaving a significant amount potentially unreported.
WHY DOES THIS MATTER?
Within commercial real estate it has been estimated that 85 per cent of total emissions actually fall under Scope 3. This is the case for the majority of leased assets, where emissions are often outside of operational control, such as those associated with tenant energy consumption.
With investors facing increasing pressure to reduce the environmental impact of their assets, declaring Scope 3 emissions should help to provide a clearer picture of what still needs to be done. What’s more, large reporting disclosure frameworks, such as the Task Force on Climate Related Financial Disclosure (TCFD) and GRESB, reward participants who voluntarily disclose this information.
As pressure builds on the sector from stakeholders to provide further details on its commitment to achieve net zero, it is critical that it is seen to be tackling emissions that fall within all three scopes, not just Scopes 1 and 2.
Ultimately, including Scope 3 emissions as part of your data collection will provide a great opportunity to engage with both occupiers and suppliers. It will also allow all parties to better understand their whole carbon impact and make the positive changes needed to successfully achieve their net zero ambitions.
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