Demystifying Scope 2 Emissions: A Guide for Tenants and Landlords

Introduction

In this blog we’re going to be unpacking a topic that's often shrouded in confusion: Scope 2 emissions for tenants and landlords. If you're renting an office space or managing a property, understanding your role in greenhouse gas (GHG) emissions reporting is crucial. Let's dive in and make sense of it together.

What Are Scope 2 Emissions, Anyway?

Before we get into the nitty-gritty, let's recap the basics. The Greenhouse Gas Protocol divides emissions into three scopes:

1. Scope 1: Direct emissions from sources you own or control—think company vehicles or on-site fuel combustion.
2. Scope 2: Indirect emissions from the generation of purchased electricity, steam, heating, or cooling that you consume.
3. Scope 3: All other indirect emissions that occur in your value chain, like business travel or waste disposal.

Today, we're focusing on Scope 2—the emissions resulting from the energy you buy and use but don't generate yourself.

Tenants: Taking Charge of Your Energy Footprint

As a tenant, you might feel that your influence is limited, but when it comes to energy consumption, you have more control than you might think.

Operational Control Matters

Do you decide when the lights go on and off? Can you adjust the thermostat? If you have the authority to implement operational policies within your space, you have what's called operational control. This means you're responsible for reporting the Scope 2 emissions associated with the electricity and energy you consume.

But What If I Don't Have Access to Energy Data?

For SMEs in rented office spaces, it is often difficult to get hold of energy data for the electricity they consume in a serviced office. First and foremost, ask your landlord. Even if they have not provided you with this information, the more tenants ask, the more likely the landlord is to start putting in measure to be able to provide this.

If your landlord doesn't provide direct energy usage data, you can estimate your consumption:

• Use Industry Benchmarks: Find average energy use per square meter for similar office spaces.
• Calculate Based on Occupancy: Estimate energy use per employee and multiply by your staff count.
• Model Your Consumption: Use energy modelling tools that consider your equipment and operating hours.

Remember to document your assumptions and methodologies for transparency.

Landlords: Your Role in the Emissions Equation

Landlords, you're not off the hook! You play a significant part in the building's overall energy profile.

Control Over Common Areas

In rented office spaces, landlords are typically responsible for the energy used in common spaces like lobbies, elevators, and shared facilities. If they have operational control over these areas, you should report the associated emissions under Scope 2.

Tenant Spaces and Scope 3 Emissions

Even if you don't control the energy usage within tenant spaces, you're still connected to those emissions. They fall under Scope 3, Category 13: Downstream Leased Assets. This means you should report the emissions from these areas as part of your Scope 3 inventory.

Collaborate for Better Data

Consider working with your tenants to gather accurate energy usage data. Sub-metering can be a valuable investment, providing precise information that benefits both parties.

Avoiding Double Counting: Striking the Right Balance

A common concern is whether both landlords and tenants reporting the same emissions leads to double counting. Here's the scoop:

• Between Organisations: The whole point of the scopes of emissions is to avoid multiple organisations accounting for a set of emissions in the same scope. In short, if one organisation reports emissions in Scope 2 the other organisation should not. So if a tenant reports emissions in Scope 2, the landlord should report these emissions in Scope 3: Downstream Leased Assets. If the landlord reports emissions in Scope 2, the tenant should report these same emissions in Scope 3: Upstream Leased Assets.
• Within the Same Organisation: It is also important to avoid double counting by not reporting the same emissions in multiple scopes. In other words if you associate your emissions to scope 2, you should not also report them in scope 3.

The key is clear communication and transparency about who controls what.

Why Accurate Reporting Matters

Understanding and correctly reporting Scope 2 emissions isn't just about ticking boxes—it's about making a real impact.

• For Tenants: Identifying your energy consumption helps you find opportunities to reduce costs and enhance sustainability.
• For Landlords: Demonstrating a commitment to energy efficiency can make your property more attractive to potential tenants and reduce operating costs.

Practical Steps to Move Forward

For Tenants:

• Audit Your Energy Use: Identify major energy consumers in your space.
• Implement Efficiency Measures: Upgrade to energy-efficient lighting or appliances.
• Engage Your Team: Foster a culture of sustainability among employees.

For Landlords:

• Invest in Building Upgrades: Improve insulation, install energy-efficient windows, or upgrade HVAC systems.
• Offer Green Leases: Include clauses that promote energy efficiency and data sharing.
• Build Relationships with Tenants: Work together on sustainability initiatives.

Conclusion

Navigating Scope 2 emissions reporting doesn't have to be daunting. By understanding your level of control and communicating openly, tenants and landlords can both fulfil their reporting obligations and contribute to a more sustainable future. Remember, every kilowatt-hour saved is a step toward a healthier planet.