Navigating GHG Protocol, SBTi, and CRREM Requirements

 

As sustainability regulations tighten and stakeholders demand more accurate reporting, landlords are increasingly dealing with accounting for tenant energy consumption in greenhouse gas (GHG) inventories. A common question is whether tenant emissions should fall under Scope 1, Scope 2, or Scope 3, and how operational versus financial control influences reporting. This article clarifies the requirements and methodologies using guidance from the GHG Protocol, SBTi, and CRREM.

 

What the GHG Protocol Says About Tenant Emissions

 

The GHG Protocol provides the foundation for emissions reporting in leased buildings. The treatment of tenant energy consumption depends on the operational boundary and the division of control between landlords and tenants.

 

Scope 1 and Scope 2:

 

Landlords report Scope 1 emissions from on-site combustion (e.g., gas heating systems) and Scope 2 emissions from purchased electricity used in common areas under their operational control[1]

Tenants report their own Scope 2 emissions for electricity and heating/cooling if they control their spaces[2] .

 

Scope 3 (Category 13: Downstream Leased Assets):

 

Landlords must report tenant energy consumption emissions under Scope 3, Category 13 if they do not have operational control over the leased spaces but are still responsible for the building's overall emissions impact[3] .

 

The Role of SBTi and CRREM

 

Both SBTi and CRREM require comprehensive reporting and mitigation of emissions, including tenant activities, as part of a landlord's decarbonization strategy.

 

SBTi:

 

SBTi requires Scope 3 accounting for tenant energy use, as these emissions are part of the landlord's value chain[4].

Reducing tenant energy use is essential for aligning with science-based decarbonization targets[5] .

 

CRREM:

CRREM focuses on carbon intensity thresholds (e.g., kgCO₂/m²/year) for buildings. Tenant energy consumption directly affects whether a building aligns with these thresholds[6].

Both the landlord and tenant emissions contribute to determining whether the asset risks becoming a "stranded asset" under tightening decarbonization pathways[7] .

 

Tenant Energy Consumption: Scenarios for Emissions Allocation

 

To understand how tenant energy consumption is allocated, consider the following scenarios based on control and metering:

 

Landlord Operates a Central Gas Heating Plant:

 

Landlord: Reports Scope 1 emissions for the entire gas consumption since the heating plant is under their operational control[8].

Tenants: Report Scope 2 emissions for their metered share of heating consumption[9].

Landlord Scope 3: Optionally, the landlord may include tenant heating emissions under Scope 3, Category 13, to align with CRREM or SBTi[10].

 

^{Tenant Directly Purchases Electricity:}

 

Tenant: Reports on their electricity use as Scope 2 emissions[11].

Landlord: No Scope 3 reporting for tenant electricity unless indirectly billed via service fees.

 

Unmetered Tenant Spaces:

 

The landlord reports all energy use in the building and allocates tenant energy consumption to Scope 3, Category 13, based on floor area or another allocation method[12].

 

Challenges in Allocating Tenant Emissions

 

The debate over allocation often arises from ambiguities in control and metering. The following factors must be considered:

 

Operational Control:

 

If the landlord controls the systems providing energy to tenants (e.g., centralized HVAC or heating), those emissions are reported as Scope 1 or Scope 2 by the landlord[13].

Tenants only report emissions if they directly control energy procurement and usage in their spaces[14]).

 

Financial Control:

 

Financial control plays a smaller role in emission allocation but may influence whether a landlord reports tenant energy consumption under Scope 3[15].

 

Data Gaps:

 

Lack of metering can make it difficult to disaggregate tenant energy consumption. In such cases, landlords must use allocation methods (e.g., by floor area) to estimate tenant-related emissions[16].

 

Best Practices for Compliance

 

To ensure accurate and compliant reporting of tenant energy consumption:

 

• Meter Tenant Spaces: Install sub-meters for heating, cooling, and electricity to track tenant energy use accurately.

• Collaborate with Tenants: Share energy data to help tenants report Scope 2 emissions while aligning Scope 3 reporting for landlords.

• Use Tools and Frameworks: CRREM tools and SBTi guidance can streamline tenant emission calculations and ensure alignment with decarbonization goals.

• Document Allocation Methods: If exact data is unavailable, transparently document estimation methods, such as allocating emissions by floor area or usage intensity.

 

Conclusion

 

Tenant energy consumption should be reported under Scope 3, Category 13: Downstream Leased Assets by landlords, particularly when aligning with frameworks like SBTi and CRREM. Accurate data collection, clear boundaries of control, and collaboration between landlords and tenants are essential to ensure robust and actionable GHG inventories.

 

By addressing tenant energy use effectively, landlords can meet compliance requirements, drive decarbonization, and future-proof their assets.

 

For more detailed guidance, refer to:

 

• GHG Protocol Corporate Standard (specific references noted above).

• GHG Protocol Scope 3 Calculation Guidance (specific references noted above).

• CRREM Guidance and Tools (specific references noted above).

• SBTi Guidance for Real Estate (specific references noted above).