Hi,
I’m working on a project where the flooring is being financed by the landlord but installed by the tenant. The landlord is selecting the flooring product so I assume that the embodied carbon should be included in the landlord’s embodied carbon assessment. Is my understanding of this correct?
Now, in a separate instance, what if the tenant influences the flooring selected, however, the landlord still finances it (as long as its within the same budget) and the tenant installs it? Would that now be under the tenant’s scope of work to include within the embodied carbon calculation?
To further complicate it, if the tenant pays for a portion of the flooring (the difference between the the landlord’s budget and the new, more expensive product), would that be considered within the tenant’s scope of work for their embodied carbon calculation? Especially since the tenant is the driver in the changes to the flooring installed.
I hope this is clear but I’m happy to answer any clarifying questions. Your feedback is greatly appreciated.
Hi Cheryl,
You might find this other post (link above) on the platform quite relevant to your question, specially the referenced SBTI Draft Guidance for Buildings
In general, we tend to follow the financial control method, i.e. whoever is the financial owner & decision maker is the one tagged with the emissions. Hope this helps!
As another reference, RMI released some thoughts on this topic a few weeks ago:
Sheryl, your example really illustrates how quickly this can be complex. For your example where the flooring is financed by the landlord and installed by the tenant, my understanding is that the landlord would report the flooring in Scope 3: Category 1 (purchased goods and services). For the tenant, reporting these emissions are optional in Scope 3: Category 8 (upstream leased assets) which states: Companies may also calculate the life cycle emissions associated with manufacturing or constructing leased assets (emphasis mine). Tenants can elect to report these emissions (and probably should, if they are operating decision control over them) but it is not required.
Note that, in many cases, it is appropriate for both tenant and landlord to both report upstream emissions, albeit in different categories. The GHG protocol is a reporting framework, not a mechanism to create a globally-balanced carbon budget. The goal is transparent disclosure of direct and indirect emissions; this means double-counting in scope 3 when more than one organization their upstream emissions isn’t an issue to be resolved, but a sign that companies are transparently disclosing direct, upstream, and downstream emissions.
The real threat of greenwash-y double-counting in Scope 3 occurs when emissions reductions are misallocated, by accident or maliciously, to downstream entities. For instance, in a building with two tenants A and B:
Tenant A buys low-carbon carpet for their renovation via a purchasing agreement with the landlord
Tenant B, renovating simultaneously, buys high-carbon carpet via a purchasing agreement with the landlord
Tenant B claims that, since both renovations happened together via the landlord (and maybe appear together on the same invoice), they can claim a lower GWP value based on Tenant A’s purchase of low-carbon carpet.
This is the no-good-very-bad kind of double-counting that we need to avoid!