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Leased assets emissions refer to the greenhouse gas (GHG) emissions generated by assets that a company leases, whether they are upstream or downstream in the supply chain. These emissions fall under Scope 3 of the GHG Protocol and are classified into two categories: upstream leased assets (Scope 3, Category 8) and downstream leased assets (Scope 3, Category 13).
By understanding and measuring these emissions, businesses can gain insight into the full environmental impact of their leased assets and take meaningful steps to reduce their carbon footprint.
Upstream leased assets emissions occur when a business leases assets—such as office space, vehicles, equipment, or machinery—from a third-party provider. Although the company may not own these assets, they are still responsible for the emissions generated through their usage, as the assets directly support their operations. For example, a company leasing office space must account for the energy used in heating, cooling, and lighting the building, as well as any other operational emissions resulting from their activities within the space.
Similarly, leased vehicles used for business purposes, such as company cars, delivery vans, or specialised equipment, also fall under upstream leased assets emissions. While the leasing company typically maintains ownership, the emissions from using the asset are attributed to the leasing organisation, as it is the primary user and therefore the source of emissions.
Understanding upstream leased assets emissions is critical, as they can represent a substantial part of an organisation's Scope 3 footprint. By tracking these emissions, companies can explore ways to reduce energy usage in leased spaces, implement energy-saving practices, or even negotiate with landlords and suppliers for more sustainable options.
Downstream leased assets emissions occur when a business owns assets that it leases out to other organisations or individuals. In this scenario, the emissions generated by the use of these assets are categorised as downstream emissions, as they occur after the product or asset has left the company’s direct control. Examples include companies leasing properties, vehicles, or equipment to clients. The emissions generated by the lessee while using these assets contribute to the lessor’s downstream leased assets emissions footprint.
For instance, a property management company that leases buildings to tenants is responsible for tracking the emissions from the energy consumed in those properties, even though the tenants occupy and control the space. Similarly, a company that leases specialised equipment, such as construction machinery, must account for the emissions generated when clients use that equipment. In essence, the lessor holds the responsibility for emissions linked to assets they own, even when these are temporarily in the hands of another party.
Understanding downstream leased assets emissions allows companies to collaborate with lessees on emission reduction strategies, such as energy efficiency initiatives, renewable energy integration, or low-emission equipment upgrades. This approach not only helps to mitigate environmental impact but also strengthens the organisation’s sustainability profile by promoting environmentally responsible practices across the leased assets.
Measuring leased assets emissions provides organisations with a more accurate and complete view of their carbon footprint, enabling them to make informed sustainability decisions. First, tracking both upstream and downstream leased assets emissions allows companies to identify high-impact areas within their leased asset portfolio. By understanding where the majority of emissions come from, they can implement targeted strategies to reduce their environmental impact, such as optimising energy use in leased buildings or encouraging efficient operation of leased equipment.
Additionally, measuring leased assets emissions supports sustainable procurement and leasing practices. For upstream leases, organisations can choose to work with property owners or vehicle leasing companies that prioritise energy-efficient buildings and low-emission vehicle options. Similarly, companies leasing out assets downstream can promote sustainable practices among lessees, encouraging them to adopt energy-saving habits or upgrade to cleaner technology when possible.
Finally, managing leased assets emissions enhances corporate social responsibility and stakeholder trust. Transparency in reporting and managing these emissions demonstrates a commitment to sustainability, showing investors, customers, and partners that the organisation is actively addressing its indirect environmental impact. By taking steps to reduce leased assets emissions, companies can contribute to their overall sustainability goals and appeal to stakeholders who value responsible environmental stewardship.
FutureTracker provides comprehensive support for organisations in every aspect of measuring and managing their emissions, including leased assets emissions. Our emissions calculator and guidance library simplifies the process, making it easy for your organisation to identify sources of emissions, quantify their impact, and develop targeted strategies to reduce them effectively.
If you’d like to learn more about FutureTracker, get in touch with us at enquiries@futuretracker.com or learn more about our plans and pricing here.
