Scope 3 Category 13 Overview: Downstream Leased Assets
SCOPE 3 CATEGORY 13
The GHG Protocol defines Scope 3 emissions as indirect emissions that occur outside of a company's own operations but are included in its value chain. These emissions are frequently the most difficult to calculate and manage due to their broad scope across various upstream and downstream activities. Category 13 focuses on "downstream leased assets," which are assets leased by the reporting company to another party and operated and controlled by the lessee.
"Downstream Leased Assets" as a category within Scope 3 emissions includes those assets that a company owns but leases to other parties, and the emissions resulting from the operation or use of these assets are accounted for under this category. This is distinct from assets leased by the company from others, which would typically fall under Scope 3 Category 1 or Category 2, depending on whether they're upstream or downstream leased assets.
Category 13: Downstream Leased Assets
Calculation
The GHG Protocol provides detailed recommendations on how to account for emissions from leased assets based on the lease type (operational or financial) and control scenario. Emissions for downstream leased assets (assets leased by a corporation to others) are accounted for in Scope 3 where the lessor has no operational control over the asset. This can happen under operating leases, where the lessee assumes operational responsibility. However, the lessor retains financial control, thus the emissions from these assets are recorded under Scope 3.
Example
- If a corporation leases out vehicles to a delivery service and does not have control over their operation, the emissions produced by these vehicles are recorded as Scope 3 emissions in Category 13.
Understanding and managing Category 13 emissions necessitates thorough understanding of lease agreements and operational controls. This category emphasizes companies' larger responsibilities for managing GHG emissions throughout their value chain, outside their immediate operations.
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