01 Jul 2024
The Green Building Council of Australia has today released a discussion paper to start an important conversation in the property sector about reporting and accounting for Scope 3 emissions to drive emissions reductions at scale.
Releasing the paper today, Jorge Chapa, Chief Impact Officer at GBCA said Scope 3 emissions have unsurprisingly become a focal point in reducing the real estate sector’s carbon footprint.
“Scope 3 are the largest and most elusive source of emissions for companies, and until now the property sector hasn't had much specific guidance on how to report on them,” Mr Chapa said.
“While many tools are available at the project level, we don’t yet have industry consensus. We hope this paper will spark industry-wide discussion and lead us toward an agreed approach to Scope 3 reporting,” Jorge said.
The discussion paper highlights the challenge of translating asset emissions into corporate accounts, calling for precise measurement to ensure that significant emissions sources in the built environment are addressed.
Global agreements like the Paris Agreement emphasise the importance of accurate and consistent reporting for tracking progress, meeting climate commitments, assessing investment sustainability, and complying with regulations.
“Reporting will also help to manage and reduce emissions throughout the supply chain by improving supply chain resilience and efficiency, fostering better relationships with committed suppliers and customers, and enhancing corporate reputation by demonstrating environmental responsibility.”
“It’s about articulating how we should better measure things that we already measure and include things that we’re currently not required to measure. This will ensure a comprehensive approach to emissions accountability,” Chapa noted.
The discussion paper includes insights from the Clean Energy Finance Corporation (CEFC), an experienced investor in measures to reduce emissions across the built environment.
CEFC Chief Investment Officer – Infrastructure and Alternatives, Rory Lonergan said we’re seeing an increasing sense of urgency around progress towards net zero emissions by 2050.
“It’s clear that this urgency is leading investors, regulators and consumers to demand greater transparency when it comes to the drivers of emissions right across the economy.”
“While we are seeing good progress around the reporting of Scope 1 and Scope 2 emissions, particularly in the built environment, there is widespread recognition that we need to go further. From a Scope 3 perspective, this requires a deeper understanding about the source of emissions, an organisation’s ability to influence them, and reporting requirements. We welcome the work of the GBCA in developing this important analysis as a means of assisting investors and the industry to start to develop their views on meeting these important challenges.”
The discussion paper covers scenarios for buildings that are sold, leased, developed, or built, considering different lease types and their impact on emissions. It also reviews current frameworks and standards, assessing their relevance to corporate reporting.
The paper shows how project-level analysis can be applied to corporate reporting and provides a consistent interpretation and approach to Scope 3 boundaries for real estate companies. Additionally, it fosters alignment in the real estate sector on Scope 3 emissions boundaries.
The paper identifies key sources for Scope 3 emissions, including:
GBCA will use industry feedback from the discussion paper to create a comprehensive guidance document for Australia, in partnership with the Property Council of Australia.
Measuring impact: Why scope 3 deserves our attention more than ever is available for download here.
GBCA acknowledges the essential support of our funding partner, the Clean Energy Finance Corporation and the technical guidance provided by Andefena in developing this discussion paper.
Background on emissions scopes
Scope 1: Direct emissions from sources owned or controlled by the company.
Scope 2: Indirect emissions from the generation of purchased electricity consumed by the company.
Scope 3: Other indirect emissions resulting from company activities but coming from sources not owned or controlled by the company.
Scope 3 emissions, which are divided into upstream (purchased or acquired goods/services) and downstream (sold/leased goods/services) categories, usually make up the majority of a real estate company's total emissions. Despite being indirect, they significantly impact the company's value chain and decision-making.