Upstream leased assets emissions, classified under Scope 3 Category 8 of the GHG Protocol, refer to the greenhouse gas emissions resulting from assets a company leases from another entity, where the company does not have financial control over these assets. These emissions are considered upstream because they are associated with leased assets used in the company's operations before its direct handling or processing activities, such as leasing office spaces, manufacturing facilities, or equipment.
In the context of greenhouse gas accounting, when a company leases an asset under an operating lease, the lessor (owner of the asset) retains financial control. Still, the lessee (company using the asset) may assume operational control. Under such arrangements, emissions from these assets—direct emissions from fuel combustion or indirect emissions from purchased electricity—fall under the lessee's Scope 3, Category 8, if the lessee reports them. The categorisation is essential to avoid double-counting emissions in Scope 1 (direct emissions) and Scope 2 (indirect emissions from purchased energy) inventories.
Calculating emissions from upstream leased assets involves identifying all relevant leased assets not controlled financially by the company, determining the source of emissions (e.g., energy use, operational processes), and applying suitable emission factors, usually provided by national databases or international agencies like the IPCC. This data is crucial for businesses to manage their environmental impact comprehensively and optimise energy use and strategies for emission reduction across their leased assets.
To go further, read our expert's presentation of a company's ideal decarbonisation journey.
