Categorising Utility Emissions in Leased Facilities
Who pays the bill, who controls the systems, and what type of lease you hold all affect whether emissions sit in Scope 1, 2, or 3
Leased offices create one of the more common boundary questions in GHG reporting. Unlike owned premises where control is clear, tenants often share building systems with landlords, and the bills, meters, and operational controls don't always align neatly with GHG Protocol boundaries. This article walks through how to classify emissions from electricity, gas, HVAC (refrigerant gases), and building energy in a leased setting, and when it's appropriate to move emissions out of Scope 1 and 2 into Scope 3 Category 8 (Upstream Leased Assets).
🔑 The Golden Rule
Your organisational boundary approach determines whether leased asset emissions are Scope 1, 2, or 3. Most companies leasing office space use an operational control approach. Under this approach, you report emissions from any asset or system over which you have operational control, even if the landlord owns it.
Default treatment in Trace
All energy and refrigerant data in Trace is automatically mapped to Scope 1 (gas / refrigerants) and Scope 2 (purchased electricity) by default. This reflects the operational control principle - even where utilities are managed by a landlord, your company occupies the space and typically drives consumption. This approach supports consistency and comparability across your inventory, and ensures you are accountable for the emissions from the facility you choose to occupy.
When Scope 3 may be appropriate...
Energy can be reallocated to Scope 3 Category 8 (Upstream Leased Assets) if both conditions are met:
- The company does not pay for utilities directly and is unable to obtain a breakdown. Energy costs are bundled into rent and passed through by the landlord (see bottom of page for more details).
- The company has no influence or control over how energy is used in the building. For example, centralised systems with fixed operation schedules or no ability to adjust heating, cooling or lighting.
Why this is a grey area
GHG Protocol guidance varies in interpretation. Some organisations consider bundled utilities as part of operational control, while others treat them as landlord emissions. Renting space does not always equate to control over energy systems, so companies need to assess their specific circumstances. The key question is whether the tenant can meaningfully influence energy consumption or HVAC usage (e.g. air conditioning).
See full guidance from the GHG Protocol here.
Common scenarios
| Utility | Scenario | Recommended Scope | Notes |
|---|---|---|---|
| Electricity | Submetered, bill paid by your company | Scope 2 | Preferred treatment, Trace default |
| Bundled in rent, usage data obtainable | Scope 2 | Request data from landlord | |
| Bundled in rent, no data available | Scope 3, Cat. 8 | Disclose rationale | |
| Gas or HVAC | Attributable to your tenancy | Scope 1 | Requires reasonable allocation method (floor area, # of ACUs in tenancy, etc) |
| Fully centralised with no control over operation | Scope 3, Cat. 8 | Apply consistently, disclose justification | |
| Diesel | Base building backup diesel generators | Scope 3, Cat. 8 | Not linked to normal operations |
| Any | Co-working or flexible desk | Scope 3, Cat. 8 | Attribution not practicable |
Recommended approach for reporters
✅Disclose the basis for classification in your methodology.
✅ If allocated to Scope 3, justify by explaining why operational control does not apply.
✅If kept in Scope 1 and 2, acknowledge that utilities are bundled but consumption arises from your operations.
Q: My utility costs are bundled into my rent — how do I report emissions?
Where energy costs are embedded in your rental payment with no separate invoice, the key question is whether you can reasonably attribute consumption to your tenancy. If you can obtain utility data from your landlord, including a floor area ratio, or occupancy estimate, report gas in Scope 1 and electricity in Scope 2 as normal. Where possible, request an annual utilities breakdown from your landlord or property manager before defaulting to Scope 3.
If no data is available and there is no reasonable basis for allocation, report in Scope 3, Category 8 and disclose why operational control could not be determined in any public reporting.