Carbon footprint of leased assets - how to approach?

I’m a sustainability consultant based in Belgium, doing a carbon footprint for a company that leases (as lessee) quite a bit of equipment such as forklift trucks. I’m using the control approach.

How should the emissions of this equipment be included in their carbon footprint?

Since the company determines what it leases and then enters into a rent agreement for it, I believe that this is a financial operation and, in terms of carbon accounting, should actually be equated with a purchase. The embodied carbon of the equipment then enters category 2 (capital assets) at the time of purchase/commissioning (with amortization of 1 year). The same for other things such as company cars that they have on lease.

But you could also take a different approach and view the use of those forklifts as a purchased service and charge a use for category 1 every year that they are in use. Apart from the emission factor that is difficult to find, I think this approach less good.

What is the best approach?
Wouter (GRUUND)

Hi Wouter,

Thanks for your question! Interesting.

Type of lease is Operating lease for the forklift trucks (or similar equipment):

  • A finance o rcapital lease is a financed purchase; the lease term spans most of the asset’s useful life. Assets leased under a capital or finance lease are considered wholly owned assets in financial accounting. This type of lease enables
    the lessee to operate an asset and also gives the lessee all the risks and rewards of owning the asset
  • An operating lease resembles a rental agreement in that the asset is used for a set time with useful life remaining at lease end. This type of lease enables the lessee
    to operate an asset, like a building or vehicle, but does not give the lessee any of the risks or rewards of owning the asset.

As you use the operational control approach, this would mean that you need to account for the emissions associated with fuel combustion at sources in the leased space in scope 1 and use of purchased electricity in scope 2 (see overview from the lessee’s perspective below).

I don’t think that the impact of building the forklist is in-scope of the lessee and the same goes for the cars a company leases.

Table below is from Appendix A in Scope 3 Guidance. I find that appendix very insightful.