This blog post shows an office building's windows with three window cleaners visible, highlighting the subject of tenant energy data and its role in Scope 3 reporting.
Understanding tenant energy data for net zero goals
Measuring tenant energy data is essential for precise Scope 3 reporting in commercial real estate. You might wonder if your tenant’s energy consumption falls under Scope 3 and whether you need to report it. This article aims to clarify the importance of tracking accurate tenant energy consumption data.
The importance of Scope 3 reporting in ESG compliance
With the increasing emphasis on Environmental, Social, and Governance (ESG) reporting, companies face stricter data requirements. Accurate data collection, particularly for indirect emissions or Scope 3, has become mandatory due to new regulations such as the Corporate Sustainability Reporting Directive (CSRD). The global push for more stringent reporting laws stems from the necessity to address Scope 3 emissions to achieve meaningful reductions in overall emissions.
Identifying tenant energy consumption in Scope 3 emissions
To determine if your tenants’ energy consumption is part of Scope 3 emissions, consider whether you have operational control over the leased properties. Emissions from properties wholly owned by a company fall under Scope 2 or Scope 1. If you manage these properties, their energy consumption counts as direct emissions, requiring you to report this data. More you can find in this article.
If you lack direct control over the property, the energy consumption is categorized under Scope 3 emissions, typically relevant for investors or commercial real estate companies that do not manage the properties. According to the GHG Protocol, this data falls under ‘downstream leased assets’ (Scope 3) or financed emissions for financial companies with real estate portfolios.
EU entities leasing properties must collect and report tenant energy data, classifying it as Scope 1, 2, or 3 based on operational control and ownership.
How tenant energy data helps reduce Scope 3 emissions
Collecting tenant energy data is crucial for real estate and finance companies, particularly those deriving income from rented properties. Beyond compliance, it offers tangible benefits:
Enhancing Energy Efficiency
Tenant energy data provides insights into adopting energy-saving technologies and renewable energy sources, improving overall energy efficiency.
Showcasing Climate Action
Using tenant energy data to implement energy-saving measures demonstrates a commitment to climate action, boosting investor confidence.
Setting Accurate Targets
Accurate energy data empowers companies to set realistic decarbonization and ESG goals, aligning with initiatives like the Science-based Targets Initiative (SBTi).
Engaging with Tenants
Analyzing tenant energy use helps engage tenants in energy efficiency efforts, reducing Scope 3 emissions and enhancing tenant services. Incentive programs can be created to reward energy-efficient practices.
Strategies for collecting tenant energy data
Accessing tenant energy data can be challenging, especially for companies investing in properties managed by others. Where direct data is unavailable, estimates are necessary but often inaccurate.
Modern technology simplifies the collection of reliable energy data. Comundo’s advanced solution enables accurate data collection, even retrospectively for up to three years, aiding in precise Scope 3 emissions reporting and compliance with regulations like the CSRD.
This data supports setting reduction targets and strategies, benefiting both property owners and tenants by lowering their carbon footprints.
Example: Pilar-Rhino collaboration on energy monitoring
A notable example is the collaboration between Pilar Technologies, iqbi, Rhino, and Dalpha Real Estate. Dalpha Real Estate is using a smart energy monitoring solution in 32 apartments in The Hague. This initiative aims to enhance resident awareness, reduce energy costs, and promote sustainability.
Wouter Terhorst, Director of Real Estate at Dalpha, highlights the goal of making buildings more energy-efficient and cost-effective. Gosse Taal, CEO of Pilar Technologies, emphasizes the improved tenant experience through data integration. Rishi Lodhia, Chairman of Rhino, underscores the collaboration’s role in reducing the ecological footprint and setting new industry standards.
Conclusion
Collecting comprehensive energy data, including tenant consumption, is essential for achieving sustainability certifications like DGNB, which distinguishes your buildings in the competitive market. This topic, while complex, underscores the critical role of tenant energy data in effective ESG reporting and sustainability efforts.
