Sarah's Clause

Allocating Scope 1, 2 and 3 Emissions for Leased Assets

This clause allocates responsibility for measuring and reporting the scope 1, 2 and 3 emissions of leased assets between the Lessor and Lessee.

Jurisdiction: England & Wales
Updated:

What this clause does

By contractually obliging the parties to take responsibility for measuring and reporting emissions from leased assets, this clause reduces the possibility of missing, duplicating or inaccurately reporting emissions associated with the lease. 


In turn, this gives both Lessor and Lessee an accurate basis from which to improve the climate impact of the relevant assets.

Clauses

[This clause is recommended as template wording to assign ownership of emissions in Scope 3 Guidance for Telecommunications Operators, published by the global telecommunications networks GSMA, GeSI and ITU-T (p.53).]


1. Responsibility for GHG Emissions in relation to Lessor Operated [Resources]

In relation to Lessor Operated [Resources]:

Obligations of the Lessor

1.1 [●] months after the date of this [Lease/ Agreement] and every [●] months thereafter, the Lessor shall: 

(a) Measure the: 

(i) energy consumption data, and 

(ii) other direct consumption data not related to energy use, 

associated with the Lessee’s usage of Lessor Operated [Resources] [in accordance with the GHG Protocol*].

(b) Using the data measured under clause 1.1(a), calculate the: 

(i) Scope 1 Emissions, and 

(ii) [location-based and market-based] Scope 2 Emissions, 

associated with the Lessee’s usage of Lessor Operated [Resources] [in accordance with the GHG Protocol].

* [See GHG Protocol: Calculation Tools for guidance.]

1.2 For the purposes of the Lessor’s [carbon accounting/ emissions reporting] the Lessor shall [record/ report*] the GHG Emissions under clause 1.1(b) as [Scope 1 Emissions] [and] [Scope 2 Emissions]** of the Lessor [in accordance with the GHG Protocol].

* [Drafting note: Include ‘report’ where reporting requirements exist.]

** [Drafting note: Reporting entity to specify if it will report these as Scope 1 and/or Scope 2 Emissions.]

1.3 The Lessor shall notify the Lessee of the energy consumption and other direct consumption data not related to energy use measured under clause 1.1(a) within [●] [days/ Business Days] of the relevant measurement.

1.4 The Lessor shall notify the Lessee of the [Scope 1 Emissions] [and] [Scope 2 Emissions] calculated under clause 1.1(b) within [●] [days/ Business Days] of the relevant calculation.

Obligations of the Lessee

1.5 For the purposes of the Lessee’s [carbon accounting/ emissions reporting] the Lessee shall [record/ report*] the Lessor’s reported [Scope 1 Emissions] [and] [Scope 2 Emissions] notified to it under clause 1.4 as scope 3, category 8 emissions (upstream leased assets) of the Lessee [in accordance with the GHG Protocol].

* [Drafting note: Include ‘report’ where reporting requirements exist.]

2. Responsibility for GHG Emissions in relation to Lessee Operated [Resources]

In relation to Lessee Operated [Resources]:

Obligations of the Lessee

2.1 [●] months after the date of this [Lease/ Agreement] and every [●] months thereafter, the Lessee shall: 

(a) Measure the: 

(i) energy consumption data, and 

(ii) other direct consumption data not related to energy use, 

associated with its usage of Lessee Operated [Resources] [in accordance with the GHG Protocol*].

(b) Using the data measured under clause 2.1(a), calculate the: 

(i) Scope 1 Emissions, and 

(ii) [location-based and market-based] Scope 2 Emissions, 

associated with its usage of Lessee Operated [Resources] [in accordance with the GHG Protocol].

* [See GHG Protocol: Calculation Tools for guidance.]

2.2 For the purposes of the Lessee’s [carbon accounting/ emissions reporting] the Lessee shall [record/ report*] the GHG Emissions under clause 2.1(b) as [Scope 1 Emissions] [and] [Scope 2 Emissions]** of the Lessee [in accordance with the GHG Protocol]. 

* [Drafting note: Include ‘report’ where reporting requirements exist.]

** [Drafting note: Reporting entity to specify if it will report these as Scope 1 and/or Scope 2 Emissions.]

2.3 The Lessee shall notify the Lessor of the energy consumption and other direct consumption data not related to energy use, measured under clause 2.1(a) within [●] [days/ Business Days] of the relevant measurement.

2.4 The Lessee shall notify the Lessor of the [Scope 1 Emissions] [and] [Scope 2 Emissions] calculated under clause 2.1(b) within [●] [days/ Business Days] of the relevant calculation.

Obligations of the Lessor

2.5 For the purposes of the Lessor’s [carbon accounting/ emissions reporting] the Lessor shall [record/ report*] the Lessee’s reported [Scope 1 Emissions] [and] [Scope 2 Emissions] notified to it under clause 2.4 as scope 3, category 13 emissions (downstream leased assets) of the Lessor [in accordance with the GHG Protocol].

* [Drafting note: Include ‘report’ where reporting requirements exist.]

Definitions

GHG Protocol means [The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, Revised Edition 2015] and related standards and guidance issued by Greenhouse Gas Protocol, as updated periodically.

Greenhouse Gas (GHG) Emissions means emissions of GHGs related to the Lessor Operated [Resources] [and/or] Lessee Operated [Resources], as applicable, expressed as a total in units of carbon dioxide equivalent.*

* [Drafting note: For a definition of carbon dioxide equivalent, see TCLP Glossary: Carbon Dioxide Equivalent (CO2e or CO2eq).]

Greenhouse Gases (GHGs) means the gases specified by the United Nations Framework Convention on Climate Change (UNFCCC) in Annex A to the Kyoto Protocol, as updated periodically.

Lessor Operated [Resources] means [resources] operated by the Lessor and leased to the Lessee, for which the Lessor [measures/calculates] Scope 1 Emissions and/or Scope 2 Emissions and the Lessee reports these as its scope 3, category 8 emissions (upstream leased assets). [Lessor Operated Resources are listed in Appendix [●].] 

[Drafting note: For further information on scope 3, category 8 emissions, see: GHG Protocol, Category 8: Upstream Leased Assets.]

Lessee Operated [Resources] means [resources] operated by the Lessee and leased by the Lessor, for which the Lessee [measures/calculates] Scope 1 Emissions and/or Scope 2 Emissions and the Lessor reports these as its scope 3, category 13 emissions (downstream leased assets). [Lessee Operated Resources are listed in Appendix [●].]

[Drafting note: For further information on scope 3, category 13 emissions, see: GHG Protocol, Category 13: Downstream Leased Assets.]

[Drafting note: ‘Resources’ is a deliberately broad term that attempts to cover the many types of assets and/or services which may be the subject of the main agreement. Examples of ‘Resources’ could include leased property, computing equipment, telecommunications infrastructure or facilities management services provided by one party to another. The parties may wish to select their own term to replace ‘Resources’ throughout the agreement. Likewise, ‘Lessor Operated’ and ‘Lessee Operated’ are used for example only, and the parties may wish to select their own terms to replace these throughout the agreement.]

[Drafting note: Where the agreement covers many resources (assets and/or services), the parties may wish to list these in an Appendix/Schedule, for convenience.]

[Scope 1 Emissions means the direct GHG Emissions from sources directly owned or controlled by the reporting entity[ including on site fuel combustion and emissions from refrigerant losses and company vehicles.]]

[Scope 2 Emissions means the indirect GHG Emissions associated with the generation of electricity[, steam, heat and cooling] purchased or acquired by the reporting entity.]

[Drafting note: Where possible, Scope 2 Emissions calculated under clause 1 or 2 should include both market- and location-based data. For further information, see GHG Protocol Scope 2 Guidance, Chapter 4 (Scope 2 Accounting Methods).]

Scope 3 Emissions means all indirect GHG Emissions from sources which are not directly owned or controlled by the reporting entity, excluding Scope 2 Emissions, which occur both upstream and downstream in the reporting entity’s supply or value chain.

[Drafting note: Capitalised terms relate to either a defined term in these clauses or a defined term in the main agreement that these clauses are designed to be inserted into.]

 

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