Scope 3 Emissions: Starting Points for Real Estate Portfolios
Scope 3 emissions often represent the largest share of a property portfolio's carbon footprint. This article covers which categories matter most and how to begin measuring them.
What are Scope 3 emissions?
Scope 3 covers all indirect emissions in your value chain – those not directly owned or controlled by your organisation. For real estate, this includes embodied carbon in construction materials, tenant energy use, employee commuting, and waste disposal.
Why Scope 3 matters for real estate
For many property portfolios, Scope 3 emissions dwarf Scope 1 and 2 combined. Embodied carbon from development activities and downstream tenant emissions can account for 80-90% of total footprint. Ignoring Scope 3 means missing the majority of your climate impact.
Key categories for property portfolios
- Category 1: Purchased goods and services (construction materials, maintenance supplies)
- Category 2: Capital goods (major refurbishments, fit-outs)
- Category 5: Waste generated in operations
- Category 7: Employee commuting
- Category 13: Downstream leased assets (tenant emissions)
Getting started
Don't try to measure everything at once. Start with the categories most material to your portfolio. For most landlords, this means tenant energy use (Category 13) and embodied carbon from development (Categories 1 and 2). Use spend-based estimates where activity data isn't available, then refine over time.
Data challenges
Scope 3 data is inherently harder to collect – you're relying on third parties. Build relationships with key suppliers and tenants. Request energy data as part of lease agreements. Use industry benchmarks and emission factors where primary data isn't available, but be transparent about your methodology.