Buildings Criteria - Low carbon
New Buildings
Guidance to Scope 3 Accountingand Reporting
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Climate Bonds Initiative - Buildings Criteria - Low carbon New Buildings Document
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Acknowledgements
Climate Bonds gratefully acknowledges the Technical and Industry Working Group members
who provided their time and expertise during the development of these Criteria.
Special thanks are given to Ché Wall of Flux Consultants the lead specialist co-ordinating thedevelopment of the Criteria through the Technical Working Group.

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Table of Contents
1

Guide to Scope 3 Accounting and Reporting
1.1

Background

4
4

1.1.1

What is GHG accounting?

4

1.1.2

GHG Accounting in the real estate sector

4

1.1.3

Corporate GHG protocol standard

4

1.1.4

Overview of Scope 3 categories

5

1.2

Defining the categories of the building and construction system

7

1.3

Guidance for reporting and accounting under the Climate Bonds Low carbon Buildings Criteria

8

1.3.1

Building value chain and their intended users81.3.2

Intended users and their relevant target categories

9

List of Figures
Figure 1: Overview of GHG protocol scopes and emissions across the value chain
Figure 2. Categories of the building and construction system
Figure 3. Value chain of building and construction system

478

List of Tables
Table 1: Scope 3 Categories (adapted from GHG Protocol)
Table 2: Description and minimum boundaries
Table 3: Alignment of intended users within the Building value chain
Table 4: Scope categories and target categories
Table 5: Relation between Life Cycle Stages and GHG Protocol Categories

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1 Guide to Scope 3 Accounting and Reporting
1.1 Background1.1.1 What is GHG accounting?
Greenhouse Gas (GHG) accounting is a process of quantifying and reporting GHG emissions and removals associatedwith human activities. GHG accounting is important because it helps individuals, organisations and governments
understand and track their carbon footprint and identifies area where emissions can be reduced. They are also
important for ensuring compliance with regulatory requirements and meeting sustainability goals.
The application of GHG accounting is numerous and diverse. It can be used by companies to measure and manage
their carbon emissions, identify energy saving opportunities and improve their environmental performance.
It is an essential tool for addressing climate change and achieving a sustainable future. By accurately measuring andreporting GHG emissions, individuals, organizations, and government can work together to reduce emissions andtransition to a low carbon economy.

1.1.2 GHG Accounting in the real estate sector
One of the key applications of GHG accounting in the real estate sector is to inform sustainability strategies and set
targets for reducing emissions. This includes assessing the energy efficiency of buildings, reducing energy
consumption, and promoting the use of renewable energy sources. It can also help real estate companies to identify
areas where emissions can be reduced through changes in transportation, waste management (human behaviour) andsupply chain practices.
It is increasingly being used to access the environmental performances of real estate investments and to informinvestment decisions. This includes evaluating the carbon footprint of buildings and portfolios as well as assessing thepotential for carbon pricing and regulatory risks. It is crucial for the real estate sector to manage its environmental
impact and meet the sustainability goals, as well as respond to changing the market demands and regulatory
requirements.

1.1.3 Corporate GHG protocol standard
Until recently, companies have focused on emission from their own operations predominantly known as Scope 1 andScope 2. With the growth in the market, there is an increasing understanding in the importance of accounting of GHG
emissions along their value chains and products (known as Scope 3) to manage the GHG-related risks andopportunities.
The GHG Protocol Corporate Value chain (scope 3) Accounting and reporting standard 1 is an internationally recognised
method for companies to account for their Scope 3 emissions.
The Corporate Standard classifies a company’s direct and indirect emissions into three ‘scopes’ and requires thatcompanies account for and report on scope 1 emissions (i.e., direct emissions from owned or controlled sources), andall scope 2 (i.e., all indirect emissions from the generation of purchased energy consumed by the reporting company
and there is a flexibility in accounting for Scope 3 emissions (i.e., all other indirect emissions that occur in a company’svalue chain. An overview of the three GHG protocol scopes and categories of scope 3 emissions is provided below.
Figure 1: Overview of GHG protocol scopes and emissions across the value chain

1 Corporate-Value-Chain-Accounting-Reporing-Standard_041613_2.pdf (ghgprotocol.org)

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Source:Scope3_Calculation_Guidance_0.pdf(ghgprotocol.org)

This guidance aims to assist companies under the Climate Bonds Low-carbon Buildings Sector to report on Scope 3
emissions and is intended to meet the suggested sector-specific guidance requirements, as set out in the GHG Protocol
Corporate Value Chain (Scope 3) accounting and Reporting Standard to promote additional consistency in way ofcompanies accounting and reporting on scope 3 emissions.
This should be used in conjunction with the more detailed Technical Guidance for Calculating Scope 3 emissions
document2 while undertaking the calculations along with the GHG protocol.

1.1.4 Overview of Scope 3 categories
The GHG Protocol Corporate Value chain Standard categorizes scope 3 emissions into 15 categories, as listed in figure
1 above and figure 2 along with the description of each of the 15 categories is presented in table 3. The categories areintended to provide companies with a systematic framework to organize, understand and report on the diversity ofscope 3 activities within a corporate value chain.
Table 1: Scope 3 Categories (adapted from GHG Protocol)
Upstream or downstream

Scope 3 category

Upstream scope 3 emissions

1234567

Purchased goods and services
Capital goods
Fuel- and energy-related activities (not included in Scope 1 and scope 2)
Waste generated in operations
Business travel
Employee commuting
Upstream leased assets

Downstream scope 3 emissions

89Downstream transportation and distribution
Processing of sold products

2 Scope3_Calculation_Guidance_0.pdf (ghgprotocol.org)

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Upstream or downstream

Scope 3 category
1011121314

Use of sold products
End-of-life treatment of sold products
Downstream leased assets
Franchises
investments
Source:Corporate-Value-Chain-Accounting-ReporingStandard_041613_2.pdf (ghgprotocol.org)

Table 2: Description and minimum boundaries
Category description

Category

Minimum boundary

1

Purchased goods
and services•2

Capital Goods

Extraction, production, andtransportation of capital goodspurchased or acquired by the reporting
company in the reporting year.

3

Fuel and energy
related activities

None

n/a

Extraction, production, andtransportation of goods andservices purchased or acquired by
the reporting company in thereporting year, not otherwise
included in categories 2 - 8•

All upstream (cradle-to-gate) emissions ofpurchased goods and services

All upstream (cradle-to-gate) emissions ofpurchased capital goods(not included in scope 1and 2 emissions)
4

Upstreamtransportation anddistribution

Nonen/a5

Waste generated inoperations

Nonen/a6

Business travel

Nonen/a7

Employeecommuting

None

n/a8

Upstream leased
assetsNone

n/a9

Downstream
transportation anddistribution

None

n/a10

Processing of soldproducts

Processing of intermediate products
sold in the reporting year bydownstream companies (e.g.,manufacturers)

The scope 1 and scope 2 emissions of downstream
companies that occur during processing (e.g., fromenergy use)11

Use of soldproducts

End use of goods and services sold by
the reporting company in the reportingyear

The direct use-phase emissions of sold products
over their expected lifetime (i.e., the scope 1 andscope 2 emissions of end users that occur fromthe use of: products that directly consume energy(fuels or electricity) during use; fuels andfeedstocks; and GHGs and products that containor form GHGs that are emitted during use)

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Category

Category description

Minimum boundary•

Optional: The indirect use-phase emissions ofsold products over their expected lifetime(i.e., emissions from the use of products thatindirectly consume energy (fuels or electricity)during use)

12

End-of-life
treatment of soldproducts

Waste disposal and treatment ofproducts sold by the reporting company(in the reporting year) at the end of
their life

The scope 1 and scope 2 emissions of waste
management companies that occur during
disposal or treatment of sold products

13

Downstream leased
assetsOperation of assets owned by thereporting company (lessor) and leased
to other entities in the reporting year,
not included in scope 1 and scope 2 reported by lessor

The scope 1 and scope 2 emissions of lessees that
occur during operation of leased assets (e.g., fromenergy use).

n/a14

Franchises

None15Investments

Operation of investments (includingequity and debt investments and projectfinance) in the reporting year, notincluded in scope 1 or scope 2•Optional: The life cycle emissions associatedwith manufacturing or constructing leased
assets

Source:Corporate-Value-Chain-Accounting-ReporingStandard_041613_2.pdf (ghgprotocol.org)

1.2 Defining the categories of the building and construction system
Defining the categories of the building is a key part for reporting and accounting of Scope 3 emissions. This determines
who are the key players included in a company’s organizational boundary and how emission from each operation isintegrated by the reporting company and has been adopted from world business council for sustainable development.
Figure 3 explains the categories of the building and construction system while figure 4 shows the value chain inside
the building and construction system.
Figure 2. Categories of the building and construction system

Source:Buildings Criteria - Low carbon New Buildings- Climate Bonds Initiative

The Building System Carbon Framework(wbcsd.org)

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Figure 3. Value chain of building and construction system

Source:The Building System Carbon Framework(wbcsd.org)

1.3 Guidance for reporting and accounting under the Climate Bonds Low carbon
Buildings Criteria
1.3.1 Building value chain and their intended users
The below table provides the list of building value chain identified from WBCSD and their intended users who arerequired to report for Scope 3 emissions under the CBI Low carbon buildings criteria.
Table 3: Alignment of intended users within the Building value chain
Building value chain

Intended users

Manufacturers

Users who are linked with the manufactures (as their products are an essential
part of a buildings value chain representing a large portion of embodied carbon).

Construction••

Architecture/engineering firms
Property Developers

Owners/Managers

•
•
••
•
•

Developers
Property/Asset managers
Owner - lessor
Owner - occupier
Financial Institutions (FI) (?)(Real estate?)

Deconstruction••

Construction firms
Developers

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Building value chain

Intended users•

Individual house owners (?)

1.3.2 Intended users and their relevant target categories
The below table provides the list of intended users and their relevant target categories adapted from GHG Protocol
Corporate Value chain accounting and reporting standard and Table 4 provides the relation between Life cycle stages(for Whole Life Carbon Assessment) and the corresponding reporting category under the GHG Protocol.
Table 4: Scope categories and target categories
Intended users

Cat 1Cat 2

Cat 3 toCat 9

Cat 10Cat 11

Cat 12✓✓✓

Architecture/engineering
firms
Property Developers✓✓

Cat 13

Cat 14Cat 15✓
n/a

Property/Asset managers✓

Owner - lessor✓✓✓

Owner - Occupier✓✓✓Table 5: Relation between Life Cycle Stages and GHG Protocol Categories
Life Cycle Stages
A1 - A5 Includes the Embodied Emissions of a built
environment project

Reporting Category••

Reported as Scope 3 under Category 1, 2 and/or 4, asapplicable.
In the year the project occurred.

B1, B2, B3, B6 - Operational emissions associatedwith a built environment projectB4 and B5 are embodied emissions reported asScope 3 in the year of replacement orrefurbishment•Category 1, cat 10, cat 13(in-use embodied emissions for renovation or maintenance)

C1 - C4 Embodied emissions of a buildenvironment project (Reported as Scope 3)•

Category 5 or 12 in the year the materials reach end of life

D emissions are not embodied emissions but canbe considered relevant carbon sinks if additional
accounting criteria is met.

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