3.3 Concept of Double Counting
Corporate Standard, Chapter 4, “Setting Operational
Boundaries,” Page 32
Double Counting
Concern is often expressed that accounting for indirect
emissions will lead to double counting when two different
companies include the same emissions in their respective
inventories.
According to the Corporate Standard’s glossary, double counting
occurs when “[t]wo or more reporting companies take ownership of the same emissions
or reductions.” Further, in a company’s emission disclosures, Scope 1 emissions
would not be included within Scope 2 or Scope 3. Classifying emissions along a
company’s value chain into the proper scope (Scope 1, Scope 2, or Scope 3) can
prevent double counting as long as the entities reporting the specific emissions are
applying the same consolidation approach. For example, Scope 2 would exclude
emissions from electricity purchased for resale since those emissions are classified
as Scope 3. For considerations related to the double counting of Scope 3 emissions,
see Section 6.6.
While the Corporate Standard encourages entities to report in such a way that double
counting of GHG emissions is avoided, it does not require entities within the same
value chain to use the same approach to determine their respective organizational
boundaries (see Chapter 2 for a discussion of
the equity share approach, the financial control approach, and the operational
control approach), recognizing that “[w]hen two or more companies hold interests in
the same joint operation and use different consolidation approaches . . . ,
emissions from that joint operation could be double counted.” In this scenario, it
would not be appropriate for the reporting entities to remove GHG emissions from
their reporting to avoid double counting (i.e., two or more reporting entities
reporting the same GHG emissions as either Scope 1 or Scope 2 emissions).
Example 3-2
Company C has the following two
shareholders:
- Company A, with a 45 percent equity ownership — Company A has significant influence over C and, for the purposes of reporting GHG emissions, applies the equity share approach (see Section 2.2). That is, A reports 45 percent of the GHG emissions from C.
- Company B, with a 55 percent equity ownership — Company B has determined that it has control over C for financial reporting purposes. For the purposes of reporting GHG emissions, B applies the financial control approach (see Section 2.3.1). That is, B reports 100 percent of the GHG emissions from C.
For the year ended December 31, 20X1, C has
Scope 2 emissions totaling 60,000 tonnes of CO2.
Companies A and B report Scope 2 emissions from C as
follows:
- Company A reports Scope 2 emissions from C in the amount of 27,000 tonnes of CO2 on the basis of A’s equity share of C (60,000 tonnes of CO2 × 45%).
- Company B reports Scope 2 emissions from C in the amount of 60,000 tonnes of CO2 since B has financial control over C (i.e., B reports 100 percent of C’s Scope 2 emissions).
Therefore, when A and B report Scope 2
emissions from C, 27,000 tonnes of CO2 from C are
double counted.
In addition to the GHG Protocol, an entity would also need to consider the
sustainability standards, if applicable, under which the GHG emissions will be
reported (e.g., IFRS Sustainability Disclosure Standards or ESRS) for specific
requirements on the need to avoid double counting.