7.5 Double Counting of GHG Emissions From Leased Assets
In some scenarios, two entities in a lessee-lessor relationship may
report GHG emissions related to the same asset in the same scope if they apply
different consolidation approaches for determining organizational boundaries, as
illustrated in the example below.
Example 7-8
Lessor J leases an item of machinery to Lessee K. In their
respective statements of financial position, the entities
account for the lease as follows:
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Lessor J recognizes the leased asset as it determines that the lease is an operating lease in accordance with ASC 842.
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Lessee K also accounts for the lease as an operating lease in accordance with ASC 842 and recognizes a right-of-use asset.
For the purposes of sustainability reporting under the GHG Protocol:
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Lessor J applies the financial control approach and, since it has determined that the lease is an operating lease, reports the GHG emissions associated with the machinery as Scope 1 or Scope 2 depending on the nature of the GHG emissions (see Section 7.4).
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Lessee K applies the operational control approach and determines that it has operational control over the machinery. It therefore reports the GHG emissions associated with the machinery as Scope 1 or Scope 2 depending on the nature of the GHG emissions (see Section 7.3).