Scope 3 Emissions Estimator
for Real Estate

Scope 3 emissions estimation for Real Estate

Real estate entities face a Scope 3 profile dominated by two sources that sit on opposite ends of the building lifecycle: embodied carbon in construction materials (Category 1 and Category 2) and tenant energy consumption in leased buildings (Category 13, downstream leased assets). For a property investment company that owns and leases office buildings, Category 13 often represents 60% to 80% of total emissions because tenants' electricity and heating consumption falls outside the landlord's Scope 1 and Scope 2 boundary unless the landlord procures energy on behalf of tenants. The Carbon Risk Real Estate Monitor (CRREM) provides decarbonisation pathways by property type and country that real estate entities can use to assess whether their portfolio is aligned with Paris Agreement temperature targets. Under ESRS E1, real estate entities subject to CSRD must disclose emissions from downstream leased assets, which forces landlords to collect or estimate energy data for tenant-controlled spaces.

Embodied carbon in construction deserves close attention from real estate developers. Category 1 (purchased goods and services) includes the embodied emissions in concrete, steel, glass, insulation, and all other building materials. For a new-build commercial office, embodied carbon typically represents 30% to 50% of the building's total lifecycle emissions over a 60-year assumed life. The World Green Building Council estimates that embodied carbon in buildings accounts for 11% of global energy-related CO2 emissions. Whole-life carbon assessments following EN 15978 (Sustainability of construction works) provide the methodology for calculating embodied carbon across lifecycle stages A1 to A5 (product stage and construction) through B1 to B7 (use stage) and C1 to C4 (end-of-life). Category 3 (fuel and energy related activities) captures the upstream emissions from energy used in common areas that the landlord controls. Category 5 (waste) covers construction and demolition waste, as well as operational waste from managed properties.

Assurance providers examining real estate Scope 3 disclosures regularly find data gaps in tenant energy consumption. Landlords that lack green lease clauses requiring tenants to share energy data must estimate consumption using benchmarks (such as CIBSE Energy Benchmark TM46 for UK commercial buildings or the CRREM country-specific energy intensity benchmarks). These estimates carry uncertainty of 20% to 40%. Another frequent finding is incomplete embodied carbon calculations that cover structural materials (concrete, steel) but exclude fit-out materials, mechanical and electrical systems, and landscaping. For property funds or REITs with large portfolios, asset-level data quality varies enormously between directly managed properties (where the landlord holds utility data) and properties managed by third parties or under net lease structures. ISAE 3410 practitioners will test whether the boundary between Scope 2 (landlord-procured energy) and Scope 3 Category 13 (tenant-procured energy) is correctly drawn.

For real estate entities using this estimator, first classify your portfolio by operational control. Properties where you procure energy generate Scope 2 emissions; properties where tenants procure their own energy generate Category 13 emissions. For Category 13, obtain tenant energy bills where green lease clauses permit, or estimate using CRREM benchmarks for the property type, country, and floor area. For embodied carbon in development projects, commission whole-life carbon assessments using EN 15978, drawing on Environmental Product Declarations (EPDs) for major materials and the Inventory of Carbon and Energy (ICE) database for generic factors. For operational waste, obtain waste contractor data by tonnage and treatment method. Aggregate across the portfolio, flagging the proportion of emissions based on actual data versus benchmarked estimates.