Questions & Answers
Should all the subsidiaries and the parent company in a consolidated sustainability statement use the same criteria and methodology for GHG emissions?
- GHG protocol
- holding companies
- alignment in methodology
Background
The original question submitted: ‘Should the companies of a holding company use the same criteria and methodology for GHG emissions?’ has been reworded to the above question to be clearer.
ESRS 1 Appendix B, qualitative characteristics of information shall be applied in the preparation of the ESRS sustainability statement.
ESRS 2 paragraph 77 (a) states: ‘disclose the methodologies and significant assumptions behind the metric, including the limitations of the methodologies used;’. ESRS E1 paragraph AR 39 (b) requires the undertaking to: ‘disclose the methodologies, significant assumptions and emissions factors used to calculate or measure GHG emissions accompanied by the reasons why they were chosen, and provide a reference or link to any calculation tools used.’ Moreover, ESRS E1 paragraph AR46 (h), on Scope 3 emissions, requires clarity on the boundaries considered and the methods used for estimating emissions: ‘for each significant Scope 3 GHG category, disclose the reporting boundaries considered, the calculation methods for estimating the GHG emissions as well as if and which calculation tools were applied. The Scope 3 categories should be consistent with the GHGP and include:
(a) indirect Scope 3 GHG emissions from the consolidated accounting group (the parent and its subsidiaries),
(b) indirect Scope 3 GHG emissions from associates, joint ventures, and unconsolidated subsidiaries for which the undertaking has the ability to control the operational activities and relationships (i.e., operational control),
(c) Scope 1, 2 and 3 GHG emissions from associates, joint ventures, unconsolidated subsidiaries (investment entities) and joint arrangements for which the undertaking does not have operational control and when these entities are part of the undertaking’s upstream and downstream value chain.’
All these requirements point to the advantages of using a uniform approach for ease of understanding and transparency.
Answer
All subsidiaries and their parent undertaking shall apply the requirements of ESRS, including the qualitative characteristics of information in ESRS 1 Appendix B. The GHG Protocol is the reference for the calculation of GHG emissions following ESRS E1. The sustainability statement shall include the methodology and the significant assumptions made by the parent and subsidiaries regarding GHG emissions, as stated in ESRS E1 paragraph AR 39.
ESRS does not exclude flexibility in the methodologies used by different undertakings in the same group, provided that the qualitative characteristics of information are met.
A standardised approach from the onset is advantageous for its consistency, comparability, transparency and the overall integrity of reported GHG emissions.
Deviations from a common methodology can be accepted but should be disclosed, along with the rationale for their use, to meet the transparency requirements set forth by the ESRS.
Using diverging methodologies for similar or comparable fact patterns can result in information that may not comply with the qualitative characteristics of information required by the ESRS (ESRS 1, Appendix B).
Relations
Paragraph | Content |
|---|---|
Appendix B - Qualitative characteristics of information | |
Appendix B - Qualitative characteristics of information | |
Appendix B - Qualitative characteristics of information | |
disclose the methodologies and significant assumptions behind the metric, including the limitations of the methodologies used; | |
for each significant Scope 3 GHG category, disclose the reporting boundaries considered, the calculation methods for estimating the GHG emissions as well as if and which calculation tools were applied. The Scope 3 categories should be consistent with the GHGP and include: | |
An undertaking might have a different reporting period from some or all of the entities in its value chain. In such circumstances, the undertaking is permitted to measure its GHG emissions in accordance with paragraph 44 using information for reporting periods that are different from its own reporting period if that information is obtained from entities in its value chain with reporting periods that are different from the undertaking’s reporting period, on the condition that: | |
disclose the methodologies, significant assumptions and emissions factors used to calculate or measure GHG emissions accompanied by the reasons why they were chosen, and provide a reference or link to any calculation tools used; | |
For Scope 1 and Scope 2 emissions disclosed as required by paragraphs 44 (a) and (b) the undertaking shall disaggregate the information, separately disclosing emissions from: | |
for each significant Scope 3 GHG category, disclose the reporting boundaries considered, the calculation methods for estimating the GHG emissions as well as if and which calculation tools were applied. The Scope 3 categories should be consistent with the GHGP and include: | |
An undertaking might have a different reporting period from some or all of the entities in its value chain. In such circumstances, the undertaking is permitted to measure its GHG emissions in accordance with paragraph 44 using information for reporting periods that are different from its own reporting period if that information is obtained from entities in its value chain with reporting periods that are different from the undertaking’s reporting period, on the condition that: |