A REIT with forty buildings asks its property managers for last year's energy data. Twenty-six come back. The rest are single-let assets where the tenant holds the supply contract directly, and the landlord has never seen a meter reading. Nobody has done anything wrong. The data does not exist on the landlord's side of the relationship.
That is the defining problem of climate disclosure in real estate, and it is a boundary question long before it is a data question.
Key points
- The industry metric asks for energy consumption data coverage as a percentage of floor area, so the standard already assumes a landlord cannot obtain everything.
- Who holds the supply contract usually decides whether a kilowatt hour is the landlord's Scope 2 or the landlord's Scope 3.
- The boundary decision comes first. Until it is written down, two people in the same company will produce two different portfolio figures and both will be defensible.
- Coverage is a disclosure in its own right. A partial figure declared as partial is stronger than a complete-looking figure built on estimates.
The decision that comes before the number
IFRS S2 paragraph 32 requires an entity to refer to and consider the applicability of the industry-based metrics, which are set out in Appendix B and derived from the SASB Standards. Applying them is not a condition of stating compliance. For a landlord that consideration starts with the Real Estate industry topics, where Energy Management is the one that carries the climate content.
Before any of those metrics can be calculated, the landlord has to answer a prior question. Which parts of a let building are inside the reporting boundary.
Under operational control, the usual answer is that the landlord reports what it controls. Plant, common parts, lifts, shared heating and cooling, and any supply the landlord procures. Space demised to a tenant who buys their own electricity is outside Scope 1 and 2, and appears instead in Scope 3 as a downstream leased asset.
That sounds clean. In practice a portfolio contains every variant at once: full repairing leases, service-charge recoveries, sub-metered floors, landlord-procured supply recharged at cost, and green leases with data-sharing clauses that some tenants honour and some ignore.
Why the same kilowatt hour moves between scopes
Take one floor of one building. If the tenant holds the account with the utility, the landlord has no operational control of that consumption and it belongs downstream. If the landlord holds the account and recharges the tenant through the service charge, the landlord bought the electricity, and it is landlord Scope 2 even though the tenant used it and paid for it.
Nothing about the floor changed. The contract changed.
This is why the boundary decision is the most contested evidence point in the sector. It is not a measurement. It is a policy, applied consistently across a portfolio of assets with different lease structures, and it has to be applied the same way next year by whoever holds the job then.
The failure mode is quiet. One asset manager treats recharged supply as landlord Scope 2, another treats the same arrangement as tenant consumption, and the portfolio total is the sum of two incompatible policies. No error is visible in the number.
The metric that expects you to fall short
Here is the part worth pausing on. The industry metric does not only ask how much energy was consumed. It asks for energy consumption data coverage as a percentage of floor area.
Read that as a design decision. SASB recognises that a portfolio will contain area for which consumption data is unavailable, and that a disclosure built on the rest does not cover the whole portfolio. Rather than pretend otherwise, the metric makes the gap explicit and measurable.
Very few disclosure requirements in any standard are built this way. It changes what good looks like. A landlord reporting 61 per cent coverage with the basis stated is making a more useful disclosure than one reporting an apparently complete figure that quietly grosses up the missing 39 per cent from benchmarks.
It also gives the reporting team something concrete to improve year on year, which is easier to govern than an intensity target that moves with the weather and the occupancy.
Whole building or landlord only
Some landlords report whole-building energy, including tenant consumption they do not control, because that is what an investor comparing assets wants to see. Others report only what they control, because that is what the operational control boundary gives them.
Both are defensible. What is not defensible is switching between them by asset, or switching between them by year without saying so.
If you report whole-building numbers, be explicit that the figure exceeds your operational control boundary, and keep the tenant-supplied data separately identifiable so the landlord-only figure can still be produced. Mixing them into one column with no flag is the version that fails a review, because the reviewer cannot unpick it and neither, eventually, can you.
The only durable fix is contractual
Every landlord eventually reaches the same conclusion. You cannot obtain tenant data by asking harder. The tenant has no obligation to give it to you, no benefit from doing so, and often no easy way to extract it from their own utility account.
The mechanism that works is the lease. A data-sharing clause obliges the tenant to provide consumption data, or to authorise the landlord to obtain it from the supplier directly. Some leases go further and permit sub-metering at the landlord's cost.
This moves the problem out of the sustainability team and into legal and leasing, which is where it can actually be solved. It also makes coverage a forecastable number. If you know which leases carry a clause and when the rest expire, you know roughly what coverage will be in three years without guessing.
The catch is timing. Leases turn over slowly, so a clause added today improves coverage over a decade, not a cycle. That is an argument for starting now and for disclosing the trajectory rather than only the current percentage.
It is also worth keeping the clause register itself. Which assets have data rights, granted when and on what terms, is evidence about the reliability of your coverage figure, not just a legal housekeeping matter.
What a landlord has to be able to show
An assurance provider will sample assets, not portfolios. For each one they will ask four things.
What is the boundary for this asset, and which document records that decision. Where did the consumption figure come from: a landlord meter, a tenant submission, a managing agent's report, or an estimate. If it is an estimate, what method and what benchmark. And what floor area was used in the coverage calculation, from which source.
The first question is where most portfolios come apart. The boundary is usually a shared understanding rather than a written policy, held by a sustainability manager and a handful of asset managers. It was applied consistently, probably, but nothing records that it was applied at all.
The fourth is quietly difficult too. Floor area sounds like a fixed fact until you ask whether it is net lettable, gross internal or the figure in the valuation report, and whether it was measured at the year end or when the asset was acquired.
None of this is a measurement problem. The meters work. What is missing is the record of the decisions taken around them, which is the same gap that appears whenever figures from many entities roll into one, and the same reason a figure that cannot be reproduced eighteen months later is a control weakness rather than a data one.
Write the boundary policy down first. Everything else in this sector follows from it.
Common questions
Are tenant emissions the landlord's Scope 3?
Where the tenant holds the supply contract and the landlord has no operational control, tenant consumption is generally reported by the landlord as a downstream leased asset in Scope 3 rather than in Scope 1 or 2. Where the landlord procures the supply and recharges it, the landlord bought the energy and it generally falls in landlord Scope 2.
What does energy consumption data coverage mean?
It is the share of the portfolio, measured by floor area, for which the landlord actually holds consumption data. The metric exists because the standard anticipates that some area will not be covered, and it asks you to quantify that rather than obscure it.
Should we report whole-building or landlord-controlled energy?
Either can be appropriate, but the choice has to be stated and applied consistently across the portfolio and across years. If you report whole-building figures, keep the tenant-supplied component separately identifiable.
Where do you stand against IFRS S2?
The readiness diagnostic covers governance, evidence and controls and names the gaps. For the standard's own structure, see the IFRS S2 reference. Deadlines by market are in the deadline checker.