Climate change duties - draft statutory guidance for public bodies: consultation

8. Reporting

All public bodies subject to the climate change duties should include climate change and sustainability reporting as part of their annual corporate reporting process.

Over 180 public bodies deemed to be ‘major players’ have a statutory duty under The Climate Change (Duties of Public Bodies: Reporting Requirements) (Scotland) Order 2015, as amended, to report annually on their compliance with the climate change duties. These bodies are listed in schedule 1 of the Order.

8.1 Reporting: introduction

The Scottish public sector has been playing a crucial part in taking action on climate change for many years. Public bodies contribute to tackling climate change by supporting national and local climate policy, reducing emissions from public sector assets and supply chain, and ensuring public services are resilient. Recording greenhouse gas emissions, and the actions taken to contribute to adaptation and sustainability, allows public bodies to set targets and monitor progress towards achieving these targets. In order to reduce emissions and work towards net zero and other targets, bodies need to understand how their emissions arise, through a combination of environmental and carbon management processes and reporting.

To date, emissions reporting by public bodies has focused primarily on scope 1 and 2 emissions: from heating and power used in buildings, and on the emissions from fleet vehicles. Many bodies also include indirect emissions such as those from waste, business travel and staff commuting. It is important, moving forwards, that while bodies continue to focus efforts on reducing their scope 1 and 2 emissions, they also start to measure, monitor and reduce scope 3 emissions from the wider value chain.

For most public bodies, indirect emissions from the wider value chain will be where their greatest climate impact lies. It is estimated that typically over 90% of an organisation's emissions fall under scope 3 ^[72]; and that the emissions from purchased goods and services could make up over 70-80% of a local authority's overall carbon footprint ^[73]. It is therefore important that public bodies work towards fuller reporting of scope 3 emissions, to provide a more accurate and complete picture of their actual climate impact, and to enable them to take action accordingly.

8.2 Public bodies climate change duties reporting

All public bodies subject to the climate change duties are expected, as best practice, to include climate change reporting as part of their annual corporate reporting process, in terms of mitigation (carbon emissions reductions), adaptation and sustainability.

Mandatory reporting on compliance with the climate change duties was introduced for the 'major players' within the public sector by The Climate Change (Duties of Public Bodies: Reporting Requirements) (Scotland) Order 2015 ('the 2015 Order'), as amended. Bodies subject to mandatory reporting are listed in schedule 1 of the Order.

Bodies not subject to mandatory climate change duties reporting are encouraged to adopt the principles outlined below as best practice.

Public bodies are likely to be subject to other reporting or disclosure duties which include climate impact reporting. Statutory examples include the UK Streamlined Energy and Carbon Reporting (SECR), the Taskforce on Climate-related Financial Disclosures (TCFD) and International Financial Reporting Standards Foundation (IFRS) recommendations. Voluntary examples include the Global Covenant of Mayors and the Carbon Disclosure Project (CDP). In all cases, public bodies should ensure that they are aware of their responsibilities and act accordingly.

8.3 The reporting duty

This section explains the mandatory public bodies climate change duties reporting duty ('the reporting duty'), which bodies are covered by it, and contains guidance to help public bodies understand and meet the duty. While the guidance is primarily addressed to the public bodies subject to the reporting duty, it is intended to be useful to all public bodies.

8.3.1 Background and legislation

Provision for reporting on climate change duties was introduced by section 46 of the Climate Change (Scotland) Act 2009. Subsection 46(1)(a) states that Scottish Ministers may, by order, require relevant public bodies to prepare reports on compliance with the climate change duties. The order may set out the information to be included in the reports, the form and manner of the reports, and the reporting period.

Mandatory reporting for relevant public bodies using the power under section 46 of the 2009 Act was introduced by The Climate Change (Duties of Public Bodies: Reporting Requirements) (Scotland) Order 2015, which came into force on 23 November 2015. It has required over 180 listed public bodies to report annually on compliance with their climate change duties since 2015.

• Schedule 1 of the 2015 Order lists all public bodies who have a mandatory requirement to report.

Schedule 2 includes the questions public bodies are required to answer as part of their report, such as details of their carbon emissions, and questions on mitigation, adaptation and procurement.

Since becoming a statutory requirement in 2015, Scotland's reporting duty has been credited with driving climate action and delivering robust measurement of public bodies' scope 1 and scope 2 emissions. Reports provide valuable detail to share on emissions reductions efforts by public bodies and in more recent years reports provide increased detail on scope 3 emissions. There is a strong demand among the public sector for robust, consistent and comprehensive measurement and reporting of the entire carbon footprint of public bodies. Mandatory reporting also helps to improve the transparency, consistency and quality of reporting, and increases collaborative working between public bodies.

Following public consultation in 2019, the Scottish Government strengthened the legislative framework for the reporting duty. The Climate Change (Duties of Public Bodies: Reporting Requirements) (Scotland) Amendment Order 2020 amended the 2015 Order and from November 2022, relevant public bodies have been required to provide in their annual climate change duties reports:

• where applicable, the body's target date for achieving zero direct emissions of greenhouse gases, or such other targets that demonstrate how the body is contributing to Scotland achieving its emissions reduction targets
• where applicable, targets for reducing indirect emissions of greenhouse gases
• how the body will align its spending plans and use of resources to contribute to reducing emissions and delivering its emissions reduction targets
• how the body will publish, or otherwise make available, its progress to achieving its emissions reduction targets
• where applicable, what contribution the body has made to helping deliver the National Adaptation Plan.

8.3.2 Reporting on scope 1, 2 and 3 emissions

All public bodies have a direct impact on emissions through the way they carry out their functions, including how they manage their estates and staff. Public bodies can reduce emissions through the way they manage their estate; this includes energy use, water use, waste management and staff travel. For most public bodies, indirect emissions from the wider value chain, i.e. scope 3 emissions, will be where their greatest climate impact lies. It is important that public bodies work towards fuller reporting of scope 3 emissions, to provide a more complete picture of their climate impact. In turn, this will enable bodies to focus resource to where they can achieve the greatest emissions reductions.

Reporting data on scope 1 and 2 emissions has improved and become more established since mandatory reporting began. The Greenhouse Gas (GHG) Protocol defines direct and indirect emissions as follows:

• direct GHG emissions (scope 1) are emissions from sources that are owned or controlled by the reporting entity, e.g. emissions from heating buildings with gas or oil, or from petrol or diesel fleet vehicles
• indirect GHG emissions are emissions that are a consequence of the activities of the reporting entity, but occur at sources owned or controlled by another entity. They include emissions from purchased electricity, heat, steam or cooling (scope 2) and all other indirect emissions from the wider value chain (scope 3) such as those associated with procurement, business travel and waste.

Public bodies should align their carbon accounting methodology with the GHG Protocol. As set out in the Corporate Accounting and Reporting Standard, GHG accounting and reporting should follow five key principles:

• Relevance – the inventory should appropriately reflect the emissions of the organisation
• Completeness – all emission sources and activities within the chosen inventory boundary should be accounted and reported on, with any specific exclusions disclosed and explained
• Consistency – use of consistent methodologies should allow meaningful analysis of emissions over time
• Transparency – assumptions made and methodologies and data sources used should be clearly stated, producing a clear audit trail
• Accuracy – estimation of emissions should be systematically neither under or over actual emissions, as far as can be judged, and uncertainties should be reduced as far as is practicable.

The reporting duty requires annual reports to be submitted using the standard Scottish Government reporting template. Detailed practical guidance on public bodies climate change reporting, completing the template and supporting resources are available on the Sustainable Scotland Network (SSN) website.

Boundary setting

A vital first step in carbon management and reporting is to define the organisation's boundaries. The inventory boundary determines which emissions are accounted for and reported by the organisation. Bodies should refer to the Corporate Accounting and Reporting Standard for guidance: they should first define their organisational boundary and approach; and then set the operational boundary. This will involve identifying the sources of emissions generated by their operations, categorising them as direct or indirect, and choosing the scope for indirect emissions.

As noted in the five key principles above, the inventory boundary should include all relevant assets, activities and emissions generated by the organisation. Further guidance is provided below regarding the activities and emission categories which public bodies are, as best practice, expected to include within their boundary. The body should, in defining the boundary, be transparent as to any sources of emissions which have been excluded from the inventory and provide an explanation for these.

Setting a defined boundary is important for clarity in reporting, and to avoid double counting within the organisation's inventory. For example, purchased electricity should be reported under scope 2. As this is a purchased service, it will appear on financial reports: bodies that report on purchased goods and services under scope 3 would therefore need to ensure that the electricity spend is extracted and excluded from any calculation in relation to scope 3 emissions, to avoid these being double counted.

Conversion factors

Calculation of carbon emissions typically involves applying a carbon equivalent conversion factor to a unit of consumption (kg or tonnes CO2e per unit of consumption, e.g. kg CO2e per kWh of electricity consumed or tonnes CO2e per m3 of natural gas consumed). For the purposes of the mandatory reporting, the UK Government greenhouse gas reporting conversion factors should typically be used.

Other conversion factors are available and may be used where appropriate. For example, Scottish Water have calculated a conversion factor for the supply of mains water within Scotland which provides a more accurate estimate of emissions than the UK factor. The public bodies climate change duties reporting template contains built-in conversion factors for the majority of emission sources, which are updated annually. Where bodies choose to use a different factor, or to calculate their own, this should be clearly stated and further details provided.

Environmental data management

Public bodies should ensure that their data collection, collation and processing methods are recorded, to ensure consistency year on year, and to support audits, business continuity and resilience. While it may be appropriate for bodies with larger or more complex datasets to have an environmental data management strategy or equivalent, a proportionate approach should be taken.

For bodies subject to the mandatory reporting duty, it is important that changes in staffing or staff responsibilities do not impact on their ability to comply with the duty. Ensuring that an operational environmental data management manual is maintained can assist with this.

Sector specific reporting guidance

Guidance for Scottish colleges and universities has been developed by EAUC Scotland to assist with the mandatory reporting from a higher and further education perspective.

8.3.3 Scope 1 reporting

All relevant scope 1 emissions must be reported and are likely to include energy and fuel use in buildings and vehicles. Fugitive gases, such as leaks of refrigerants from cooling systems and heat pumps, should also be included as good practice.

Some public bodies may have specific fugitive emissions, for example anaesthetic gases in the health sector, that should be scoped and reported as they typically have a higher Global Warming Potential (GWP) and so may make a significant contribution to the footprint. A small number of public bodies may generate process emissions and effort should also be made to include these, where material.

Public bodies should refer to the GHG Protocol for guidance on the calculation of scope 1 emissions.

Over time, as bodies work to decarbonise their fleet and estate, emissions from sources such as natural gas and diesel will decrease, and the relative contribution made by sources such as fugitive gases may increase. It is therefore important that bodies undertake regular reviews of their GHG inventory, to ensure that their reports continue to be relevant and complete.

8.3.4 Scope 2 reporting

Scope 2 emissions must be reported on and include those from acquired electricity, heat, steam and cooling. For most public bodies, scope 2 emissions are likely to come primarily from mains electricity, but may also include heat and steam purchased from district heating networks.

When reporting on scope 2 emissions from the purchase of electricity, bodies should follow the location-based method and use the emission factor for standard UK grid electricity. REGOs (Renewable Energy Guarantee of Origin certificates) are not considered to be truly additional in relation to UK grid electricity. Any REGO certified electricity purchased should be reported, in terms of emissions, as grid standard.

An exception to this may occur where a body purchases electricity via a Power Purchase Agreement (PPA). 100% renewably-generated electricity covered by the PPA can be reported as zero emissions, where appropriate.

Public bodies should refer to the GHG Protocol for guidance on the calculation of scope 2 emissions.

8.3.5 Scope 3 reporting

Scope 3 covers all indirect emissions (aside from those already accounted for under scope 2) from the value chain of an organisation and looks at both upstream and downstream activities. The GHG Protocol splits scope 3 emissions into fifteen categories, for example category 1 emissions from purchased goods and services, category 5 emissions from waste, and category 6 business travel.

Full information on scope 3 reporting can be found in the GHG Protocol Corporate Value Chain Accounting Standard. Further detailed guidance on how to calculate scope 3 emissions is provided by the GHG Protocol scope 3 technical guidance documents, and bodies can also refer to the SSN Net Zero Manual.

All public bodies subject to the climate change duties are expected, as part of best practice, to include certain scope 3 emissions in their reports. Public bodies are at different stages of maturity in relation to environmental data and reporting, and also have differing levels of capacity and resource. However, it is vital that bodies work towards expanding their reporting boundary to include relevant scope 3 emissions to better understand, monitor and reduce their overall climate impact.

Following an Environmental Standards Scotland (ESS) investigation (reference IESS.21.012), local authorities may in the future become subject to an additional mandatory reporting duty in relation to scope 3 emissions (refer to the ESS Improvement Report, Scottish Government's Improvement Plan, and the Net Zero and Transport Committee's report for further details). Any such changes would require public consultation and changes to the existing subordinate legislation. Local authorities should refer to section 8.4 below for further details.

8.3.5.1 Scope 3 reporting – baseline expectations

As a baseline, public bodies subject to the reporting duty are expected, as part of best practice, to include scope 3 emissions from:

• consumption of mains water (category 1)
• waste and waste water (category 5)
• business travel including, where appropriate, overnight stays (category 6)
• commuting and homeworking (category 7)
• fuel and energy-related emissions not included in scopes 1 and 2 (category 3).

Colleges and universities are, in addition, strongly encouraged to include student travel within their reporting boundary. This should include estimates of emissions from daily commuting to and from campus; and from relocation travel (travel from the place of permanent residence to the location of study at the start and end of each term or academic year).

The rationale for including waste, water, business travel, commuting and student travel is that these are areas where public bodies have more influence, and they offer opportunities to engage staff, visitors and customers. Emissions from these areas can be more easily influenced and managed through policy and operational processes. They are also areas where data should be more readily available to the organisation, or can be more easily and accurately estimated (see section 8.3.5.3).

Reporting on fuel and energy-related emissions (category 3) provides a fuller picture of the carbon impact of using, say, natural gas as it includes the upstream emissions associated with extracting, refining and transporting the fuel. As such, it can assist in the development of robust business cases and impact assessments that support the transition to low or zero carbon alternatives.

If all bodies include these categories of emissions, it will provide a consistent baseline across the public sector, allow more accurate analysis, and facilitate sectoral comparisons and benchmarking.

8.3.5.2 Scope 3 reporting – expanding on the baseline

Over time those subject to the reporting duties, in particular bodies with larger spend and influence, are expected, as best practice, to expand reporting of scope 3 emissions to include all relevant categories. Such bodies include local authorities, NHS Health Boards, universities, central government bodies and executive agencies.

Expansion of the reporting boundary can progress in a phased approach, focusing first on the scope 3 categories which contribute the most to the organisation's overall footprint. Such priority categories will differ according to the body's functions, budget and operations. As best practice, bodies should undertake an initial high level scoping exercise, first to identify the priority categories; and then to identify the emission 'hotspots' within those categories, to allow resources to be focused where they will have the most impact.

For most bodies, priority categories may typically include purchased goods and services (category 1) and capital goods (category 2), in particular the embodied carbon related to construction and large retrofit projects. Some bodies may find that investments including pension funds (category 15) are also a hotspot.

Where bodies choose to take a phased approach to expanding their boundary, they are encouraged to develop a clear plan and timeline for this, as part of their overall carbon management plan or equivalent. This should identify key stakeholders from across the organisation, as tackling scope 3 emissions is likely to require cross-departmental working, and involve staff who may never have been involved in environmental reporting before. It will be important that the plan recognises the need to provide training for such staff, to ensure they have the necessary climate knowledge and skills.

8.3.5.3 Scope 3 reporting - data sources

When public bodies start reporting on scope 3 emissions, or expand their reporting to include previously un-reported sources, data maturity may be low. For example, data may be incomplete or contain a high level of uncertainty. However, bodies should not let this be a barrier to reporting on that source at all. It is recognised that each organisation is on a maturity journey, and it is essential that public bodies start to take the first steps into reporting scope 3. As part of this process, bodies should be transparent as to the source of their data, its limitations, and so the accuracy of the associated estimated emissions. Over time data quality, accuracy and completeness can be improved as data management processes mature.

The sections below outline some of the common sources of data for the scope 3 emission categories public bodies are expected to include in their reporting as a best practice baseline.

Purchased mains water (category 1)

There are emissions associated with the supply of mains water. The majority of sites will have water meters – whether analogue meters or digital meters with remote monitoring – and water consumption can therefore usually be measured fairly easily. At a basic level, meter readings could be taken on an annual basis. More advanced meters, typically digital meters with remote monitoring capabilities, take readings at regular intervals such as daily, hourly or half-hourly, and can also be used to monitor consumption patterns and identify maintenance issues.

Most utility bills include an estimate of consumption. Bodies should be cautious about using unverified bills as a source of consumption data, as they can be inaccurate. Bodies are advised to using billing or invoice data only where this has been verified using meter readings, where possible.

Where water meters are not installed, or where one meter covers an area shared with another organisation, estimated data can be used. For the former, the bill or invoice will include an estimate of consumption. For the latter, a proportionate share could be estimated based on, for example, overall share of floorspace or numbers of staff on site. Any assumptions and estimates should be clearly stated.

Waste and waste water (category 5)

All public bodies will generate waste through their day to day operations. Types and volumes of waste generated will however vary widely, from simple food waste and packaging, through to specialist streams of clinical, scientific and chemical waste. Waste data should be readily available to most public bodies. Waste is a heavily regulated sector, and clear records at each stage between site collection and final disposal are required. Where public bodies are responsible for their own waste contracts, the waste contractor should be able to supply detailed data including types of waste, volume or weight of waste collected, and treatment or disposal route. This information can be used, with the UK Government conversion factors, to estimate the emissions associated with the waste collection, treatment and end destination of the treatment output or residue.

Waste data is typically based on estimates, based on size of bin and how full the average bin is at the time of collection. This data can be improved by undertaking waste surveys. Bodies generating particularly large volumes of waste could consider installing scales on site to allow for accurate measurement.

Where public bodies do not arrange their own waste contracts, for example where a landlord arranges such services, bodies can request this data. Bodies on shared sites could estimate their share of the emissions using an appropriate proportional approach based on, for example, overall share of floorspace or numbers of staff on site. Any assumptions or estimates should be clearly stated.

UK Government plans to introduce mandatory digital waste tracking across the UK from April 2025. While waste policy is a devolved matter, SG, the other devolved administrations and UK Government have agreed to work together to introduce a single UK system. Further information and guidance on this system will be available from SEPA in due course.

Waste water is typically estimated to be 95% of mains water consumption. Bodies responsible for producing large volumes of effluent may have waste water metering in place and be able to take more accurate measurements. However, this is uncommon for most public bodies and taking the 95% approach for reporting is acceptable. This assumption should be clearly stated, in line with the principle of transparency.

Business Travel, including overnight stays (category 6)

Emissions in this category should include emissions associated with business travel taken by staff, using vehicles or modes of transport that are not owned by the public body, in the course of their work. Such emissions are likely to include journeys on public transport, in hire cars, and by air. 'Grey fleet' journeys – those taken in personal vehicles and for which staff claim a mileage rate – should also be included. Business travel emissions should, as good practice, also include overnight stays.

Emissions from trips taken in vehicles owned by the organisation, such as pool cars, fall under scope 1 and are excluded from this category.

When reporting on business travel, bodies should take a proportionate approach and focus effort on reporting sources material to their footprint. For example, a body may on occasion use taxis, but the use of these may be minimal such that the emissions form only a very small proportion of their overall footprint, and obtaining the data may be resource intensive. In such a case, the body may choose to exclude taxi travel, and should note this along with an explanation. However, there may be other reasons to report on specific travel modes. For example, if a body's use of public transport is currently low, but they want to encourage a modal shift from grey fleet to public transport, they may want to monitor and report on this.

There are likely to be multiple sources of business travel data within a public body.

• Travel agent: many public bodies hold a contract with a travel agent for the booking of business travel and overnight stays. Travel agents are likely to be able to provide detailed management information (MI) including the mode of travel, class of ticket, distance travelled, starting point and destination, price paid, country, and other relevant details for estimating emissions. Bodies may be able to work with their supplier to tailor MI reports to their environmental reporting needs; or could use the point of retendering the contract to introduce such a requirement.
• Other travel suppliers: bodies may have other travel-related suppliers such as hire car contractors, who will also be a source of MI from which emissions can be estimated. Hire car contractors, for example, may be able to provide data including distance travelled, fuel type used, size of car, and sometimes even amount of fuel consumed.
• Corporate expenses system: expenses claims are likely to include mileages, and travel tickets and accommodation paid for by the individual. This data is likely to be less detailed than that provided by a travel agent, but can still be used to estimate emissions. For example, if only the price of a train ticket is recorded, rather than any details about the journey and distance travelled, an appropriate spend-based factor can be used. Improvements to data quality should be sought over time, for example by introducing additional mandatory fields for claimants to complete.
• Corporate expenses cards or credit cards: some organisations may hold a number of expenses cards or credit cards, to allow the purchase of travel, consumables and other items at short notice. The statements from these cards are another valuable source of data – this may require more manual processing but should not be overlooked.
• Travel surveys: staff travel surveys can be used to gather data such as how often individuals travel to attend meetings, the mode of transport used, and the reasons for choosing that mode. This more qualitative information can help inform the development of travel plans and policies.

Commuting and home working (category 7)

Public bodies should report on both commuting and homeworking emissions. This is important for a number of reasons. If a body only reports on homeworking emissions, an increase in the number of employees working from the office will create a false impression of emissions going down, as the decrease in homeworking emissions is not counterbalanced by a corresponding increase in commuting emissions (or vice versa). Being able to compare commuting emissions with homeworking emissions will be important as bodies develop evidence-based policies around hybrid working, noting that emissions are only one of many factors to be taken into account.

While a standard conversion factor is provided for estimating homeworking emissions, there is no standard 'Scottish commuter' conversion factor and bodies will require to estimate commuting emissions themselves.

Public bodies should consider how they can effectively engage with their employees to understand how staff commute to and from work, how often staff commute and to which sites, and how often staff are working from home; and put in place measures to collect or estimate this data.

• Staff travel surveys: carrying out a regular travel survey across the workforce is a good way to collect data on employee commuting behaviour, produce a clearer picture of the types of transport staff use to travel to the workplace and the distance they travel in an average week. This data can then be used to estimate commuting emissions. Surveys can also be used to identify barriers to sustainable and active travel, and the measures which would encourage people to travel more sustainably. Such information can be used to help justify and target investment, for example in improved cycling facilities at particular sites or introducing cycle to work or electric vehicle salary sacrifice schemes.

A Commuter Emission Calculator tool has been developed by Zero Waste Scotland. The tool includes a staff survey and an emissions calculator.

• Homeworking or hybrid working survey: hybrid working is now widespread across the public sector. Homeworking emissions can be simply estimated using a standard homeworking conversion factor, based on the number of full time equivalent (FTEs) employees working from home. However, bodies may wish to include questions on working from home in a staff survey, for example in a hybrid working survey. This could seek to elicit more detailed information around energy use at home and heating behaviour. This could allow more accurate homeworking emissions to be calculated. In addition, the information could also inform employee engagement and communications plans, for example providing signposting to home energy advice services.
• Site occupancy data: buildings with a security system that registers staff as they enter and leave the building may be able to estimate typical building occupancy. Where more detailed data is not held, this could be used to estimate homeworking and commuting rates, e.g. average 20% of staff coming to the office, and so 20% of staff commuting and 80% working from home. The details of this calculation would depend upon the nature of the body and its staff, and could be supplemented with related data held in the HR system.

Student travel: reporting student relocation travel emissions

Student relocation travel emissions are those generated by students travelling from their place of permanent residence to the place of study at the start and end of each term or academic year. Domestic and international student relocation emissions form a significant proportion of university scope 3 emissions: for example, within the 2021-22 public bodies duties reporting, these emissions accounted for between 11 and 21% of total reported emissions for the institutions that included them. In line with the GHG Protocol, universities should measure and report emissions arising from this source.

The sector can use the Domestic and International Student Travel Emissions Calculator Tool developed by the University of Aberdeen and made available through EAUC Scotland to measure and report these emissions. The tool requires student registry data (number of students per nation) and the distance from London to the university (in kilometers) to start measuring and reporting these emissions. Universities can improve the granularity of the tool in future based on available student travel survey data. The tool also includes historical UK GHG conversion factors to allow universities to backdate emission source data to 2015-16. EAUC will update the tool annually with the latest conversion factors.

EAUC have also developed a Commuting Survey Guide and Tool. This resource package intends to provide a standardised approach for the further and higher education sectors to report on staff and student commuting emissions.

Fuel and energy-related emissions not included in scopes 1 and 2 (category 3)

This category includes emissions related to the production of fuels and energy purchased and consumed in the reporting year, that are not already included in scopes 1 or 2. It includes the upstream emissions of purchased fuels (e.g. emissions generated by the extraction, production and transportation of fuels, also referred to as 'well to tank' (WTT) emissions), upstream emissions from purchased electricity, and transmission and distribution losses. Transmission and distribution losses are the amounts of energy in a system that are not consumed by end users or customers, for example losses through leakage or energy dissipation, or the energy needed to power the equipment that runs the distribution system.

To estimate the emissions associated with this category, bodies are recommended to use an average data method, and utilise the conversion factors provided by the UK Government. If this approach is taken, bodies can use the fuel and energy consumption information already gathered for scope 1 and 2 reporting, and apply the relevant conversion factors.

Bodies should refer to the practical reporting guidance for further details.

Capital assets – embodied carbon from construction and retrofit projects (category 2)

Bodies are encouraged, as best practice, to calculate the whole life carbon of projects in line the Net Zero Public Sector Building Standard, RICS whole life carbon assessment, the UK Net Zero Carbon Buildings Standard, PAS 2080 (2023) or equivalent, as appropriate. Public bodies should keep records of whole life carbon emissions (in tonnes CO₂e), including embodied carbon, predicted to result from their major built environment projects. Such information on built environment carbon emissions impact should be made available upon request from Scottish Government by all public bodies.

Public bodies subject to the reporting duty should, as best practice, include the embodied carbon emissions from construction and retrofit projects in their annual report.

If a public body's construction or retrofit project is completed within a single reporting year, the total embodied carbon emitted from its construction should be reported in tonnes CO₂e. Typically, building projects will span several years. In this case, an estimate of the embodied carbon emitted during the reporting period should be included, e.g. a proportion of the total estimated embodied carbon based on construction spend in the period. This would result in the same project being reported over a number of years, with the annual emissions adding up to the total embodied carbon resulting from the project.

8.3.6 Reporting land-based emissions and removals

Land-based emissions should be accounted for and reported on in line with the principles of the GHG Protocol Land Sector and Removals Guidance. In doing so, public bodies should follow the GHG Protocol principles of relevance, transparency, accuracy, completeness, consistency, conservativeness and permanence when compiling an inventory that includes land use activities and or nature-based removals.

Before adding land-based emissions to their inventory, it is important that bodies set a boundary in relation to their land and land use activities. The boundary should reflect the nature of the public body, its estate and functions, noting the GHG Protocol principles of relevance and completeness, etc. For example, a public body with large landholdings or land management functions is likely to find including land-based emissions is appropriate, whereas a small body with an administrative function and landholdings restricted to areas around office buildings would not. The Land Sector and Removals Guidance provides further details.

Key to reporting insetting activities is the need to have an organisational inventory of land-based emissions and carbon capture. If carbon reductions are to be reported and the benefit claimed, such as through woodland creation, then other land-based emissions must also be included, such as losses from change of land use or from degraded peatland. Carrying out an inventory assessment of the condition of existing carbon stores will enable restoration activities to be prioritised to the most degraded or vulnerable areas. Such an inventory should be regularly refreshed to take account of changing environmental conditions, the impact of nature-based projects and land use changes.

The scope and level of detail included in such a land and emissions inventory should be appropriate to the scale and nature of the organisation's landholdings. It is acceptable for an organisation to take a phased approach to their land-based emissions reporting, such that specific land parcels are added year-on-year as data become available. If a phased approach is taken, there should be a clearly defined timescale for the inclusion of all relevant land and land-based emissions. If a land parcel is added to the reporting, both emissions and reductions from that land should be reported, and should be included thereafter. When introducing a piece of land, and the related emissions, to the annual PBCCD report for the first time, bodies should ensure that a note is included in the relevant table or tables to explain the increase or decrease in emissions.

Carbon reductions from nature-based insetting projects should be verified using an MRV (measurement, reporting and verification) equivalent to a government supported carbon code. Bodies may choose to verify insetting projects externally through one of the Scottish Government supported carbon codes, however, there is no requirement to do so, assuming that any carbon reductions are intended for internal use. Carbon credits intended for sale or transfer to another body should be verified and issued externally through one of the codes. The methodologies used to calculate any carbon emissions reductions or carbon stored should be robust, transparent and independently audited, whether these are for internal use or external sale or transfer.

Emissions that arise within Scotland's territorial boundary should be inset or offset within Scotland. Scope 1, scope 2 and certain scope 3 emissions (e.g. from water supply and wastewater treatment, waste, staff commuting and homeworking, domestic business travel, and upstream and downstream leased assets) are likely to occur within Scotland's territorial boundary.

Any purchased or "gifted" offsets should be high-integrity and from projects verified under Scottish Government supported carbon codes such as the Woodland Carbon Code, Peatland Code or other such government-supported codes which may be developed in the future. Offsets must be retired when the carbon benefit is claimed.

Verified nature-based carbon offsets or insets from projects within Scotland can be expected to contribute to national statutory emissions reduction targets, by increasing the size of carbon sinks. Such offsets and carbon removal (e.g. woodland) insets can therefore be included in the carbon accounting section (Part 3) of the PBCCD report, to counterbalance organisational emissions that arise within Scotland's territorial boundary.

[i.e. Such offsets and carbon removal insets are acceptable to credit against a public body's relevant scope 1, 2 and 3 emissions as reported annually in Part 3 of the PBCCDR. Emission reduction insetting projects such as peatland restoration should be reported under land-based scope 1 emissions, and should result in lower direct emissions from the source than before the restoration work took place].

Occasionally an unplanned, destructive event may cause damage on a public body's landholdings such that carbon is released, for example a wildfire destroying an area of woodland. The GHG emissions from such events should be estimated and included in the annual report under land-based scope 1 emissions.

Public bodies may sell or otherwise allocate (e.g. "gift") carbon from projects on their landholdings, surplus to their own operational requirements to reach net zero, to other organisations, either other public bodies, private investors or other end-users of the credits. Such carbon reductions or credits must not be included in the originating body's own corporate carbon account, as this would constitute double-counting. Reference to carbon allocated or credits sold to others should be included in the PBCCD reports as supporting information only (further guidance and reporting requirements around carbon credits are to be developed and will be included in the Land and Nature supplement in due course). Carbon credits issued for sale under Scottish Government supported carbon codes must also be able to demonstrate additionality in line with the codes.

International offsets do not contribute to progress to Scotland's national statutory emissions reduction targets. Therefore, these must not be included in the annual PBCCD reports as credits against organisational scope 1, 2 and 3 emissions that arise within Scotland. Reference to such international credits should only be included as supporting information.

Direct air capture with carbon storage (DACCS) and other negative emissions technologies (NETs) are not currently accounted for in the national GHG inventory, i.e. they are not classed as "Scottish removals" as defined in the Climate Change (Scotland) Act 2009 ^[74], and do not count towards national emissions reduction targets. There is provision within the 2009 Act for this to be changed in the future, if appropriate. Until such a change is made, engineered emissions removals from NETs should not be included in the annual PBCCD reports as credits against organisational scope 1, 2 and 3 emissions that arise within Scotland. Reference to such removals should only be included as supporting information.

8.3.7 Reporting on alignment of resources with net zero targets

Bodies subject to the mandatory reporting duty are required to include, in their annual reports, how they will align their spending plans and use of resources to contribute to reducing emissions and delivering their emission reduction targets. Bodies are encouraged to take a broad approach to reporting on this aspect of their activities and to consider staff resources and time, as well as financial resources. For example, by:

• reporting on how their capital investments contribute to reduction of their scope 1 and 2 emissions, for example by investing in low emission replacement fleet vehicles, or by replacing polluting heating systems with clean heating systems in their buildings
• considering wider spending plans and budgets: spending on procurement and service design and delivery, for example, can be used to drive emission reductions
• demonstrating the use of appropriate tools and methodologies that have been used in policy and project appraisal, for example whole life carbon assessment, and incorporating the cost of carbon into the cost benefit analysis of business cases
• investing in systems that will support delivery of emissions reductions
• having staff members, roles or teams with a dedicated remit around climate action could help demonstrate alignment of resources with emission reduction targets, as could embedding climate action into annual staff objectives particularly for senior managers
• expanding staff resource allocated to climate action
• ensuring that staff are given the time to undertake climate-related and sustainability training, and for other climate-related activities and processes such as climate change impact assessments.

8.3.8 Reporting on adaptation action

A key goal of climate adaptation is to increase preparedness to extreme weather events now and in the future and to reduce vulnerability to climate change impacts. Evidence shows investment in adaptation action represents good value for money, with the costs of preparing for the impact of climate change outweighing those associated with response and recovery.

Effective and inclusive adaptation action requires collaboration and flexibility within and between organisations. This also requires adaptation action to be embedded into an organisation's strategies with links made to other relevant policy areas.

The mandatory climate change duties report includes a set of questions focused on adaptation, the majority applying at corporate level, with one specific question on the contribution to national adaptation objectives.

Public bodies subject to the reporting duty should report on:

• understanding of current and future climate-related risks
• arrangements in place to manage climate-related risks
• action taken to adapt
• arrangements in place to review risk and monitor and evaluate the impact of actions
• adaptation priorities for the year ahead.

Public bodies subject to the reporting duty are, where applicable, also expected to report on:

• progress in delivering the Scottish National Adaptation Plan (SNAP3).

All public bodies should consider how the exercise of their functions can support the national adaptation objectives and, where applicable, report on contributions to national adaptation objectives, as outlined in section 6.3.4 and section 6.4.6.1. Public bodies identified as owners of one or more policies (or proposals) in the Scottish National Adaptation Plan, should report on policy delivery.

To support statutory duties on adaptation action and reporting, public bodies are encouraged to use the Capability Framework developed by Adaptation Scotland for the Scottish public sector. As outlined in section 6.3.2 , the Capability Framework outlines four capabilities needed for an organisation's adaptation journey and describes a number of tasks to develop these capabilities over four stages from 'starting' to 'mature'.

8.3.9 Sustainability reporting

General reporting

Where bodies prepare annual corporate reports, these should incorporate sustainability. Bodies should, as best practice, report on alignment with, and contribution to, the NPF national outcomes through the delivery of their plans and programmes. By integrating sustainability into their existing reporting suite, bodies can avoid creating a separate, siloed sustainable development report, and help ensure that sustainability is embedded across all business areas.

Mandatory public bodies climate change duties reporting

At time of publication, the mandatory reporting duty does not include a question explicitly around compliance with the third duty, to act in the most sustainable way. In the future, consideration may be given to introducing a question specifically around this duty; and relevant bodies would be required to comply with any additional reporting requirements.

Part 5 of the annual mandatory report focuses on procurement. Any procurement activity undertaken by Scottish public bodies should be in line with the Sustainable Procurement Duty (see section 7.5.1), and this part of the report should reflect that approach.

Bodies are encouraged to report on their compliance with the third duty using other sections of the reporting template, for example using the free text fields provided for additional and supporting information, and the recommended voluntary questions for reporting on wider influence. Mainstreaming sustainability into decision making through the use of sustainable development impact assessments, for example, would help demonstrate compliance with the third duty, and would produce a clear audit trail.

8.3.10 Reporting on wider influence emissions

Through the climate change duties, the 2009 Act requires all public bodies, in exercising their functions, to contribute to addressing climate change. Collectively, public bodies have a wide range of functions that can influence emissions including spatial and transport planning, place-making, investment, infrastructure development, economic development, funding, regulation, communications, education, community development, and partnership development and facilitation.

Bodies are unlikely to be able to report in quantitative terms on the emissions impact of these activities, but should make efforts to report these voluntarily in qualitative terms under the recommended wider influence questions in the mandatory reporting template.

8.4 Local authorities – additional reporting duties

8.4.1 Scope 3 reporting for local authorities

At the time of this consultation, Scottish Government is taking forward the actions outlined in the Improvement Plan developed in response to an Improvement Report issued by Environmental Standards Scotland (ESS) concluding investigation IESS.21.012. The investigation looked into the effectiveness of the systems in place to support local authorities in their duty to contribute to the delivery of climate change targets. The Improvement Plan focuses on the recommendation made by ESS that the reporting of scope 3 emissions should be made mandatory for local authorities.

This section of the guidance will be updated in due course as the actions outlined in the Improvement Plan are taken forward. Introducing mandatory reporting of scope 3 emissions will require amending The Climate Change (Duties of Public Bodies: Reporting Requirements) (Scotland) Order 2015.

8.4.2 Area based reporting for local authorities

As part of the informal resolution process to the ESS investigation noted above, Scottish Government agreed that local authorities will move towards the reporting of area based emissions. This section will be updated in due course as the monitoring and reporting of area based emissions is developed by local authorities and the Scottish Climate Intelligence Service (SCIS).