Decoding Carbon Footprints: ERA's New Carbon Reporting Guidance Sets the Standard for Equipment Rental Industry

Tomáš Babický, European Affairs Manager at ERA, discusses how this standard is set to transform the industry by providing transparency and consistency
IMAGE SOURCE: LECTURA GmbH

26 September 2024, 15:44

In a world where sustainability is no longer optional but essential, the European Rental Association (ERA) has introduced a groundbreaking tool designed to help rental companies measure and report their carbon emissions accurately. The ERA Carbon Reporting Guidance (CRG) offers a unified methodology that empowers companies of all sizes to calculate their carbon footprint with precision. In an interview with LECTURA Press, Tomáš Babický, European Affairs Manager at ERA, discusses how this standard is set to transform the industry by providing transparency and consistency, particularly in addressing the complexities of Scope 1, 2, and 3 emissions.

Patrik Eder: Can you briefly introduce the ERA Carbon Reporting Guidance (CRG) and who is it suitable for?

Tomáš Babický: The ERA Carbon Reporting Guidance ‎is a practical document published by the European Rental Association helping rental companies to calculate their corporate carbon emissions in a way that is harmonised across the rental industry by this guidance. It can be used by any company of any size that rents out equipment that uses energy.

PE: How do you think the ERA CRG will influence the equipment rental industry, both within Europe, particularly regarding Scope 1, 2, and 3 emissions?

TB: The ERA guidance will allow rental companies to correctly and consistently report to stakeholders on all categories of carbon equivalent emissions, as defined broadly by the GHG Protocol. With this guidance the rental industry now has a voluntary standard for this kind of non-financial reporting. It will serve as a reference and basis for establishing a level playing field for reporting on emissions.

In particular the Scope 3 emissions are defined by the GHG Protocol very broadly. Because they represent the largest part of the overall carbon footprint, it was crucial to define in detail all rental operations and their corresponding Scope 3 category. In Europe large companies are now legally obliged to report on emissions by regulations such as the CSRD, however in other parts of the world big rental customers are increasingly asking their suppliers including rental companies for transparency on their carbon footprint. The ERA Carbon Reporting Guidance will give rental companies anywhere in the world a tool to comply with such requests.

Overview of GHG Protocol scopes and emissions across the value chain<br>IMAGE SOURCE: ERA - European Rental Association

PE: Given that there is currently no unified methodology for calculating the carbon footprint of equipment rental companies, what challenges do you foresee in implementing the ERA CRG?

TB: The ERA guidance establishes such a unified methodology and it consists of step-by-step instructions and formulas to accurately establish the company carbon footprint. That’s why it should be easy for any company to use the guidance and find usable advice in it.

PE: How do you see the ERA CRG aligning with the EU’s Corporate Sustainability Reporting Directive, and what are the implications for larger versus smaller rental companies?

TB: The CSRD directive requires large companies (which in the EU means companies with more than 250 employees) to report on an annual basis on their non-financial performance indicators. This includes the environmental footprint in terms of carbon equivalent emissions. The Carbon reporting guidance is one of the tools ERA develops to help rental companies to comply with the CSRD requirements.

Small and medium size companies are not in direct scope of CSRD, so they do not have the obligation to report publicly; however, they might be affected too, especially in cases when they are serving large customers who have the report on carbon themselves and will need information from their suppliers to complete their own carbon reports.

The guidance was steered by the ERA Sustainability Committee and developed by KPMG<br>IMAGE SOURCE: ERA - European Rental Association

PE: How significant is the ERA rental equipment benchmark database in ensuring accurate carbon reporting, and how can rental companies best utilize this resource?

TB: The equipment values database, which forms an integral part of the guidance, is the first ever collection of benchmarks in the industry on key equipment variables, such as the average energy consumption per piece of equipment or utilisation of the machine in a typical day on rent. Setting these industry benchmarks was indispensable to calculate the carbon footprint accurately and in a fair way.

Even very small variations in these values in case of commonly rented equipment such as mini-excavators have huge consequences for the whole scope 3 emissions of a rental company. Scope 3 (emissions generated by rental customers while operating the machines) typically represents the vast majority of emissions in the rental sector. These benchmarks will make sure that all players in the industry use fair and solid figures to calculate their carbon reports.

PE: What strategies would you recommend to ensure that rental companies of varying sizes and experiences with carbon accounting can consistently and comparably report their emissions, as encouraged by the ERA guidance?

TB: The ERA Carbon Reporting Guidance is published in a time when many companies worldwide commit to certain climate targets. And you can only commit to reducing your emissions if you know how to measure them. Aligning yourself with the methodology in ERA guidance is only one step in the journey of decarbonisation. And it does not matter if you are a small or large company or if you have already made any decarbonisation efforts. Measuring and reporting correctly are prerequisites to knowing where and how to reduce your footprint.