How do divestments, mergers, or acquisitions impact my organizational chart and carbon inventory?
Structural changes like divestments, mergers, or acquisitions can significantly affect your organizational chart and GHG inventory. When operations are sold, acquired, or merged, emissions boundaries must be updated to reflect the new reality.For example:
Divestments: Emissions from sold operations are excluded from your inventory from the date of sale onward. Historical emissions (including the base year) must also be recalculated to exclude these operations.
Mergers or acquisitions: Newly acquired entities’ emissions must be included in your inventory and base year as if they were part of your organization all along.
These updates ensure consistency in reporting over time and allow for meaningful comparisons, as required by the GHG Protocol.
Do I need to recalculate my base year and historical emissions?
Recalculations are often necessary to account for structural changes. The GHG Protocol requires companies to revise their base year and historical data if the changes significantly affect the reported emissions.However, recalculations are not required for changes deemed insignificant. A 5% materiality threshold is often used—if the structural change impacts less than 5% of total emissions, recalculation can be avoided. This threshold helps balance precision with practicality.
How should recalculations be handled?
When recalculations are required, follow these steps:
Document the change: Clearly describe the structural change and its impact on your organizational boundaries.
Adjust historical data: Modify your base year and previous inventories to reflect the new structure.
Report transparently: Disclose recalculations in your reports, explaining why they were necessary and how they were performed.
For example, if your company acquires a new facility that emitted 8,000 tonnes of CO₂ in your base year, you’d add those emissions to your historical data to maintain consistency. By adhering to these principles, your emissions inventory remains a reliable and accurate foundation for decision-making, even during times of organizational change.