Acquisitions can impact a company’s historical emissions profile, requiring a recalculation of base year emissions if the acquisition leads to significant structural changes.
Impact of acquisitions
Acquiring the ownership of the assets and liabilities of an entity can have carbon accounting implications as it can change the historical emissions profile and base year of the acquiring company.
The base year is the reference point from which an organisation’s emissions reduction can be tracked.
To ensure the comparability of emissions over time, an acquisition may lead to a recalculation of the base year of the acquiring entity.
Significance thresholds
The impact of an acquisition is considered “significant” if the inclusion of the acquired entity’s emissions increases the base year emissions inventory of the acquiring entity by more than 10%.
Emitwise’s approach to acquisitions
To estimate the potential impact of an acquisition on your greenhouse gas inventory, Emitwise will perform a screening assessment of the acquired company using the following data:
- Publicly-available GHG emissions data
- Actual or estimated headcount figures
- Actual or estimated revenue
If the screening assessment demonstrates that the emissions of the acquired company will significantly change the historical emissions profile of the acquiring entity, Emitwise will:
- Collect the data of the acquired entity relevant to the acquiring entity’s base year
- Calculate the emissions of the acquired entity to reassess the base year emissions inventory of the acquiring entity
If there is no evidence that the acquired entity will significantly impact the base year emissions inventory of the acquiring entity, Emitwise will not undertake any revisions. The emissions of the two entities will simply be grouped in the next reporting period.