ERA Carbon Reporting Guidance: Simplifying compliance for rental companies

The European Rental Association (ERA) last month released its Carbon Reporting Guidance, a comprehensive document to assist rental companies in reporting corporate carbon emissions across Scopes 1, 2, and 3.

Produced in collaboration with KPMG, the document is based on the Greenhouse Gas Protocol and provides a standardized framework for the industry to establish an equipment rental company carbon footprint.

The Guidance has been developed specifically for the equipment rental industry and offers a step-by-step methodology for calculating corporate CO2 emissions in each scope: direct emissions (Scope 1), indirect emissions from purchased energy (Scope 2), and all relevant categories of Scope 3.

The Guidance also looks at the most significant emission sources for the rental industry and offers “tailored calculation formulas to quantify emissions while allowing flexibility to adapt to data availability.”

Timeline for compliance

Based on the Greenhouse Gas Protocol, the document provides a standardized framework for the industry to establish an equipment rental company carbon footprint. (Photo: AdobeStock/Gorodenkoff)

Compliance with the EU Corporate Sustainability Reporting Directive is imminent for large European firms and will soon be a focus for small and medium-sized enterprises as well. 

“Reporting on the carbon footprint of a company is a requirement and a legal obligation first and foremost for larger companies,” explains Douglas McLuckie, chair of the ERA Sustainability Committee and managing director of ESG and Ashtead Group, noting that the ERA guidance has been drafted with all size rental companies in mind.

“However small and medium size companies will be affected too, especially in cases when they are serving large customers who have to report on carbon themselves and will need information from their suppliers to complete their own carbon reports.”

The EU´s Corporate Sustainability Reporting Directive (CSRD) has various deadlines and thresholds, but most rental companies operating in the EU will be required to start issuing their CSRD report including information on carbon footprint in 2026, based on their sustainability performance in 2025.

“The ERA Carbon Reporting Guidance is part of what we are doing for the rental industry to prepare for CSRD, and more guidance on other sustainability KPIs will follow next year,” states Michel Petitjean, secretary general of the ERA.

Sector-specific insights 

The ERA Carbon Reporting Guidance contains sector-specific guidance to make compliance as clear and comprehensible as possible for rental companies. 

“The main value of this guidance lies in the fact that it is a common methodology for the whole hire and rental equipment industry,” states Petitjean. “The GHG Protocol is too general to give instructions on how to determine CO2 impact of some specific aspects of the rental operations and so we needed to agree on how to approach those across rental businesses of any size.

“The Guidance gives a clear indication which elements of carbon footprint fall into which GHG Protocol category. For instance, we have agreed in the Guidance that if transportation of equipment and fuel to clients is provided by a rental company, then the CO2 equivalent of that falls into Scope 1 or 2,” Petitjean explains.

“If the transportation is handled by a third-party supplier to the rental company, then it falls into Scope 3. These questions can be very technical and the guidance provides clear explanations for anyone who needs help understanding all the details.”

McLuckie says all rental businesses, ERA members or not, will benefit from this Guidance.

“First of all, our stakeholders, be it customers, public authorities, institutions or employees require and will increasingly require more transparency from any company on how good we are in our sustainability performance,” he says. “The pressure is coming also from our investors, who will continue to seek disclosure as they are turning more and more to green companies and investments.

“Then, there are of course the regulatory requirements and the EU CSRD is a prime example of this,” he continues. “The EU may be at the forefront on this, but other parts of the world may follow with similar rules soon enough, which will only underpin the global significance of this guidance going forward.

“And lastly, correct reporting on carbon emissions is only the first step in a longer process. If you are able to measure yourself, you can set targets for yourself to improve your performance over time. Which is what we all should be aiming for if we want to be serious about decarbonization efforts.”

While drafting the Guidance, Petitjean says ERA was encouraged by what he says was “incredible engagement from many rental companies,” indicating how important the resource is for the industry.

“To give you an idea, the ERA Sustainability Committee that steered the project has grown with this project to its record size,” he says. “We wanted to issue it as soon as possible even if it is not 100% comprehensive and there will be room for further development in the future.

“Some larger rental companies have been issuing carbon reports already, but now they have a common baseline to do it on an equal footing. Our guidance is a kind of voluntary industry standard, but any rental business using it will be able to refer to it so that any investor or stakeholder can see that their carbon report is based on a solid and standardized basis.”

Equipment Database 

Alongside the report, the ERA is also launching a rental equipment benchmark database, which it said will provide a “valuable resource” for accurate emission estimation of equipment.

The database compiles equipment data provided by rental companies, manufacturers and lifecycle assessment analyses and enables more accurate reporting of carbon emissions. ERA said it can also act as a tool to respond to client inquiries about project-specific emissions.

“The equipment database is an invaluable source of information for the industry as it contains benchmarks of sector-specific metrics such as average energy consumption or average utilization hours for more than 100 types of typical rental equipment,” explains McLuckie. “The database was developed with input from top rental companies in Europe and 10 leading OEMs.”

He continues, “A significant effort indeed was needed to put it together, as it represents a first-ever benchmark in the industry on such sensitive data. In the end, we have succeeded in reaching a real industry benchmark as the database was fed with around 1,800 unique data points. As time progresses we will naturally need to keep it up to date and develop it further by adding more equipment types, especially those running on alternative fuels.”