ESG & sustainability
How to assess and manage indirect climate impacts from leased assets and franchised operations globally.
A comprehensive, practical guide for organizations seeking to quantify, monitor, and mitigate climate effects arising from leased assets and franchised networks across borders, while aligning governance, reporting, and supplier engagement with robust sustainability standards.
Published by
Robert Wilson
July 29, 2025 - 3 min Read
In today’s economy, many companies rely on leased equipment, office spaces, and franchised networks to scale operations quickly. Indirect climate impacts from these arrangements can be substantial yet are often overlooked in traditional risk assessments. This article outlines a structured approach to identify, measure, and manage those emissions, focusing on governance, data collection, and collaboration with landlords and franchise partners. By disentangling responsibility between lessees, lessors, and franchisees, organizations can build an clearer picture of footprints, set ambitious targets, and drive improvements across diverse geographies and regulatory contexts. The goal is not blame but accountability and measurable progress toward decarbonization.
Effective management begins with a clear boundary: what counts as indirect climate impact in leased and franchised arrangements? Scope 3 categories typically capture emissions from leased assets, franchise-owned operations, and the energy intensity of facilities not directly owned by the company. Yet many firms struggle to gather reliable data from landlords, franchisees, and third-party operators. A robust program requires standardized data templates, recurring disclosures, and incentives that align the interests of all parties. This means establishing roles, responsibilities, and escalation paths, plus establishing common baselines so that improvements are trackable over time and comparable across markets with different energy mixes and climate policies.
Translating data into actionable strategies for leasing and franchising
A practical framework starts with governance that assigns accountability for indirect emissions to a dedicated cross-functional team. This team coordinates data requests, sets consistent reporting metrics, and aligns incentives with corporate climate goals. It also ensures that lease agreements and franchise contracts embed environmental clauses, performance targets, and regular audit rights. Data collection should cover energy consumption, occupancy levels, equipment efficiencies, and maintenance practices. It helps to segment by region and facility type, recognizing that cooling loads in hot climates or heating needs in cooler regions can dramatically influence outcomes. Transparent communication builds trust and encourages cooperative problem-solving among stakeholders.
Data quality and interoperability are the linchpins of credible reporting. Standardized templates, data dictionaries, and regular reconciliations reduce mismatch risks across portfolios. Companies should leverage energy performance certificates, utility invoices, and submetering where available, augmenting with smart sensors and remote monitoring to fill gaps. Incorporating third-party verification or assurance adds credibility for investors and regulators. As organizations scale, they should phase in supplier engagement programs that train landlords and franchisees on energy-efficient practices, enabling shared savings and accelerated progress. This collaborative approach converts indirect emissions into a measurable, continuous improvement process.
Engaging stakeholders across borders to standardize expectations
From the data assembled, the next step is prioritizing opportunities for emissions reductions in leased assets and franchised operations. This involves evaluating HVAC optimization, lighting retrofits, building envelope improvements, and equipment lifecycle choices. While property owners control some decisions, lessees can influence space utilization, operating hours, and maintenance regimes through policy and negotiation. Franchise networks respond well to standardized energy procedures, centralized supplier standards, and performance-based incentives. The objective is to harmonize practices across locations while accommodating local constraints. A phased program with short, medium, and long-term targets keeps momentum and demonstrates progress to stakeholders.
Financial considerations must accompany technical strategies. Conducting a total cost of ownership analysis helps compare upfront capital with ongoing energy savings, equipment depreciation, and potential tax incentives. Leasing arrangements can be renegotiated to incorporate energy performance commitments, with clear penalties or adjustments for underperformance. For franchised models, performance-related royalties or brand concessions tied to sustainability metrics create financial alignments. Embedding climate risk assessments into procurement decisions reduces exposure to energy price volatility and regulatory changes. Transparent budgeting and scenario planning enable executives to balance climate ambition with resilience and profitability.
Integrating climate risk into leasing and franchising decision-making
Global operations present diverse regulatory landscapes, cultural norms, and energy infrastructures. An international program must account for jurisdictional differences while preserving a consistent internal standard. This requires clear guidance on permissible energy sources, calculation methodologies, and reporting cadence. Coordination across regional offices helps identify unique opportunities, such as grid decarbonization initiatives, favorable tariffs, or local incentives. It also calls for a centralized analytics hub capable of aggregating data from multiple data feeds, validating inputs, and publishing executive dashboards. Strong governance ensures that regional teams remain accountable to global targets without losing agility to local realities.
Communication with lenders and franchise partners should emphasize practical benefits and shared accountability. Regular briefings, site visits, and performance reviews create a feedback loop that translates data into action. Providing education on energy management, maintenance scheduling, and equipment lifecycle planning empowers partners to contribute effectively. Demonstrating early wins—such as reduced energy bills or lowered peak demand—builds momentum and reinforces commitment. In multinational networks, documenting success stories also helps standardize best practices so other markets can replicate them. The aim is to foster a collaborative culture where sustainability objectives become integral to daily operations.
Building a sustainable, scalable model for the long term
Climate risk must be embedded in every leasing and franchising decision, from site selection to renewal negotiations. An assessment framework should weigh exposure to extreme weather, flood risk, and power supply reliability alongside energy performance. Insurance considerations, resilience upgrades, and contingency planning should be part of contract language. By incorporating climate risk into due diligence, companies can avoid destabilizing exposures and ensure continuity of service. This approach also signals to investors that the organization actively manages vulnerabilities rather than reacting after events occur. Comprehensive risk profiles enable senior leadership to allocate resources where they will have the highest impact.
A robust monitoring system tracks progress against targets and flags deviations early. Dashboards that visualize energy intensity, utilization efficiency, and equipment uptime help operational teams stay aligned with goals. Regular audits, both internal and third-party, verify data integrity and verify that improvements are sustained. The feedback from these checks informs refinements in supplier agreements, maintenance schedules, and capital planning. As markets evolve, the program should adapt by revising baselines, incorporating new measurement technologies, and expanding scope to cover additional assets or services within the franchised network.
The long-term success of indirect emissions management rests on scalable processes and cultural adoption. Companies should invest in training programs that empower managers to identify energy-saving opportunities and to negotiate better terms with landlords and franchisees. A culture of continuous improvement, supported by transparent reporting and external assurance, sustains accountability even as leadership and markets shift. Strategic partnerships with utilities, technology providers, and sustainability experts can accelerate progress and unlock new capabilities, such as demand response or distributed energy resources. By documenting lessons learned, organizations create a playbook that future teams can deploy across regions and asset types.
Finally, keep the narrative simple and outcomes measurable for stakeholders. Communicate milestones, challenges, and successes with clarity, avoiding jargon that obscures impact. Publicly report on progress toward science-based targets and align disclosures with recognized frameworks. Demonstrating real-world impact, such as lower carbon intensity per occupied square meter or reduced franchise energy bills, strengthens investor confidence and supports policy dialogue. A well-structured program that combines governance, data excellence, partner engagement, and resilience planning becomes a durable competitive advantage in a climate-conscious marketplace.
