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Recalculating base-year emissions

You’ve  calculated your base-year emissions, but are they still relevant?

Chapter Overview

If your accounting methodology, scope or data has changed, it may be time to recalculate your base-year emissions to align them with your current reporting year. We call this rebaselining: a process that ensures you capture the most complete and accurate picture of your true progress.


A robust and straightforward model will make rebaselining easier for organizations. And when coupled with open communication with stakeholders about your efforts, rebaselining can promote transparency and trust.


In this chapter, we’ll take a look at when and how to rebaseline, and why it’s critical for tracking true progress, not just methodological or scope changes.

Defining progress + why rebaselining is critical for tracking it

In the context of sustainability, progress can mean different things to different companies. At Quantis, we define progress as the actual reduction of a company’s emissions, determined by measuring the difference between two footprints that were calculated using the same methodology, data granularity and scope. That last part is key, and the very reason rebaselining is so critical to an accurate analysis of progress. Why? Let’s say your company decides to sell off an entity or start using different, more accurate emissions factors. Both decisions could lead to a decrease in your company’s carbon footprint compared to your base year, however neither qualifies as real progress — they’re simply shifts in scope or data quality. The only way to get a true sense of your progress is to be consistent in your approach to measuring your base-year and your current-year footprints.



It’s also worth noting the kind of progress being made. Progress can be categorized in two ways — internal or external — as determined by whether it is triggered by internal or external drivers. Internal drivers are company-initiated actions to decrease emissions, such as altering the type or reducing the quantity of materials used in key products. External drivers are actions taken by others — sectors, countries or peers— that indirectly benefit a company, such as a region improving its energy mix with renewables.


Both types of progress count towards goals such as science-based targets and should be clearly communicated for transparency and trust.

Rebaselining is a process undertaken by an organization to recalculate its base-year emissions to align them with its current reporting year. By measuring the difference between two footprints calculated using the same methodology, data granularity and scope, organizations will have the most complete and accurate picture of their true progress.

When should you rebaseline?

An organization should rebaseline when there is a significant change in its structure or inventory. The Science-Based Target initiative (SBTi) defines the threshold for significance as 5% or greater in an organization’s total base-year emissions.


An organization could reach the 5% threshold following one major change, such as selling an entity, or several smaller changes that, when combined, reach the 5% threshold. However, you don’t have to reach the 5% in order to rebaseline; it could make sense for your business or be relevant to your scope of focus to rebaseline in other contexts. For example, rebaselining could be a good option if a subset of a corporation, such as a subsidiary, reached the 5% threshold of its scope while working on its own reduction strategy independent of the parent corporation.


Below, we’ve outlined some of the activities that could trigger the need for rebaselining. It’s important to remember that the changes in emissions resulting from these activities do not count as progress, as they are the result of a footprint shift rather than an actual effort.

Scope updates:

Mergers and acquisitions (M&As), divestments, outsourcing or insourcing, changes in ownership, control or business activities are changes in scope that necessitate rebaselining. In the specific case of M&As, if your company has recently acquired or merged with another entity, rebaselining should only take place when full integration has occurred.


Bear in mind that changes in ownership could shift activities between scopes if your company is already reporting accurately on the three scopes. Such shifts would create the need for rebaselining.


Including emissions previously excluded from the boundary also falls into this category, such as emissions stemming from e-commerce activities which weren’t included in an initial footprint. 

Activity data improvements:

When the quality of available data changes significantly, this could lead to an increase or decrease of emissions, despite no real changes in practices. It could be that you now have access to better data on volumes, or that you’ve switched to a system that captures information at subcategory level, or perhaps you’ve discovered data errors that can now be fixed. Rebaselining can help prevent a false sense of progress or inflated impact linked to improvements in data.

Changes to accounting methods:

Making changes to the methodologies used to align with new standards or better knowledge could impact your emissions, necessitating rebaselining. For example, adjusting the way land use change is accounted for in a model following the release of the GHG Protocol Land Sector and Removals Guidance could lead to an increase or decrease of emissions, related only to the accounting rules change. As a methodological change, this requires rebaselining before any assessment of whether progress has been made.

Changes in emissions factors:

Rebaselining is necessary when an organization starts using an emissions factor that is more scientifically robust, from a different database, or more representative of its activities. It’s important to distinguish between updates to emissions factors from the same database (for example, a country energy mix update), which could reflect an improvement if they share the same scope and methodology, and those that come from different databases, and thus have different methodologies behind them. While the former does count as progress, the latter should not.

Do you need to rebaseline? The  decision tree below can help you determine the answer.

Figure 1. Rebaselining decision tree.

How to approach rebaselining

You’ve determined that you need to rebaseline. The only question that remains is how to get started.

In concrete terms, rebaselining entails plugging base-year data into an updated model. To illustrate how this works, let’s look at an example. An organization has acquired a new entity that represents more than 5% of its revenue or is a significant impact driver. Rebaselining would require the following process:  

Figure 2. How to approach rebaselining when acquiring a new entity

This process allows for the measurement of a company’s actual impact by comparing two identical models and showcasing the progress made towards overall goals. When undertaking this exercise, you can either approach it from a very high-level, focusing solely on progress vs. change, or you can do a deep dive and track the various internal or external drivers of progress. The final results will look as follows:

Figure 3. The above waterfall chart example showcases the depth of tracking progress vs. change that can be done when rebaselining.

Will a moving baseline impact my targets?

The SBTi expects baselines and targets to evolve as a result of changes in activities and methodologies. It lays out a specific process to allow for adjustments to targets when significant changes occur.


Depending on the method used to set your target, rebaselining could lead to a notable revision to your target.

Absolute contraction approach:

For targets set using the absolute contraction approach, the percentage of reduction defined compared to the baseline will not change, only the absolute value of the target in GHG emissions. For example, if your absolute target was set at 20%, representing a 24 tCO2-eq reduction from your 120 tCO2-eq baseline, the target will remain 20% following rebaselining, but with an updated baseline of 150 tCO2-eq. The actual reduction will now be 30 tCO2-eq. Corporate targets that are set as the consolidation of various business units may require updating if the business units’ relative importance changes as a result of the rebaselining.

Intensity method:

Targets set using the sectoral decarbonization  approach should, however, be revised after rebaselining because the base-year intensity measure will likely change.

Regardless of the approach used to set your targets, it’s crucial to review your roadmap after rebaselining to ensure it will still get you to your targets. Over- or underestimating certain GHG Protocol reporting categories could lead to a change in the reduction potential of key actions.


Recommendation 1

Develop and communicate a clear base-year recalculation policy. 

In this policy, you should aim to address any questions around when, why and how you will rebaseline. Having clear guidelines in place concerning what internal and external circumstances trigger rebaselining will facilitate decision-making and allow consideration for the most pragmatic route for your company to take. The objective of the policy should be to enhance clarity around progress tracking processes.

Recommendation 2

Rebaseline when change is significant. 

The SBTi defines significant change as a minimum of 5% of the total corporate footprint. If major corporate activities are underway, it could be time to rebaseline. When you do rebaseline, remember to check the impact on targets and roadmaps, and determine if they are still relevant and accurate. If you’re not sure how to determine this, you can check-out the decision tree above.

Recommendation 3

Consolidate less significant changes into a single baseline update. 

In the absence of major changes, verify whether rebaselining is necessary on a regular basis (every few years). If your changes are less than 5% of the total corporate footprint — that is, they don’t hit the “significant” threshold set by the SBTi — group changes and limit yearly small movements. Annual or frequent rebaselining is time-consuming, unproductive and can make tracking progress difficult. If you do need to update your baseline, review other changes that could impact your footprint to ensure they will not need to be updated in the near future.

Recommendation 4

Manage expectations.

Be transparent with executives, higher-level management and external stakeholders, from the beginning, and flag that baselines can change in a significant way. A robust baseline can take two to three years to develop, and will evolve alongside changes in standards, methodologies and data precision. Carbon accounting is very different from financial accounting: it is neither predictable, nor static.  The challenges and necessary considerations required should be communicated clearly and frequently to senior leaders. 

Recommendation 5

Use accurate and qualitative communication around rebaselining.

To promote transparency and gain trust, it’s important to communicate the reasons behind any fluctuations, such as a change in methodology, scope or real emissions reduction progress, to both internal and external stakeholders.

Recommendation 6

When in doubt, follow GHG Protocol guidance.

The SBTi relies on this guidance for accounting decisions and level of precision, making it a relevant guide for rebaselining.

Have questions?

We have answers. Get in touch with our team today and let us guide you through the solutions that might help you on your journey toward a sustainable supply chain.

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