Select the most relevant organizational boundaries approach for your company

There are three different approaches to set organizational boundaries. The operational and financial control approaches are commonly considered best practice. Once your company has selected an approach, ensure that it is consistently applied across all entities to account for the GHG emissions.

Example of how the consolidation approach affects the GHG inventory

A reporting company has an equity share in four entities (Entities A, B, C and D) but has operational control over three of those entities (Entities A, B, and C).

• Emissions from sources controlled by Entities A, B, and C are included in the company’s scope 1 inventory, while emissions from sources controlled by Entity D are excluded from the reporting company’s scope 1 inventory because the reporting company do not have operational control over Entity D.

• Emissions in the value chain of Entities A, B, and C are included in the company’s scope 3 inventory as the reporting company operationally controls Entities A, B and C.

• Emissions from the operations of Entity D are included in the reporting company’s scope 3 inventory as an investment (according to the reporting company’s share of equity in Entity D).

• The reporting company includes emissions from sources controlled by Entities A, B, C, and D in its scope 1 inventory, according to its share of equity in each entity.

• The company will include value chain emissions from Entities A, B, C, and D in its scope 3 inventory, according to its share of equity in each entity.