Setting organizational boundaries is a crucial step in carbon accounting as it determines which locations should be included in the emissions analysis. The GHG Protocol offers two main approaches:
Equity Share Approach: Under this method, you consider emissions from operations based on your share of equity in the operation. For example, if you own 50% of a subsidiary, only 50% of its emissions are included in your inventory.
Control Approach: This method considers whether your company has operational control or financial control over the emissions.
A company has operational control if it has the authority to introduce and implement operating policies at the operation.
A company has financial control if it has the rights to all benefits from the operation, or bears the majority of risks and rewards from owning the operation’s assets.
Select the method that most accurately reflects your company's GHG emissions and is consistent with your reporting goals. Remember, once chosen, the approach should be consistently applied across all reporting periods to ensure comparability.
Hint: We recommend using operational control because this approach allows you to focus on emissions from sources that you have the authority to manage, making data collection easier.