Skip to main content
Back to Glossary
Definition

GHG organizational boundary (equity share vs control)

A GHG organizational boundary sets which subsidiaries, sites, joint ventures, and other operations enter your inventory, using equity share, financial control, or operational control as the consolidation approach.

What is a GHG organizational boundary?

Your GHG organizational boundary identifies the entities and operations included in your greenhouse gas inventory. It is set before the operational boundary, which assigns included emission sources to Scope 1, Scope 2, or Scope 3.

Why does a GHG organizational boundary matter to you?

Joint ventures or leased operations can make totals differ between methods. CDP 2026 question 6.1 asks which consolidation approach you chose. Question 7.22 asks you to split Scope 1 and Scope 2 between the consolidated accounting group and other included entities. AASB S2 paragraph 29(a)(iii), read with B27, asks Australian reporters using the GHG Protocol to disclose their approach and why.

How does a GHG organizational boundary work?

Equity share includes emissions in proportion to your economic interest. Financial control includes 100% from operations fully consolidated in your financial accounts. Operations under joint financial control use equity share. Operational control includes 100% where you can introduce and implement operating policies. Apply one approach throughout the group, and record it before starting your GHG calculation.

What mistakes should you avoid?

  • Using ownership percentages under a control approach instead of testing who controls each operation.
  • Excluding a joint venture, leased site, or subsidiary without recording the contract and control decision.
  • Changing the approach between years without explaining the change and assessing whether the base year needs recalculation.

Is an organizational boundary the same as an operational boundary?

No. The organizational boundary decides which operations enter the inventory. The operational boundary then classifies emissions from those operations as Scope 1, Scope 2, or Scope 3.

What records should you keep for the boundary decision?

Keep the group chart, ownership percentages, financial-consolidation schedule, operating agreements, lease details, and a decision table showing the chosen approach, each included or excluded operation, and the reason.

Example

Suppose a construction materials producer in Canada has three operations. It has a wholly owned cement plant that it controls financially and operationally, with 1,000 tCO2e. It owns 40% of an aggregate quarry where it can introduce and implement operating policies but has no financial control, with 300 tCO2e. It owns 25% of a terminal that it controls neither financially nor operationally, with 200 tCO2e.

Equity share gives 1,000 + (40% x 300) + (25% x 200) = 1,170 tCO2e. Operational control gives 1,000 + 300 + 0 = 1,300 tCO2e. Financial control gives 1,000 + 0 + 0 = 1,000 tCO2e. The operating agreements and financial-consolidation records support those control judgments.

Where it comes up

CDP 2026 chosen consolidation approachCDP full corporate questionnaire, question 6.1CDP 2026 split between the consolidated accounting group and other included entitiesCDP full corporate questionnaire, question 7.22AASB S2 equity-share or control measurement approach and reason for the choiceAASB S2 paragraph 29(a)(iii) and B27

Related terms

Carbon Accounting

Carbon accounting is the process of defining a company’s greenhouse gas inventory, collecting activity data, applying emission factors, and reporting Scope 1, Scope 2, and Scope 3 emissions on a consistent basis.

GHG inventory

A GHG inventory is a dated record that fixes an organisation's boundary, lists its emissions sources and calculations, separates Scope 1, Scope 2 and Scope 3 totals, and documents methods, exclusions and supporting files.

Scope 1 Emissions

Scope 1 emissions are greenhouse gases released directly from sources your company owns or controls, including fuel-burning equipment and vehicles, industrial processes, and refrigerant or other gas leaks.

Scope 2 Emissions

Scope 2 emissions are the indirect greenhouse gas emissions from generating the electricity, steam, heat, and cooling your company buys and uses.

Scope 3 Emissions

Scope 3 emissions are the indirect greenhouse gas emissions from goods, services, transport, product use, investments, and other upstream and downstream activities outside your company's Scope 1 and Scope 2 boundary.

Sources

  • GHG Protocol

    Corporate Standard chapters 3 and 4 on equity share, financial control, operational control, consistent consolidation, and setting the operational boundary after the organizational boundary

    2026-08-20

  • CDP

    Current 2026 question numbers for consolidation approach, boundary changes, and emissions by consolidated accounting group

    2026-08-20

  • Australian Accounting Standards Board

    Paragraph 29(a)(iii) and B27 disclosure of the GHG measurement approach, including equity share or control, and the reason for the choice

    2026-08-20

Last verified 2026-08-20

Ready to start?

Tell us what you need.

Bring us the sustainability request, reporting deadline, or strategy question you are facing. We will read it and suggest a practical first step, and the first conversation is free.

Get in touch
GHG organizational boundary (equity share vs control) Definition | Keslio