Setting organisational boundaries

Setting organizational boundaries

The most important thing when setting organizational boundaries is that you are open about your setting and argue for any inclusions and exclusions.


It can be a challenge for companies with subsidiaries or entering into joint ventures to set organizational boundaries – i.e. to decide which entities or parts of the company to include in the calculation.


Under the GHG Protocol, companies can use either of two approaches when setting organizational boundaries:


Equity share approach – where a company accounts for its GHG emissions according to its equity share of a given production/other company. In this way, your company’s share of a given amount of CO2 emissions is calculated on the basis of your equity share of the other company. This method of calculation is comparable to the principles applied in general financial reporting.


Control approach – which means the degree of financial or operational control of another company’s production or behaviour. This means that your company must have control over the company to include the emissions. Further distinction can be made between functional and financial control. In practice, financial control is an easier way of setting organizational boundaries than the equity share approach.


> See GHG Protocol Corporate Standard (p. 16) for an elaboration on this setting.


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