A Corporate Accounting and Reporting Standard

Training Curriculum

A Corporate Accounting and Reporting Standard

 Introduction
Lesson Modules

Principles
2. GHG Accounting and Reporting Principles

Organizational
Boundaries
3. Setting Organizational Boundaries

Operational
Boundaries
4. Setting Operational Boundaries

5. Tracking Emissions Over Time

over time
Tracking
6. Identifying and Calculating Emissions

Calculating
Emissions
7. Reporting GHG Emissions

Reporting
8. Review

Review
A Corporate Accounting and Reporting Standard
Organizational Boundaries
Lesson 3

A Corporate Accounting and Reporting Standard

 Introduction
Principles
Learning Objectives

Organizational
Boundaries
In this lesson, you will learn:

• How to determine which of your company’s operations to include in

Operational
Boundaries
your inventory

• Two approaches to determine a company’s organizational boundaries

over time
Tracking
• Why an entity might choose one approach over another

Calculating
Emissions
Reporting
Review
A Corporate Accounting and Reporting Standard
 Introduction
“Boundaries” in a GHG inventory

Principles
• Boundaries: Imaginary lines encompassing the emissions to include in a
company’s GHG inventory

Organizational
Boundaries
1. Organizational boundaries
• Determine which company operations to include

Operational
Boundaries
2. Operational boundaries
• Determine which emissions sources to include
• Determine how to categorize emissions

over time
Tracking
Scope 3 Scope 1 Scope 1 Scope 1

Calculating
Emissions
GHGs GHGs GHGs GHGs

Reporting
Review
A Corporate Accounting and Reporting Standard
 Introduction
Principles
Organizational Boundaries

Organizational
Boundaries
Why are organizational boundaries important?

Operational
Boundaries
• Complex business structures
– Subsidiaries

over time
Tracking
– Joint ventures
– Franchises

Calculating
Emissions
• To measure emissions consistently throughout company

Reporting
Review
A Corporate Accounting and Reporting Standard
 Introduction
Example: What are Global Cement’s emissions?

Principles
Organizational
Boundaries
Operational
Boundaries
Global Cement, Inc.

over time
Tracking
PhilCemen Cementeros National Cement Co.

Calculating
Emissions
10,000 Mt CO2e/yr 5,000 Mt CO2e/yr 1,000 Mt CO2e/yr

Reporting
Review
A Corporate Accounting and Reporting Standard
 Introduction
Example: But what if…?

Principles
What are Global Cement ‘s emissions?

Organizational
Boundaries
16,000 Mt CO e/yr ?
2

13,500 Mt CO e/yr ?

Operational
Boundaries
2

11,000 Mt CO e/yr ?
2
Global Cement, Inc.

over time
Tracking
PhilCemen Cementeros National Cement Co.

Calculating
Emissions
10,000 Mt CO2e/yr 5,000 Mt CO2e/yr 1,000 Mt CO2e/yr

50% of Cementeros is

Reporting
owned by another
organization?

Review
A Corporate Accounting and Reporting Standard
 Introduction
Example: And what if…?

Principles
What are Global Cement’s emissions?

Organizational
Boundaries
16,000 Mt CO e/yr ?
2

13,500 Mt CO e/yr ?

Operational
Boundaries
2

11,000 Mt CO e/yr ?
2
Global Cement, Inc.

over time
Tracking
PhilCemen Cementeros National Cement Co.

Calculating
Emissions
10,000 Mt CO2e/yr 5,000 Mt CO2e/yr 1,000 Mt CO2e/yr

50% of Cementeros is owned

Reporting
by another organization
that controls all of
Cementeros’ operations?

Review
A Corporate Accounting and Reporting Standard
 Introduction
Example: Global Cement

Principles
Organizational
Boundaries
Global Cement’s total emissions

Operational
Boundaries
depend on how they define their

over time
Tracking
Organizational Boundaries

Calculating
Emissions
Reporting
Review
A Corporate Accounting and Reporting Standard
 Introduction
Consolidation approach

Principles
• Consolidation: combining emissions data from separate

Organizational
Boundaries
operations

• 2 consolidation approaches

Operational
Boundaries
1. Equity Share
2. Control
a) Financial Control

over time
Tracking
b) Operational Control

Calculating
Emissions
• Apply selected approach across entire organization

Reporting
Review
A Corporate Accounting and Reporting Standard
 Introduction
1) Equity Share approach 1. Equity Share

Principles
2. Control
a) Financial control
b) Operational Control
Definition: % of ownership; economic interest

Organizational
Boundaries
Account for emissions according to the company’s equity share in the operation
– Independent of financial or operational control

Operational
Boundaries
Factory A
Company
has 50% equity share Account for 500 Mt

over time
Tracking
1,000 Mt CO2e/yr

Calculating
Emissions
Factory B

has 85% equity share

Account for 850 Mt

Reporting
1,000 Mt CO2e/yr

Review
A Corporate Accounting and Reporting Standard
 Introduction
2) Control approach 1. Equity Share

Principles
2. Control
a) Financial control
b) Operational Control

Organizational
Boundaries
Definition: can be defined as
a) financial control

Operational
Boundaries
b) operational control

over time
Tracking
Account for 100% of emissions from operations under the
company’s “control”

Calculating
Emissions
– Independent of equity share

Reporting
Review
A Corporate Accounting and Reporting Standard
 Introduction
1. Equity Share
2. Control

2a) Financial Control a) Financial control

Principles
b) Operational Control

Definition: ability to direct an operation’s financial and operational policies

– To determine, consider corporate voting rights and financial accounting status

Organizational
Boundaries
Account for 100% of emissions from each operation under financial control

Operational
Boundaries
Factory A
Company
has financial control Account for 800 Mt

over time
Tracking
800 Mt CO2e/yr

Calculating
Emissions
Factory B
does NOT have
Account for 0 Mt

Reporting
financial control

800 Mt CO2e/yr

Review
A Corporate Accounting and Reporting Standard
 Introduction
1. Equity Share
2. Control

2b) Operational Control a) Financial control

Principles
b) Operational Control

Definition: authority to introduce and implement operating policies

- To determine, consider ownership of operating permit

Organizational
Boundaries
Account for 100% of the emissions from each operation under operational
control

Operational
Boundaries
Factory A
Company
has operational
control
Account for 1000 Mt

over time
Tracking
1,000 Mt CO2e/yr

Calculating
Emissions
Factory B
does NOT have
operational control
Account for 0 Mt

Reporting
1,000 Mt CO2e/yr

Review
A Corporate Accounting and Reporting Standard
 Introduction
Summary of consolidation approaches

Principles
APPROACH DEFINITION GHG ACCOUNTING

Organizational
Boundaries
Equity share Percent ownership % owned

Operational
Boundaries
Directs financial If yes: 100%
Financial

over time
Tracking
policies to gain If no: 0%
control
economic benefits If joint: % owned

Calculating
Emissions
Operational Authority to introduce and If yes: 100%

Reporting
control implement operating policies If no: 0%

Review
A Corporate Accounting and Reporting Standard
 Introduction
Example: Equity Share

Principles
Which emissions would you include under equity share?

Organizational
Boundaries
Company
Factory A
•has 25% equity share Account for 250 Mt

Operational
Boundaries
•has financial control CO2e/yr
•does NOT have operational control
1,000 Mt CO2e/yr

over time
Tracking
(Consult the table below to help you answer)

Calculating
Emissions
APPROACH DEFINITION GHG ACCOUNTING

Equity share Percent ownership % owned

If yes: 100%
Directs financial and operating policies to gain
Financial control If no: 0%

Reporting
economic benefits
If joint: % owned
Authority to introduce and implement operating If yes: 100%
Operational control
policies If no: 0%

Review
A Corporate Accounting and Reporting Standard
 Introduction
Example: Financial Control

Principles
Which emissions would you include under financial control?

Organizational
Boundaries
Company
Factory A
•has 25% equity share Account for

Operational
Boundaries
•has financial control
•does NOT have operational control
1,000 Mt CO e/yr
2

1,000 Mt CO2e/yr

over time
Tracking
(Consult the table below to help you answer)

Calculating
Emissions
APPROACH DEFINITION GHG ACCOUNTING

Equity share Percent ownership % owned

If yes: 100%
Directs financial and operating policies to gain
Financial control If no: 0%

Reporting
economic benefits
If joint: % owned
Authority to introduce and implement operating If yes: 100%
Operational control
policies If no: 0%

Review
A Corporate Accounting and Reporting Standard
 Introduction
Example: Operational Control

Principles
Which emissions would you include under operational control?

Organizational
Boundaries
Company
Factory A
•has 25% equity share Account for

Operational
Boundaries
•has financial control
•does NOT have operational control
0 Mt CO e/yr
2

1,000 Mt CO e/yr
2

over time
Tracking
(Consult the table below to help you answer)

Calculating
Emissions
APPROACH DEFINITION GHG ACCOUNTING

Equity share Percent ownership

If yes: 100%
Directs financial and operating policies to gain
Financial control If no: 0%

Reporting
economic benefits
If joint: % owned
Authority to introduce and implement If yes: 100%
Operational control
operating policies If no: 0%

Review
A Corporate Accounting and Reporting Standard
 Introduction
What are Global Cement’s emissions?

Principles
Approach Emissions (metric tons CO2/yr)
Equity share 13,500

Organizational
Boundaries
Financial control 16,000
Operational control 11,000

Operational
Boundaries
Global Cement, Inc.

over time
Tracking
PhilCemen Cementeros National Cement Co.

Calculating
10,000 Mt CO2e/yr 5,000 Mt CO2e/yr 1,000 Mt CO2e/yr

Emissions
50% of Cementeros is
owned by another
organization
Global Cement has that controls all of Global Cement has

100% equity share,
financial control and
operational control
Cementeros’ operations?
(Global Cement, Inc. has
financial control over
Cementeros)
Reporting
100% equity share,
financial control and
operational control

Review
A Corporate Accounting and Reporting Standard
 Introduction
Accounting Categories

Principles
Consult the Corporate Standard to account for emissions from

Organizational
Boundaries
• Leased assets

Operational
Boundaries
• More complex operating structures:
– Group companies/subsidiaries

over time
Tracking
– Associated/affiliated companies

– Non-incorporated joint ventures / partnerships / operations w/ joint financial

Calculating
Emissions
control
– Fixed asset investments

Reporting
– Franchises

Review
A Corporate Accounting and Reporting Standard
 Introduction
Organizational boundaries and double-counting

Principles
Organizational
Boundaries
• Apply selected approach across entire company

Operational
Boundaries
• Joint owners should coordinate consolidation approach
– Using different consolidation approaches can lead to double- or under-

over time
Tracking
counting emissions

• Joint venture companies can draw up contracts to specify emissions

Calculating
Emissions
ownership

Reporting
Review
A Corporate Accounting and Reporting Standard
 Introduction
Selecting a consolidation approach

Principles
• What to consider when choosing consolidation approach:

Organizational
Boundaries
– Commercial reality

Operational
Boundaries
– Influence over emissions
– Program and regulatory requirements

over time
Tracking
– Liability and risk management
– Financial accounting

Calculating
Emissions
– Management information and performance tracking
– Administrative costs and data access

Reporting
– Completeness of reporting

Review
A Corporate Accounting and Reporting Standard
 Introduction
Summary

Principles
• Organizational boundaries determine which parts of the company are

Organizational
Boundaries
included in the inventory, and at what percentage

Operational
Boundaries
• Organizational boundaries can be based on equity share and/or
control consolidation approach

over time
Tracking
• Total emissions accounted can vary significantly depending on
consolidation approach

Calculating
Emissions
• Companies can use both approaches to get a more thorough
assessment of their emissions

Reporting
Review
A Corporate Accounting and Reporting Standard
 Introduction
Further Reading

Principles
Organizational
Boundaries
The Greenhouse Gas Protocol: A Corporate Accounting
& Reporting Standard
Chapter 3: Setting Organizational Boundaries

Operational
Boundaries
Hot Climate, Cool Commerce: A Service Sector Guide to
Greenhouse Gas Management

over time
Tracking
Part I, Step 2: Establishing Boundaries

Calculating
Emissions
ISO 14064-1
Section 4.1: Organizational Boundaries

Reporting
Review
A Corporate Accounting and Reporting Standard