Determining organizational boundaries for greenhouse gas (GHG) accounting is a critical step in applying the GHG Protocol. Here are the key considerations and steps involved in how to determine organizational boundaries:
Identify operational control: Begin by identifying the entities within your organization that you have operational control over. Operational control refers to the ability to establish and implement policies, make decisions, and allocate resources in order to direct the activities of the entity.
Scope 1, Scope 2, and Scope 3 emissions: GHG emissions are categorized into three scopes under the GHG Protocol. Scope 1 covers direct emissions from sources that are owned or controlled by the organization (e.g., combustion of fossil fuels on-site). Scope 2 includes indirect emissions associated with the consumption of purchased electricity, heat, or steam. Scope 3 covers other indirect emissions that occur from sources not owned or controlled by the organization but are related to its activities (e.g., business travel, transportation of goods).
Determine operational control boundaries: For Scope 1 and Scope 2 emissions, include all entities that fall under the operational control of your organization. This typically includes owned or controlled facilities, such as production plants, offices, and warehouses. Ensure that you include all relevant GHG-emitting sources within these entities.
Scope 3 boundaries: Determining Scope 3 boundaries can be more complex. Start by identifying the significant emission sources within the value chain of your organization's activities. This may involve conducting a materiality assessment to prioritize the most relevant emission sources. Consider the upstream (e.g., purchased goods and services, transportation) and downstream (e.g., use and disposal of products) activities associated with your organization's operations. Boundaries for Scope 3 emissions may include suppliers, contractors, customers, and other stakeholders that are directly influenced by your organization's activities.
Materiality and influence: When defining your organizational boundaries, consider the materiality of emission sources and the influence your organization has over them. Focus on significant emission sources that have a meaningful impact on your organization's carbon footprint. Additionally, consider the extent to which your organization can influence those sources through its activities and decision-making.
Boundary setting criteria: Establish clear criteria for including or excluding entities and emission sources based on factors such as equity share, operational control, or significant influence. Document these criteria to ensure consistency and transparency in boundary setting.
Consistency and comparability: Ensure that your organizational boundaries remain consistent over time to facilitate meaningful year-on-year comparisons of emissions. However, it's important to periodically review and update your boundaries to reflect changes in organizational structure, activities, or other relevant factors.
Reporting and disclosure: Finally, communicate your organizational boundaries clearly in your GHG accounting and reporting documents. Disclose the rationale behind boundary-setting decisions and provide a transparent overview of the emissions covered within each scope.
Remember that determining organizational boundaries for GHG accounting is not a one-size-fits-all approach. It requires careful consideration of your organization's specific circumstances, activities, and goals. Consulting the GHG Protocol's Corporate Accounting and Reporting Standard can provide more detailed guidance and examples for boundary-setting practices.