Organisational boundaries determine which entities, facilities, and operations fall within a company's greenhouse gas (GHG) inventory. They are the first thing defined in any carbon footprint, and they must be set transparently and applied consistently year-on-year.
The GHG Protocol provides three options for setting them: operational control, financial control, and equity share. The choice depends on the company's structure and reporting purpose.
Why it matters
Without clear organisational boundaries, two reports for the same company can show very different total emissions. A group that acquires or divests a subsidiary part-way through a year, runs joint ventures, or operates leased premises will see materially different footprints depending on the consolidation approach chosen. Auditors and procurement reviewers will always check which approach was used and whether it was applied consistently.
A practical example
A consultancy with a head office in London and a 60%-owned subsidiary in Manchester needs to decide whether the subsidiary's emissions count fully, partially, or not at all. Under operational control, if the consultancy directs the subsidiary's operating policies, 100% of the subsidiary's emissions are included. Under equity share, only 60% would be included. Under financial control, it depends on whether the consultancy can direct financial and operating policies.
We define organisational boundaries during the scoping call on every engagement. See how on the methodology page.