Your consolidation approach decides which parts of your group appear in your emissions inventory, and which emissions count as yours.

You choose one approach. You apply it to every entity, and you keep it the same from one reporting period to the next.

The Greenhouse Gas Protocol allows three.

Financial control. You count 100% of the emissions from any entity whose financial and operating policies you direct, and from which you gain the economic benefits.

Operational control. You count 100% of the emissions from any entity where you have full authority to introduce and implement operating policies.

Equity share. You count emissions in proportion to your ownership stake in each entity.

We recommend financial control for most Australian reporters.

Financial control aligns your emissions boundary with your financial statements. Your auditor tests both against the same group structure, and your consolidation decisions already exist in your accounts.

It also fits the way Avarni reads your data. Your general ledger already reflects your financial consolidation, so the entities in your inventory match the entities in your ledger.

Operational control fits when your group directs sites it does not own, or owns sites it does not run.

Three cases point to operational control:

If you are deciding between the two, raise it with your auditor before you build the inventory. Changing approach after the data is loaded means rebuilding the boundary.

Name the legal entity that reports, not the brand. The two often differ, and NGER registrations frequently sit with a holding company rather than the operating company.

Check the entity name on your last annual report and your NGER registration before you set up your organisation structure in Avarni.

Your consolidation approach decides how leases are treated, and leases decide which scope an emission falls into.

Under financial control, a finance lease puts the asset on your balance sheet, so its emissions fall in Scope 1 or Scope 2. An operating lease keeps the asset off your balance sheet, so its emissions fall in Scope 3, category 8, upstream leased assets.

If you lease assets out to others, those emissions fall in Scope 3, category 13, downstream leased assets.

Lease classification follows from your consolidation approach. If you change the approach later, you reclassify every lease.

Write down three things in your boundary documentation:

This text goes into your Basis of Preparation.