Your reporting boundary decides which emissions are yours to report, and where each one goes. It answers two questions, in this order:
Which entities are in your report, and at what share? This is your organisational boundary.
Inside those entities, which emission sources do you count, and in which scope or Scope 3 category? This is your operational boundary.
The GHG Protocol Corporate Standard (2004) calls the two together your inventory boundary.
What decides each part of the boundary?
Part | Question | What decides it | What you record |
Organisational boundary | Which entities, at what share? | Your consolidation approach, and how your accounts treat each investee | An entity list with the treatment of each entity |
Operational boundary | Which sources, in which scope or category? | Who owns or controls each site, asset and lease, and which Scope 3 categories are relevant | A site and asset list, a lease list and a Scope 3 relevance table |
Set the organisational boundary first.
What does a boundary look like for a real group?
Bluegum Group Holdings Ltd reports under AASB S2 for FY26 (1 July 2025 to 30 June 2026). It uses financial control. FY26 is Bluegum's second AASB S2 year. In FY25, its first year, Bluegum used the C4(b) relief and did not disclose Scope 3. It still measured Scope 3 for its own use, so its FY25 Scope 3 was never assured.
Entity or arrangement | How the accounts treat it | Where its emissions go |
Bluegum Outdoor Supply Pty Ltd | Subsidiary, 100% | Scope 1 and 2 for the owned Dandenong distribution centre and the 8 owned trucks. Scope 3 Category 8 for the leased head office, the 6 leased stores and the 12 leased utes |
Summit Packs Pty Ltd | Subsidiary, 70% | 100% of the Geelong factory in Scope 1 and 2 |
Trailhead Rentals Pty Ltd | Subsidiary, 100%, acquired 1 March 2026 | Scope 1 and 2 from 1 March 2026, including the fleet it owns and hires out |
Coastline Kayaks Pty Ltd | Joint venture, 50%, equity-accounted, under joint control | 50% of its Scope 1 and 2 goes in Bluegum's Scope 1 and 2, because Bluegum and its partner control it jointly. It is on the other investees line of AASB S2 paragraph 29(a)(iv) |
Ridgeline Supply Co | Associate, 25%, equity-accounted, significant influence without joint control | Not in Scope 1 and 2. 25% of its Scope 1 and 2 goes in Scope 3 Category 15 |
Basecamp franchise stores | Franchise, no equity | Not in Scope 1 and 2. The 4 stores' Scope 1 and 2 goes in Category 14 |
Bluegum NZ Ltd | Subsidiary, 100%, dormant | In the group with nil emissions, because it has no sites and no staff |
Brisbane 3PL warehouse | Service contract | Not a Bluegum site, so not in Scope 1 and 2. The storage service Bluegum buys goes in Category 4 |
Listed shares, 0.05% | Investment at fair value | Category 15 at 0.05% of the company's Scope 1 and 2, which is 9 tCO2e. Bluegum leaves it out under its disclosed 1% equity threshold, and records why it is not material under AASB S2 |
The leased stores show why the order matters. Bluegum pays the electricity at all 6 stores. Under financial control, stores on operating leases are Category 8, so that electricity is not Scope 2. Under operational control it is Scope 2. See Leased premises, vehicles and equipment.
Why do you set the boundary before you collect data?
Every later step takes its scope from the boundary.
Data requests. The boundary tells you which data to ask for, and from whom. Bluegum asks for energy invoices for its owned sites and its stores, and floor areas for the head office. It asks its joint venture and its associate for their Scope 1 and 2.
Chart of accounts. Each general ledger account maps to a scope or category. Bluegum's fuel account holds diesel for the owned trucks and fuel for the leased utes. The truck fuel is Scope 1. The ute fuel is Category 8. You cannot map the account until the boundary says so.
Completeness checks. A completeness check compares the data you have against the sites and months you expect. The boundary sets that list. A site that is missing from the boundary is never flagged as missing data. So check the boundary itself against your records. Check the entity list against the financial statements, including entities sold during the year. Check sites against the fixed asset register, leases against the lease register and vehicles against the fleet register.
Assurance. Your auditor tests the boundary itself, against your financial statements and the standard. Then your auditor tests completeness against it. A boundary that is not written down cannot be tested.
If you collect data first, you collect data for sources that are out, and you miss sources that are in.
The boundary must be exact enough to put each source in one scope or category. Mark any open decision as open, with a default treatment.
When do you review the boundary?
Review it:
at the start of each reporting year, before data collection
when the group buys, sells, opens or closes an entity or a site
when an ownership percentage changes, or a joint arrangement starts or ends
when you sign, end or change a lease
when you start a new activity, such as hiring out equipment.
Record each change with its date and the reason. Bluegum's acquisition of Trailhead Rentals on 1 March 2026 is a boundary change. It adds 4 months of Trailhead's emissions to FY26. It can also make Bluegum recalculate its FY25 base year. See Buying, selling or closing part of the business and Set a base year and recalculate it.
Who decides the boundary?
Finance and sustainability decide it together. Finance holds the entity list, ownership percentages and lease register. Sustainability knows the sites and sources. Write each decision and its reason in a boundary document. See What goes in your boundary document.
What this means in Avarni
Organisation › Entities holds your organisational boundary. Add each entity on your entity list with its Type, Ownership % and Registered / acquired at date. Set Disposed at when control ends.
Organisation › Facilities holds your sites. Set Opened / registered, and set the Closed date when a site closes. The Completeness screen uses these dates to decide which days each facility needs data for.
There is no operational control field in Avarni. Record each control decision in your boundary document.
In Chart of Accounts, give each account the GHG Category that your boundary decides. Where one account holds two scopes, such as Bluegum's fuel account, split it with a classification rule. See Build classification rules and set their order.