Your consolidation approach decides which emissions in your group are yours, and at what share. The GHG Protocol Corporate Standard (2004, chapter 3) allows three approaches. It does not recommend one of them.
What does each approach ask?
Approach | The test | What goes in your Scope 1 and 2 |
Equity share | What share of the economic interest do you hold? | Your share of each operation, including joint ventures and associates |
Financial control | Do your accounts consolidate it? | 100% of each consolidated entity, and your equity share of each joint arrangement under joint control, whether a joint operation or a joint venture |
Operational control | Do you, or a subsidiary, have full authority to introduce and implement its operating policies? | 100% of each operation you run, whatever you own |
What does each approach count for Bluegum?
FY26 (1 July 2025 to 30 June 2026), in tCO2e. The second column is 100% of each item's emissions. The other columns show how much goes into Bluegum's inventory, and where.
Part of the group | Emissions at 100% | Equity share | Financial control | Operational control |
Outdoor Supply: owned distribution centre and 8 owned trucks | 1,600 | Scope 1 and 2: 1,600 | Scope 1 and 2: 1,600 | Scope 1 and 2: 1,600 |
Outdoor Supply: head office, 6 stores and 12 utes, all on operating leases | 330 | Category 8: 330 | Category 8: 330 | Scope 1 and 2: 315. Category 8: 15 |
Summit Packs (70% subsidiary) | 1,830 | Scope 1 and 2: 1,281 | Scope 1 and 2: 1,830 | Scope 1 and 2: 1,830 |
Trailhead Rentals (from 1 March 2026) | 115 | Scope 1 and 2: 115 | Scope 1 and 2: 115 | Scope 1 and 2: 115 |
Coastline Kayaks (50% joint venture under joint control, equity-accounted) | 600 | Scope 1 and 2: 300 | Scope 1 and 2: 300 | Category 15: 300 |
Ridgeline Supply Co (25% associate) | 1,200 | Scope 1 and 2: 300 | Category 15: 300 | Category 15: 300 |
Basecamp franchise stores (4, no equity) | 160 | Category 14: 160 | Category 14: 160 | Category 14: 160 |
3PL warehouse in Brisbane (service contract) | 90 | Category 4: 90 | Category 4: 90 | Category 4: 90 |
Bluegum NZ Ltd (dormant) | 0 | 0 | 0 | 0 |
Scope 1 and 2 | 3,596 | 3,845 | 3,860 | |
Scope 3 from these items | 580 | 880 | 865 | |
Total | 4,176 | 4,725 | 4,725 |
Trailhead Rentals joined on 1 March 2026, so its row covers 4 months. In this example, its trailers and kayaks use no fuel or energy while on hire. The 0.05% listed shareholding (9 tCO2e) is not in the table: Bluegum leaves it out of Category 15 under its disclosed 1% equity threshold. Bluegum's other Scope 3 categories are not in this table.
How do the numbers add up?
Scope 1 and 2:
Equity share: 1,600 + 1,281 (1,830 × 70%) + 115 + 300 (600 × 50%) + 300 (1,200 × 25%) = 3,596.
Financial control: 1,600 + 1,830 + 115 + 300 (600 × 50%) = 3,845.
Operational control: 1,600 + 315 + 1,830 + 115 = 3,860.
Scope 3 from these items:
Equity share: 330 + 160 + 90 = 580.
Financial control: 330 + 300 + 160 + 90 = 880.
Operational control: 15 + 300 + 300 + 160 + 90 = 865.
Four things move:
Leased-in assets (330): Category 8 under equity share and financial control. Under operational control, 315 moves to Scope 1 and 2. The landlord's base building share of the head office (15) stays in Category 8. See Leased premises, vehicles and equipment.
The joint venture (300 at Bluegum's share): Scope 1 and 2 under equity share and financial control, because Bluegum shares joint control of it. Under operational control it goes to Category 15, because no partner operates it alone. See Joint ventures, associates, investments and franchises.
The associate (300 at Bluegum's share): Scope 1 and 2 under equity share. Category 15 under both control approaches, because Bluegum has significant influence but no control.
The 30% of Summit Packs that Bluegum does not own (549 = 1,830 × 30%): both control approaches count it. Under equity share it belongs to the other shareholder and is in no part of Bluegum's inventory. So the equity share total is lower: 4,725 minus 4,176 = 549.
The listed shares (no significant influence) and the franchises (no equity, no control) are outside Scope 1 and 2 under every approach (Corporate Standard, Table 1). They go to Category 15 and Category 14.
Which approach do we recommend?
We recommend financial control. It follows your financial statements: the same entities, consolidation and lease classifications that your finance team prepares and your auditor tests. That makes it the simplest approach to understand and to reconcile with your accounts.
Operational control puts leased premises and leased vehicles in your Scope 1 and 2. NGER uses it.
AASB S2 asks you to disclose the reason for your approach, and how it relates to the objective in paragraph 27 (B27(b)). That objective is to help users understand your performance on climate-related risks and opportunities. For financial control, a reason can be that your emissions cover the same entities and assets as your financial statements. Users can then relate your emissions to your financial position and performance.
Discuss your proposed approach and your reasons with your auditor early, so any concerns surface before data collection. The decision, and the documentation behind it, are yours. A later change moves emissions between scopes and changes your data requests.
When does financial control give a result you must handle differently?
Two cases:
You reuse NGER figures under AASB S2. If you reuse your NGER Scope 1 and 2 figures under the AASB S2 jurisdictional relief, that part uses operational control, because NGER does. AASB S2025-1 applies this relief, including NGER GWP values, to periods beginning on or after 1 January 2027. You can apply it earlier, but you must disclose that you have (C1B). See How the NGER, AASB S2 and GHG Protocol boundaries differ.
You lease assets out. Under financial control, assets you lease out on operating leases stay in your Scope 1 and 2. Under operational control, they go to Category 13. For Bluegum, this applies to the Trailhead Rentals hire fleet. See Assets you lease out to others.
Can different parts of the group use different approaches?
No, with one exception. The part of your inventory where you reuse NGER figures under the AASB S2 relief follows NGER's operational control. Otherwise one approach applies to the whole group. It cannot differ by entity, site or emission source.
Bluegum runs its six leased stores day to day, but under financial control their electricity is still Category 8, not Scope 2. Bluegum cannot use operational control for the stores alone.
Use the same approach every year. If you change it, test the change against your recalculation policy. Disclose the change and the reason in your AASB S2 report (29(a)(iii)(3)), and explain its effect on the comparative. See Set a base year and recalculate it.
What this means in Avarni
Avarni has no field for the consolidation approach or for operational control. Record your approach, and the reason for it, in your boundary document. See What goes in your boundary document.
Under financial control, load 100% of the data of a consolidated subsidiary. For Bluegum, load all of Summit Packs' data, not 70% of it.
Avarni holds tenure and lease type on the facility record. Complete them for every leased site.