Your consolidation approach sets the test for each site and asset. Under financial control, ask who owns it. Under operational control, ask who has the authority to run it.
What is the test under each approach?
Approach | The site or asset is in your Scope 1 and 2 if | This does not decide it |
Financial control | A consolidated entity owns it, or holds it on a finance lease | Who runs it day to day. Where it works. |
Operational control | You, or one of your subsidiaries, have full authority to introduce and implement its operating policies | Who owns it |
Under financial control, equipment you own is yours wherever it works, including on a customer's site.
Leases have their own rules. See Leased premises, vehicles and equipment and Assets you lease out to others.
How do you weigh operational control?
The GHG Protocol test is whether you have full authority to introduce and implement the site's operating policies. Answer each question below for the site and use the answers as evidence for that test. No single answer decides it.
Who holds the energy account and is invoiced on consumption?
Who sets operating policies, such as hours, temperature and equipment use?
Who controls design and maintenance?
Who manages the staff on site?
Whose branding does the site use?
Who has the greatest authority over health and safety policy?
Who has the greatest authority over environmental policy?
Questions 2, 6 and 7 (operating, health and safety and environmental policies) come from NGER's operational control test. Use them, but weigh them against the GHG Protocol test.
For vehicles and mobile plant, ask who operates it, fuels or charges it, maintains it and sets its usage policy.
A safety policy that applies on a site does not decide it alone. The question is who has the greatest authority to introduce and implement it.
Is Bluegum's 3PL warehouse in its Scope 1 and 2?
No, under either approach. A logistics company stores Bluegum's stock in its Brisbane warehouse under a service contract. The warehouse carries Bluegum signage.
Financial control. Bluegum does not own the warehouse and does not lease it. It buys a storage service.
Operational control. The indicators conflict:
Indicator | Points to |
Energy account | Logistics company |
Hours and operating policies | Logistics company |
Design and maintenance | Logistics company |
Staff on site | Logistics company |
Branding | Bluegum |
Health and safety policy | Logistics company, as the employer |
Environmental policy | Logistics company |
Only branding points to Bluegum. The logistics company has full authority to introduce and implement the warehouse's operating policies, so it has operational control.
Where it goes. Scope 3, Category 4 (upstream transportation and distribution). Category 4 includes storage of purchased products in third-party warehouses that you pay for (Scope 3 Technical Guidance, Category 4). Allocate the warehouse's energy by your share of the goods stored:
Warehouse electricity for the year: 450,000 kWh
Bluegum's share of the average volume stored: 25%
450,000 × 0.25 = 112,500 kWh
112,500 kWh × 0.8 kg CO2e/kWh = 90,000 kg = 90 tCO2e in Category 4
Ask the logistics company for both figures. If the contract gave Bluegum exclusive use of an identified space, it could be a lease instead. Then it is Category 8 under financial control.
Are Bluegum's trucks in its Scope 1 when they work at a customer's depot?
Yes, under either approach. Two of Bluegum's eight owned trucks are based all year at a customer's depot in Sydney. Bluegum drivers drive them, Bluegum fuel cards pay for the diesel and Bluegum maintains them.
Financial control: Bluegum owns the trucks. Scope 1.
Operational control: Bluegum operates, fuels and maintains them. Scope 1.
59,250 L of diesel × 2.7 kg CO2e/L = 159,975 kg = 160 tCO2e in Scope 1.
The depot's electricity is the customer's Scope 2. It is outside Bluegum's inventory, because Bluegum does not buy, lease or sell that energy.
If the customer's own staff drove and fuelled the trucks under a hire agreement, Bluegum would be leasing them out. See Assets you lease out to others.
Is a site you run under contract for its owner in your Scope 1 and 2?
Suppose Bluegum ran the gear store at a council-owned caravan park for a management fee, with no rent. The council owns the building and its plant, maintains them and holds the energy accounts. Bluegum staff run the store and set its hours. Bluegum uses its own LPG forklift there.
Financial control. The building is not Bluegum's asset. Its energy and refrigerant are the council's Scope 1 and 2, and outside Bluegum's inventory, because Bluegum does not own, lease, buy or sell them. Bluegum's own forklift stays in its Scope 1:
Forklift: 400 L LPG × 1.6 kg CO2e/L = 640 kg = 0.64 tCO2e in Scope 1
Building: 30,000 kWh × 0.8 kg CO2e/kWh = 24 tCO2e in the council's Scope 2
This is a judgement. Record it in your boundary document and discuss it with your auditor.
Operational control. Weigh the indicators. Read the contract for health and safety and environmental policy. If it gives Bluegum full authority to introduce and implement operating policies at the store, the site is Bluegum's: 24 + 0.64 = 24.64 tCO2e in Scope 1 and 2. If not, the result is the same as under financial control. The Corporate Standard expects the operator of a facility to have operational control in almost every case, so start from the assumption that a site you operate is yours.
AASB S2025-1 (December 2025) lets you measure the part of your entity that NGER covers with NGER methods and NGER GWP values. That part then follows NGER's operational control test, even if you use financial control elsewhere. AASB S2025-1 applies to annual periods beginning on or after 1 January 2027. You can apply it earlier, but you must disclose that you have (C1B). Without it, AASB S2 29(a)(ii) and B24 already let you use a method that NGER requires, and in your first AASB S2 year C4(a) lets you keep the method you used the year before. Disclose the method and why you chose it (B28). If you start using the relief after an earlier AASB S2 year, adjust the comparative (C6).
It is not settled whether the relief can bring in a facility that your group operates but does not consolidate, such as this store. Until you have discussed it with your auditor, use your chosen approach for such a facility and disclose the judgement. See How the NGER, AASB S2 and GHG Protocol boundaries differ.
If Bluegum paid the council to occupy the store, it would be a lease.
Is a site you do not control in Category 8?
Only if you lease it. A site you neither own nor lease is not Category 8. Find its place from what you pay for:
A service there, such as storage or cleaning: Category 1, or Category 4 for transport and storage.
Nothing for its energy: it is outside your inventory, in the owner's Scope 1 and 2.
What this means in Avarni
Avarni has no operational control field. Record the control decision for each site and asset, with the indicators you weighed, in your boundary document. See What goes in your boundary document.
Add each site in your Scope 1 and 2 as a facility under Organisation › Facilities, with its Operating entity.
The facility does not set the scope. The GHG Category on the Method, or on each emission entry, sets it.
To move rows loaded in the wrong scope, select them in the Emissions Hub and use Bulk Edit to change Scope & GHG Category.