Each emission in your inventory goes in exactly one place: Scope 1, Scope 2, or one of the 15 Scope 3 categories. Your boundary decides which one.

How do you tell Scope 1, 2 and 3 apart?

Ask where the emission is released, and whose source releases it.

Scope	Test	Bluegum examples, FY26
Scope 1 (direct)	Released from a source inside your Scope 1 and 2 boundary: fuel burned, process emissions, refrigerant leaks	Diesel in the 8 owned trucks. Gas in the Summit Packs boilers. Refrigerant leaks at the Geelong factory
Scope 2 (indirect)	Released when someone else generates the electricity, steam, heat or cooling that you buy and use inside that boundary	Electricity at the owned Dandenong distribution centre and the Geelong factory
Scope 3 (indirect)	All other emissions in your value chain	Making the stock Bluegum buys (Category 1). Electricity at the leased stores and fuel in the leased utes (Category 8)

Why is the same electricity Scope 2 at one site and Scope 3 at another?

Scope 2 counts only electricity used inside your Scope 1 and 2 boundary. Bluegum pays the electricity bills at its distribution centre and at its 6 stores. It owns the distribution centre, so that electricity is Scope 2. The stores are on operating leases, so under financial control their electricity goes in Category 8.

The scope follows the boundary, not the bill. See Leased premises, vehicles and equipment.

What are the 15 Scope 3 categories?

This follows the Scope 3 Technical Guidance (2013), Table I. The GHG Protocol requires the minimum boundary. The extras are optional.

#	Category	What it covers	Minimum boundary	Optional extras
1	Purchased goods and services	Making the goods and services you buy, unless Categories 2 to 8 cover them	Cradle-to-gate emissions	None
2	Capital goods	Making the capital goods you buy	Cradle-to-gate emissions	None
3	Fuel- and energy-related activities	Producing the fuel and energy you use, and transmission and distribution losses	Upstream emissions of fuel and electricity, and the losses	None
4	Upstream transportation and distribution	Transport and storage of goods you buy, and any transport you pay for	Carriers' and warehouses' Scope 1 and 2	Making the vehicles, facilities and infrastructure
5	Waste generated in operations	Disposal and treatment of your waste by others	Waste companies' Scope 1 and 2	Transport of the waste
6	Business travel	Staff travel for work in vehicles you do not own or operate	Carriers' Scope 1 and 2	Making the vehicles and infrastructure
7	Employee commuting	Staff travel between home and work	Scope 1 and 2 of employees and transport providers	Teleworking
8	Upstream leased assets	Assets you lease in that are not in your Scope 1 and 2	The assets' Scope 1 and 2 while you use them	Making or building the assets
9	Downstream transportation and distribution	Transport and storage of sold products that you do not pay for, including retail	Carriers' and retailers' Scope 1 and 2	Making the vehicles, facilities and infrastructure
10	Processing of sold products	Processing by others of intermediate products you sell	Processors' Scope 1 and 2	None
11	Use of sold products	Customers' use of what you sell	Direct use-phase emissions over the product's life	Indirect use-phase emissions
12	End-of-life treatment of sold products	Disposal of what you sell at the end of its life	Waste companies' Scope 1 and 2	None
13	Downstream leased assets	Assets you own and lease out that are not in your Scope 1 and 2	Lessees' Scope 1 and 2 from operating them	Making or building the assets
14	Franchises	Franchisees' operations, reported by the franchisor	Franchisees' Scope 1 and 2	Making or building the franchises
15	Investments	Operations of companies and projects you invest in that are not in your Scope 1 and 2	Investees' Scope 1 and 2 at your share	Depends on the investment type (Table 15.1)

What is the difference between upstream and downstream?

Categories 1 to 8 are upstream: the goods and services you buy, and assets you lease in. Categories 9 to 15 are downstream: the goods and services you sell, assets you lease out, franchises and investments.

Transport has one rule: if you pay for it, it goes in Category 4. This includes delivery of sold products to your customers. Category 9 is only transport after the sale that you do not pay for. Bluegum pays a carrier to deliver orders to its retail customers, so that freight is Category 4. When customers collect stock with their own trucks, that transport is Category 9.

Where do employee cars, losses, assets and rent go?

Item	Where it goes
Employees' own cars used for work, and rental cars	Category 6
Transmission and distribution losses	Category 3, not Scope 2
An asset you buy	Category 2 if your capitalisation policy capitalises it. Otherwise Category 1. Never both
Rent and lease payments	Not an emission. Count the energy, fuel and refrigerant used in the leased asset instead
Carbon dioxide from burning biomass	Reported separately, outside the scopes (Corporate Standard)

For more edge cases, see Scope 1 and 2 edge cases: vehicles, contractors and electricity losses.

What happens to the optional extras under AASB S2?

Include an optional extra if it is material. If it is not, record your estimate and the reason. See What changes when you report under AASB S2 and Test which Scope 3 categories are relevant.

What this means in Avarni

Every emission entry carries a Scope & GHG Category. Use it to filter and group in the Emissions Hub.
For general ledger data, the GHG Category on the account in Chart of Accounts, or on a classification rule, decides where each entry goes. Set accounts that hold no emissions, such as rent and lease payments, to Excluded. For uploaded activity data, the Method sets it. See Build and edit a Method.
To move entries that landed in the wrong category, filter them in the Emissions Hub, then use Bulk Edit to change Scope & GHG Category. Do not use it to switch entries between Location based and Market based. See Market-based Scope 2: LGCs, GreenPower and on-site solar.

Scope 1, 2 and 3: what goes where