Setting an emission assessment boundary

When you measure your business’s carbon footprint, the first step is setting an emissions boundary.

An emissions boundary is simply a line that shows which parts of your business you’ll include in your emissions assessment, and which (if any) are left out. This makes sure everyone is clear on what’s counted, so results are consistent, fair, and comparable over time.

The GHG Protocol (the global standard for carbon accounting) provides guidance on how to set these boundaries. Following its approach makes your reporting credible and aligned with international best practice.

Why boundaries matter

• They define what’s included in your footprint.

• They prevent double-counting or missing big sources of emissions.

• They allow results to be compared year on year.

• They give businesses, accountants, and stakeholders confidence that the numbers are accurate.

For small businesses, boundaries are usually straightforward. Most of the time, your boundary is just your whole business — all your processes and activities.

For larger businesses or groups with multiple entities, the boundary process helps confirm which entities and operations are included, and whether anything should be excluded for a valid reason.

Two types of boundaries

The GHG Protocol requires companies to set both an Organisational Boundary and an Operational Boundary.

Figure 2 below, from page 25 of the Corporate Standard demonstrates the split:

1. Organisational Boundary

This defines which companies, subsidiaries, or operations are included in your footprint. There are three approaches:

• Equity Share Approach – You include emissions in proportion to your ownership stake.

  • Example: If Company A has a 75% controlling stake in Company X and Company B has a 25% minority stake in Company X, then:
    • Company A will report 75% of the GHG emissions from Company X.
    • Company B will report 25% of the GHG emissions from Company X.

• Financial Control Approach – If you control the finances of an entity, you include 100% of its emissions.

  • Example: If Company A has financial control over Company B (meaning Company A can direct Company B’s operating policies and benefit from its operations), then:
    • Company A will report 100% of the GHG emissions from Company B.

• Operational Control Approach – If you control day-to-day operations, you include 100% of its emissions.

  • Example: If Company A has operational control over Company B (meaning Company A can implement and manage Company B’s operating policies), then:
    • Company A will report 100% of the GHG emissions from Company B.

➡️ Note for small business owners: If you’re a standalone business (no subsidiaries or joint ventures), your organisational boundary usually just equals your entire business.

2. Operational Boundary

This defines which emissions you’ll measure within your organisational boundary. It classifies them into:

• Scope 1: Direct emissions from things your business owns or controls (e.g. company cars, onsite fuel use).

• Scope 2: Indirect emissions from purchased electricity or energy.

• Scope 3: Other indirect emissions from your value chain (e.g. suppliers, employee travel, use of products).

Some businesses choose to start with Scope 1 and Scope 2, then expand into Scope 3 as they grow their reporting.

Checklist: Reviewing and Setting Emissions Boundaries

When preparing your GHG Inventory Report, follow these steps:

✅ Step 1: Review your business structure

• Do you have multiple entities, subsidiaries, or joint ventures?

• Are you a single business with no subsidiaries? (If yes, your whole business is usually included.)

✅ Step 2: Decide your organisational boundary approach

• Equity share, financial control, or operational control?

• Document why you chose this approach.

✅ Step 3: Identify what’s included and excluded

• List operations, facilities, and assets included.

• Note anything excluded and explain why.

✅ Step 4: Set your operational boundary

• Decide which Scopes (1, 2, 3) you’ll include.

• Be consistent year to year.

✅ Step 5: Check for completeness and clarity

• Would someone outside your business understand what’s included?

• Does your chosen approach align with the GHG Protocol?

Tools & Resources

📑 Sumday provides an Emissions Boundary Assessment Template in the Workpaper Templates section of the Sumday Academy Resources library.

📘 To learn more, see Chapter 3 of the Introduction to Carbon Accounting course in the Sumday Academy.