> For the complete documentation index, see [llms.txt](https://kb.bravegen.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://kb.bravegen.com/carbon/configuration/reporting-settings/reporting-boundaries.md). # Reporting Boundaries Selecting a GHG Protocol reporting boundary. Your reporting boundary determines which entities, assets, and operations belong in your emissions inventory and how they should be classified. BraveGen Carbon uses the GHG Protocol consolidation approaches. Your selected approach should be applied consistently across your entire organisation and reporting. *** ### Setting your reporting boundary The GHG Protocol uses two boundaries: 1. **Organisational boundary** — determines included entities, assets, and operations. 2. **Operational boundary** — classifies emissions as Scope 1, Scope 2, or Scope 3. Choose one organisational boundary approach to apply across all operations. Your approach determines: * Which operations belong to the reporting entity. * Whether an operation’s emissions fall within Scope 1 and Scope 2, or Scope 3. Scope 3 covers value-chain emissions outside the organisational boundary. {% hint style="info" %} This decision is made outside the BraveGen software, and should be documented as part of setting your consolidation approach below. {% endhint %} *** ### What the New Zealand Climate Standards require If you report under the New Zealand Climate-Related Disclosures (CRD) regime as a climate reporting entity, three requirements shape this decision: * **Report for the same entity as your financial statements.** Where you prepare financial statements, your GHG emissions must be reported for that same reporting entity. Your entity hierarchy in BraveGen should reflect that group — see [Reporting Entities](/carbon/core-concepts/reporting-entities.md). * **No particular approach is mandated.** Equity share, financial control, and operational control are all acceptable. The choice is yours to make and justify. * **Disclose the approach you used.** NZ CS 1 *Climate-related Disclosures* paragraph 24 and NZ CS 3 *General Requirements for Climate-related Disclosures* paragraph 21 require the consolidation approach to be disclosed. {% hint style="info" %} Reporting for the same entity is not the same as consolidating the same way. Your climate consolidation approach does not have to match the consolidation basis used in your financial statements — you can use operational control for GHG emissions while your financial statements consolidate on a different basis. What must match is the reporting entity itself. {% endhint %} The XRB's staff guidance [GHG consolidation approaches](https://www.xrb.govt.nz/dmsdocument/5564/) sets out these requirements in full, including an appendix decision process for clarifying your organisational boundary. It is guidance rather than a standard, so treat it as an aid to your own judgement and professional advice. *** ### Choose a consolidation approach All three approaches are acceptable, but uptake is uneven. The XRB's July 2025 staff guidance records that approximately 68% of companies worldwide use operational control, 23% use financial control, and 2% use equity share. #### 1. Operational Control Approach Include 100% of each operation under your operational control. Operational control generally exists when your organisation, or one of its subsidiaries: * Has full authority to introduce and implement operating policies at the operation * Controls day-to-day operations * Sets operating and health & safety policies * Is responsible for how activities are carried out Because the definition extends to subsidiaries, subsidiaries are included when using the operational control approach. Use this approach for operated infrastructure, property, campuses, and managed assets. At roughly 68% uptake it is the most widely used of the three approaches. Operations you do not have operational control over sit outside your organisational boundary. Account for relevant emissions in Scope 3. {% hint style="warning" %} Operational Control Approach is required for NGERS reporting {% endhint %} *** #### 2. Financial Control Approach Include 100% of each operation under your financial control. Financial control generally exists when your organisation: * Can direct the financial and operating policies of the operation with a view to gaining economic benefits from its activities * Bears the financial risks and rewards of the operation Ownership alone does not establish financial control. Assess control explicitly for each operation. Around 23% of companies report on this basis. Operations you do not have financial control over sit outside your organisational boundary. Account for relevant emissions in Scope 3. *** #### 3. Equity Share Approach Include each operation according to your equity ownership percentage. Financial and operational control do not determine inclusion. Your equity share applies to Scope 1, Scope 2, and Scope 3 emissions alike. If you hold 40% of an operation, you report 40% of its Scope 1, Scope 2, and Scope 3 emissions. Use this approach where ownership reflects economic risk, such as joint ventures and investment structures. At around 2% uptake it is by far the least used of the three approaches, so expect closer audit scrutiny of your rationale. *** #### Leased assets and complex structures The financial control and operational control approaches can produce different answers for the same asset. Where a wholly owned operation gives the same result under all three approaches, the approaches diverge when: * You lease assets in or out. Whether a leased asset falls inside your boundary depends on the lease type and on which control approach you have chosen. A building you occupy under an operating lease but do not control financially is treated differently under each approach. * Ownership or operatorship is split — incorporated and unincorporated joint ventures, investments, and operating arrangements where control and equity do not line up. Assess these case by case before recording control percentages, and document the reasoning. The GHG Protocol Corporate Standard chapters 3 and 4 and the GHG Protocol FAQ *How do I account for emissions from a leased asset?* cover the detail. *** ### Applying Consolidation Approach in BraveGen Only Administrators can set the consolidation approach. See [User Roles](/carbon/configuration/user-management/user-roles.md). Go to **Settings → Carbon Configuration → Reporting** and select the edit icon beside **Reporting Boundary**. | Field | Description | | ----------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | | Consolidation Approach | The approach that determines which facilities and operations are included in your GHG inventory. Select one of the three options below. | | Rationale for selection | Why you selected this approach. Minimum 40 characters. Disclosed in your audit trail. | The dialog summarises each approach as you select it: * **Operational Control** — you report 100% of emissions from entities you control, for example where you direct operating policies. Most common; required for NGERS reporting. * **Financial Control** — you report 100% of emissions from entities you financially control, for example where you direct financial policies and bear the majority of risks and rewards. Aligns with financial statements. * **Equity Share** — you report emissions proportional to your ownership stake. Suits joint ventures, minority stakes, and complex ownership structures. Select **Save Changes** to apply the approach, or **Cancel** to discard it. {% hint style="warning" %} Changing the consolidation approach requires base year recalculation and disclosure of the change. Include this in the rationale before you save. {% endhint %} Control or Equity Share % can be set on each reporting entity, and will apply to all reported total emissions at that entity or its children. See [Entity Details](/carbon/core-concepts/reporting-entities/managing-entities/entity-details.md). #### Write the rationale The rationale is a disclosure included in your [audit trail snapshots](/carbon/audit-trail/snapshots.md), and it satisfies the disclosure requirement described above. Write it for an external auditor or verifier. Cover: * Which approach you selected, and why it fits your ownership and control structure. * How the approach was applied to joint ventures, leased assets, and any operation where control and equity diverge. * Where you are changing approach, what prompted the change and how comparability is preserved. #### Activity Log Every change to the consolidation approach is recorded in the **Activity Log** on the dialog, with the user, the timestamp, and the rationale supplied at the time. Users can reply to an entry to add context, and pin an entry to keep it at the top. The boundary is the setting that determines what is in your inventory at all, so it attracts the closest audit attention of anything on this screen. Keep the reasoning in the log where a reviewer can see it beside the value. *** ### Classify emissions after consolidation After setting the organisational boundary: * Classify emissions from included operations as Scope 1 or Scope 2. * Classify emissions from upstream or downstream operations as Scope 3. Changing your approach can move an operation’s emissions between Scope 1 and Scope 2, and Scope 3. Your consolidation approach does not remove Scope 3 reporting requirements. See [Scope 3](/carbon/configuration/reporting-frameworks/ghg-protocol/scopes-and-categories/scope-3.md). *** ### Changing Consolidation Approaches You can choose to change your consolidation approach, however this is not usually recommended once reporting has started. If you update your consolidation approach in BraveGen this will trigger a recalculation of your base year, and will require you to update your inventory classification, and Entity Control / Equity % accordingly. Check the change against your [Base Year Recalculation Policy](/carbon/configuration/reporting-settings/base-year/base-year-recalculation-policy.md) before you make it. *** ### Frequently asked questions
Can I report under a control approach and still have some assets reported as Scope 3? Yes. Under a control approach, operations you do not control sit outside your organisational boundary. Account for relevant emissions in Scope 3.
Does ownership below 50% automatically mean no control? No. Assess financial and operational control independently. An ownership interest below 50% can still provide operational control.
Does my consolidation approach have to match how we consolidate for financial reporting? No. Consistency between climate reporting and financial reporting consolidation methods is not required. You can apply operational control for GHG emissions while your financial statements consolidate on a different basis. What does need to align is the reporting entity: where you prepare financial statements, report GHG emissions for that same entity.
If I have an equity interest but no control, how are emissions treated? Under a control-based approach, account for relevant emissions in Scope 3. This may include Scope 3 Category 15, Investments. The applicable Scope 3 category determines the calculation method. Do not automatically include an entity’s full Scope 1, Scope 2, and Scope 3 inventory.
If I choose the equity share approach and own 100% of an entity, how are emissions reported? The entity is fully within your organisational boundary. Its Scope 1 and Scope 2 emissions are your Scope 1 and Scope 2. Its value-chain emissions are your Scope 3.
Under equity share, does my equity % apply to Scope 3 as well? Yes. Under the equity share approach you report your equity share of Scope 1, Scope 2, and Scope 3 emissions for that operation or business arrangement — not the full amount, and not only the Scope 1 and Scope 2 portion.
How are leased assets treated? It depends on the lease and on your chosen approach — financial control and operational control can give different answers for the same asset. Assess each lease individually rather than applying a blanket rule, and record the reasoning alongside the control percentage on the entity. See Leased assets and complex structures above.
Can different assets have different control outcomes? Yes. Keep the selected approach consistent. Control outcomes can vary between assets and entities.
Why does BraveGen Carbon still ask for equity share if I’m using a control approach? Equity share supports Scope 3 treatment, including investments. It also supports category-specific calculations and audit review.
What are common audit issues related to organisational boundaries? Auditors check that you: * Use one consolidation approach. * Disclose which approach you used, with rationale. * Report emissions for the same entity as your financial statements, where you prepare them. * Report Scope 1 and Scope 2 only for included operations. * Account for relevant external emissions in Scope 3. * Apply the approach consistently each year.
*** ### Configure your reporting boundary When setting up your organisation, you: * Select one organisational boundary approach. * Record equity ownership percentages. * Indicate financial and operational control. These inputs determine each operation’s boundary treatment. They also support validation and audit review. *** ### Key points * Choose one organisational boundary approach. * Apply it consistently across all operations. * Set the boundary before classifying emissions. * Where you prepare financial statements, report for the same entity. * Disclose the approach you used, with your rationale. * Include relevant Scope 3 value-chain emissions.