The core principle for determining organizational boundaries under ISO 14064-1:2018, particularly concerning joint ventures or entities with shared control, is the concept of operational control. An organization has operational control over an entity if it has the full authority to implement its operating policies. This authority is typically demonstrated by the ability to introduce and implement management, health, safety, and environmental policies at the entity. In the scenario presented, while the company holds a significant equity stake and shares in strategic decision-making, the ultimate authority to implement operating policies, including those related to GHG emissions management, rests with the other partner. Therefore, the emissions from this jointly controlled entity would not be considered within the organizational boundary of the reporting company, as operational control is not fully held. This aligns with the standard’s guidance on distinguishing between financial control and operational control for boundary setting. The standard emphasizes that operational control is the primary criterion for inclusion, ensuring that the organization accounts for emissions over which it has the most direct influence and management capability.

The core principle of defining organizational boundaries in ISO 14064-1:2018 revolves around control and equity. An organization must include GHG emissions and removals from all sources that it controls or has a significant equity share in. Control is established if the organization has the full authority to introduce and implement its operating policies at the facility. Equity share, on the other hand, is applied when an organization has the ability to participate in the financial and operating policy decisions of a joint venture or other entity, but does not have control. For Scope 1 emissions, which are direct emissions from sources owned or controlled by the organization, the focus is on these two principles. If a company has a majority stake and operational management authority over a manufacturing plant (control), its Scope 1 emissions from that plant are included. If it has a 40% equity share in a power generation facility but no operational control, it would only include its proportionate share of Scope 1 emissions based on its equity stake, provided it can influence operating policies. The question tests the understanding of how these boundary-setting principles dictate the inclusion of direct emissions, specifically distinguishing between control and equity in the context of Scope 1. The correct approach is to identify the scenario that aligns with the standard’s guidance on both control and equity for direct emissions.

The core principle being tested here is the appropriate treatment of indirect emissions that are not directly controlled by the organization but are a consequence of its activities. ISO 14064-1:2018 categorizes these into Scope 2 (purchased electricity, steam, heating, and cooling) and Scope 3 (all other indirect emissions). For a company that outsources its IT infrastructure to a cloud service provider, the emissions associated with the electricity consumed by that data center fall under Scope 2 if the company has the ability to influence the energy sourcing of the provider (e.g., through contractual agreements or direct purchasing of renewable energy certificates tied to the service). However, if the company has no such influence or direct contractual link to the energy source, these emissions are more appropriately categorized as Scope 3, specifically within the “purchased goods and services” or “outsourced services” categories. The question implies a lack of direct control over the energy sourcing of the cloud provider’s operations. Therefore, classifying these emissions as Scope 3, particularly under the category of purchased services, aligns with the standard’s intent to capture all relevant indirect emissions where direct control is absent. This distinction is crucial for accurate inventory boundary setting and for identifying opportunities for emission reduction beyond direct operational control. The standard emphasizes that the choice between Scope 2 and Scope 3 for outsourced services depends on the degree of influence and control the reporting organization has over the emissions-generating activity. In the absence of direct influence over the cloud provider’s energy procurement, Scope 3 is the more conservative and accurate classification.

The core principle guiding the selection of organizational boundaries for a greenhouse gas (GHG) inventory under ISO 14064-1:2018 is the organizational control approach. This approach dictates that an organization should include emissions from operations over which it has the ability to introduce or implement its GHG emission policies. This control can be either operational or financial. When considering a joint venture where an organization has significant operational influence but not outright financial control, the decision hinges on the degree of control exercised over GHG-emitting activities. If the organization can direct the operational activities and implement GHG emission reduction measures, even without majority financial ownership, those emissions fall within its inventory boundary. Conversely, if its influence is purely advisory or if financial control rests with another entity that dictates operational GHG management, those emissions would typically be excluded. Therefore, the presence of substantial operational control, enabling the implementation of GHG management policies, is the decisive factor for inclusion, irrespective of sole financial ownership. This aligns with the standard’s emphasis on the ability to influence and manage emissions.

The core principle guiding the selection of organizational boundaries for a greenhouse gas (GHG) inventory under ISO 14064-1:2018 is the control approach. This approach dictates that an organization should include GHG emissions and removals from operations over which it has the ability to implement full operational or financial control. This is distinct from an equity share approach, which would include emissions based on the proportion of ownership, or an operational control approach that might be too narrow if financial control is also present. The standard emphasizes that if an organization has the ability to direct the financial and operating policies of another entity, even without majority ownership, it should be included. Conversely, if an organization only has the ability to influence, but not direct, the policies of another entity, that entity’s emissions would not typically be included under the control approach. Therefore, the presence of direct operational management and the authority to implement operational changes are key indicators of control for boundary setting.

The core principle guiding the selection of organizational boundaries in ISO 14064-1:2018 is the control approach, which focuses on the extent to which an organization has the full authority to introduce and implement its operating policies at a particular facility or operation. This approach prioritizes operational control over equity or financial control. When an organization has the ability to implement the full range of environmental management policies at a facility, it is considered to be under its operational control, regardless of ownership percentage or direct financial stake. This ensures that the entity responsible for managing and reducing emissions has the authority to do so. Therefore, a joint venture where the reporting organization has the sole authority to implement environmental policies, even if it holds only 50% equity, falls within its organizational boundary. Conversely, a subsidiary where the reporting organization holds 100% equity but does not have the authority to implement its environmental policies would not be included. The standard emphasizes the practical ability to influence and manage emissions.

The core principle guiding the selection of organizational boundaries in ISO 14064-1:2018 is the control approach, which focuses on the extent to which an organization has the full authority to introduce and implement its operating policies at the facility. This contrasts with the equity share approach, which is based on the proportion of ownership. When considering a joint venture where an organization has operational control but not majority ownership, the control approach dictates that the emissions associated with the joint venture should be included in the organization’s inventory. This is because the organization has the power to implement environmental policies and operational changes within that entity. Therefore, if the joint venture’s emissions are significant and the organization exercises operational control, these emissions fall within the organizational boundary. The question tests the understanding of which boundary approach is primary in ISO 14064-1:2018 and how operational control dictates inclusion, even in the absence of majority equity.

The core principle guiding the selection of organizational boundaries in ISO 14064-1:2018 is the control approach, which focuses on the extent to which an organization has the full authority to introduce and implement its operating policies at the facility. This is distinct from the equity share approach, which is based on the proportion of ownership. When an organization has the ability to implement environmental policies, even if it doesn’t have majority ownership, it exerts significant operational control. This control is the determining factor for including emissions within the organizational boundary. For instance, if a company holds a minority stake in a joint venture but has the sole authority to manage its operations and implement environmental management systems, its emissions from that facility would be included under the control approach. Conversely, if an organization has a majority stake but lacks the authority to dictate operational policies, those emissions might not be included if the other partners have operational control. The standard emphasizes that the control approach is generally preferred due to its direct link to the organization’s ability to influence and manage emissions.

The core principle guiding the selection of organizational boundaries for a greenhouse gas (GHG) inventory under ISO 14064-1:2018 is the control approach. This approach focuses on the extent to which an organization has the full authority to introduce and implement its operating policies at the chosen organizational unit. When an organization has the ability to direct the significant operational activities of another entity, even if it doesn’t have majority ownership, it exerts control. This control is the determining factor for inclusion in the inventory. For instance, if a parent company dictates the operational and environmental policies of a subsidiary, thereby having the power to implement GHG emission reduction measures, that subsidiary falls within the parent’s organizational boundary under the control approach. This is distinct from an equity share approach, which would include emissions based solely on the percentage of ownership, regardless of operational control. The standard emphasizes that the control approach is generally preferred due to its direct link to the organization’s ability to influence and manage emissions. Therefore, the presence of operational policy control is the decisive criterion for boundary setting.

The core principle guiding the selection of organizational boundaries in ISO 14064-1:2018 is the control approach, which focuses on the extent to which an organization has the full authority to introduce and implement its operating policies at the facility. This is distinct from equity shares or financial control, although these can be indicators of operational control. When considering a joint venture where an organization holds a 50% equity share but also has the sole authority to implement operating policies and manage emissions, the control approach dictates that the entire emissions of the joint venture should be included in the organization’s inventory. This is because the organization exercises operational control, regardless of the equal equity stake. The standard emphasizes that control is the decisive factor for inclusion, not just ownership percentage. Therefore, a scenario where an organization has significant operational influence, even if not majority ownership, necessitates the inclusion of those emissions under the control approach. This ensures a comprehensive and accurate representation of the organization’s direct and indirect influence on greenhouse gas emissions.

The core principle guiding the selection of organizational boundaries in ISO 14064-1:2018 is the control approach, which focuses on an organization’s ability to implement greenhouse gas (GHG) related operational and financial control. This means that if an organization has the authority to direct the financial and operating policies of another entity, even if it doesn’t have majority ownership, the GHG emissions associated with that entity are typically included within the reporting organization’s inventory. Conversely, if an organization only has a financial interest (e.g., minority shareholding) without the ability to direct operations, those emissions are generally excluded unless the equity share approach is chosen and the threshold for inclusion is met. The standard emphasizes that control is the primary determinant for inclusion in Scope 1 and Scope 2 emissions, and for Scope 3, it provides flexibility but still hinges on the organization’s influence and ability to manage or impact those emissions. Therefore, an entity where an organization holds significant operational and financial influence, even without majority equity, would fall under its organizational boundary if the control approach is applied.

The core principle guiding the selection of organizational boundaries for a greenhouse gas (GHG) inventory under ISO 14064-1:2018 is the control approach. This approach dictates that an organization should include GHG emissions and removals from operations over which it has the ability to implement full operational and environmental management systems. This implies a degree of influence and decision-making authority. When considering a joint venture where an organization has significant operational control, even if it doesn’t hold a majority equity stake, the control approach mandates its inclusion. The standard emphasizes operational control over financial control for boundary setting. Therefore, if the organization can direct the policies and procedures of the joint venture, its emissions and removals fall within its inventory scope. This ensures a comprehensive and accurate representation of the organization’s GHG performance based on its actual management influence.

The core principle guiding the selection of organizational boundaries for a greenhouse gas (GHG) inventory under ISO 14064-1:2018 is the ability to influence GHG emissions and removals. This influence is typically assessed through two primary approaches: the equity share approach and the control approach. The equity share approach considers an organization’s proportionate share of emissions and removals from joint ventures or subsidiaries where it has significant influence but not outright control. The control approach, on the other hand, focuses on emissions and removals from entities where the organization has the power to implement its operating policies. For a conglomerate like “Aethelred Industries,” which operates diverse subsidiaries and joint ventures across various sectors, determining the most appropriate boundary requires a careful evaluation of these influence and control mechanisms. If Aethelred Industries has the sole authority to implement operating policies in a particular subsidiary, even if it doesn’t own 100% of the equity, the control approach would dictate including 100% of that subsidiary’s emissions. Conversely, if Aethelred has significant influence over a joint venture but cannot unilaterally dictate its operational decisions, the equity share approach would be applied to include only its proportional share of the joint venture’s emissions. The standard emphasizes that the chosen approach should be applied consistently across all entities within the organizational boundary. Therefore, the most appropriate method for Aethelred Industries would be to adopt the control approach for entities where it has operational authority and the equity share approach for joint ventures where it has significant influence but not full control, ensuring a comprehensive and accurate representation of its GHG footprint.

The core principle guiding the selection of organizational boundaries in ISO 14064-1:2018 is the control approach, which focuses on the extent of an organization’s operational control over its GHG-emitting activities. This approach dictates that an organization should include GHG emissions from entities over which it has the ability to implement full operational or financial control. When an organization has significant influence but not outright control, or when it has joint control with other entities, the decision to include emissions hinges on the degree of control exercised. In the scenario described, the subsidiary is majority-owned, implying a high degree of financial control. Furthermore, the parent company dictates operational procedures, management appointments, and strategic direction, which are clear indicators of operational control. Therefore, all GHG emissions from this subsidiary must be included in the parent company’s inventory as per the control approach. This ensures a comprehensive and accurate representation of the organization’s total GHG impact, aligning with the standard’s objective of promoting transparency and accountability in GHG management. The inclusion of emissions from entities where control is exercised is fundamental to establishing a robust and credible GHG inventory.

The core principle guiding the selection of organizational boundaries in ISO 14064-1:2018 is the control approach. This approach dictates that an organization should include GHG emissions and removals from operations over which it has the ability to implement operational or financial controls. This is distinct from an equity share approach, which focuses on ownership percentages, or a significant influence approach, which is more subjective. For a multinational conglomerate like “Aethelred Industries,” which operates numerous subsidiaries with varying degrees of ownership and operational autonomy, the control approach is paramount. If Aethelred Industries has the ability to implement operational or financial controls over a subsidiary, regardless of whether it holds a majority stake or has significant influence, that subsidiary’s emissions fall within its organizational boundary. Conversely, if a joint venture is structured such that Aethelred Industries lacks the authority to implement operational or financial controls, even with a substantial equity share, its emissions would typically be excluded from Aethelred’s direct inventory. Therefore, the decisive factor is the presence and exercise of control, ensuring that the inventory reflects the emissions that the organization can directly manage and influence. This aligns with the standard’s intent to create a robust and actionable GHG inventory.

The core principle being tested here is the definition and application of “Organizational Boundaries” within the ISO 14064-1:2018 standard. The standard provides two primary methods for establishing these boundaries: the equity share approach and the control approach. The control approach, further divided into financial control and operational control, is generally preferred for its direct link to the entity’s decision-making power and its ability to influence GHG emissions. Financial control is established when the organization has the ability to direct the financial and operating policies of an entity so as to obtain benefits from its activities. Operational control is established when the organization has the full capacity to introduce and implement its operating policies at a facility. When an organization has both financial and operational control over a joint venture, it is considered to have control. In the scenario presented, the company, “Aether Dynamics,” holds a majority stake (60%) in “Stellar Innovations,” a joint venture. Crucially, Aether Dynamics also possesses the sole authority to appoint the majority of the board of directors and dictate the operational procedures, including the procurement of raw materials and the management of waste disposal. This dual control, particularly the operational control over key emission-generating activities, firmly places Stellar Innovations within Aether Dynamics’ organizational boundary under the control approach. Therefore, all Scope 1 and Scope 2 emissions from Stellar Innovations must be included in Aether Dynamics’ GHG inventory. The equity share approach would only be relevant if control was not clearly established, in which case emissions would be allocated based on the percentage of ownership. However, the explicit demonstration of operational and significant financial influence through board appointment and policy dictation supersedes the equity share calculation for boundary setting.

The core principle guiding the selection of organizational boundaries in ISO 14064-1:2018 is the control approach. This approach dictates that an organization should include GHG emissions and removals from operations over which it has the ability to implement operational and environmental policies. This control is not necessarily about direct ownership or financial control, but rather the capacity to influence the operational activities and their associated emissions. For instance, a joint venture where an organization holds significant operational decision-making power, even without majority ownership, would fall under its organizational boundary if it can implement GHG management policies. Conversely, a wholly owned subsidiary where operational decisions are entirely dictated by a separate entity, and the organization cannot influence its GHG performance, would not be included. The standard emphasizes that the choice of boundary should be consistent and transparent, allowing for comparability over time and between organizations. The control approach is distinct from the equity share approach, which is based on ownership percentages, and the financial control approach, which focuses on the ability to direct financial and operating policies. The control approach is generally considered the most appropriate for GHG inventory development as it aligns with the entity’s ability to manage and reduce its emissions.

The core principle guiding the selection of organizational boundaries for a greenhouse gas (GHG) inventory under ISO 14064-1:2018 is the “control approach” or the “equity share approach.” The standard emphasizes that an organization should include GHG emissions and removals from sources that it *controls* or has a *significant influence* over. When considering joint ventures or subsidiaries, the decision hinges on the degree of operational control and the ability to implement GHG management practices. If an organization has the ability to implement GHG emission reduction measures within a joint venture, even if it doesn’t have majority ownership, it demonstrates sufficient control to warrant inclusion. Conversely, if the joint venture operates independently with its own management and decision-making authority regarding operational emissions, and the parent organization only has financial influence, then the equity share approach might be more appropriate for the financial stake, but not necessarily for operational control of emissions. The question probes the understanding of this distinction, focusing on the operational aspect of control rather than just financial ownership. Therefore, including emissions from a joint venture where the organization can implement operational GHG management practices aligns with the control approach for inventory development.

The core principle guiding the selection of organizational boundaries in ISO 14064-1:2018 is the control approach, which focuses on the extent to which an organization has the full authority to introduce and implement its operating policies at the facility. This is distinct from an equity share approach, which allocates emissions based on ownership percentages, or an operational control approach that might be too broad or too narrow depending on the specific definition of “operational control.” When an organization has the ability to implement environmental policies, it implies a significant degree of influence over the operational activities and, consequently, the greenhouse gas (GHG) emissions generated. This control is the decisive factor in determining whether a facility’s emissions should be included within the organizational boundary for GHG inventory reporting. Therefore, identifying facilities where the organization can implement its environmental policies is paramount for accurate and compliant inventory development.

The core principle guiding the selection of organizational boundaries for a greenhouse gas (GHG) inventory under ISO 14064-1:2018 is the control approach. This approach focuses on the extent to which an organization has the full authority to introduce and implement its operating policies, including GHG emission decisions. When an organization has a majority ownership (typically over 50%) and operational control, it is generally considered within the organizational boundary. However, the standard emphasizes that even with majority ownership, if operational control is not exercised (e.g., the subsidiary operates independently with its own management and decision-making), it might not be included. Conversely, if an organization has significant influence or operational control over an entity where it holds less than majority ownership, that entity should be included. The question tests the understanding of this nuanced application of the control approach, distinguishing it from solely equity-based inclusion. The scenario describes a situation where an organization holds 60% equity in a subsidiary but does not have the authority to implement its environmental policies, indicating a lack of operational control. Therefore, this subsidiary should not be included in the inventory based on the control principle.

The core principle guiding the boundary setting for a GHG inventory under ISO 14064-1:2018, particularly concerning organizational boundaries, is the concept of “control.” This standard emphasizes that an organization should include GHG emissions and removals from all activities over which it has full operational control. Full operational control means the organization has the ability to implement full operational policies and procedures to manage and influence the GHG emissions and removals of an activity. This is distinct from financial control, which might involve ownership or economic interest but not necessarily the direct management of operational processes. When considering joint ventures or subsidiaries, the decisive factor for inclusion in the organizational boundary is the extent of operational control. If an organization has the authority to direct the activities that generate emissions and removals, even if it doesn’t own the majority stake or bear all the financial risk, those emissions fall within its inventory. Conversely, if an organization only has financial influence or a minority stake without the ability to dictate operational policies, those emissions are typically excluded from its direct inventory. This approach ensures that the inventory reflects the emissions that the organization can directly manage and influence, aligning with the standard’s objective of promoting accountability and effective GHG management.

The core principle guiding the selection of organizational boundaries for a greenhouse gas (GHG) inventory under ISO 14064-1:2018 is the control approach. This approach dictates that an organization should include GHG emissions and removals from operations over which it has operational control. Operational control is defined as the ability to implement full operational management and control over the GHG-emitting activities. This means having the authority to introduce and implement the organization’s operating policies at the facility. For instance, if an organization leases a facility and has the sole authority to dictate the operating procedures, energy usage, and waste management practices, it exercises operational control, and its emissions from that facility should be included. Conversely, if an organization merely rents space and has no influence over the facility’s operational policies or management, it does not have operational control, and its emissions from that space would not typically be included, even if it pays for the energy consumed. The standard emphasizes that the control approach is generally preferred over the equity share approach because it provides a clearer and more direct link to the entity’s management and decision-making power, which is crucial for identifying opportunities for emission reductions. The equity share approach, which includes emissions based on the proportion of ownership, is only permitted if operational control cannot be reasonably applied or if it is the prevailing practice in the industry and the chosen approach is justified. Therefore, the ability to implement operating policies is the decisive factor.

The core principle guiding the selection of organizational boundaries for a greenhouse gas (GHG) inventory under ISO 14064-1:2018 is the control approach. This approach dictates that an organization should include GHG emissions and removals from operations over which it has operational control. Operational control is defined as the ability to implement all or a significant degree of the operational policies and procedures for an activity. This means if an organization can direct the operational activities of another entity, even if it doesn’t own the assets or have full financial control, those emissions fall within its inventory boundary. For instance, a parent company that dictates the production processes, energy usage, and waste management of its subsidiary, even if the subsidiary is a separate legal entity and the parent holds only a majority stake, would typically include the subsidiary’s emissions under the control approach. Conversely, if the parent company only has a financial interest and no ability to influence operational decisions, those emissions would not be included. The standard emphasizes that the control approach is generally preferred over the equity share approach because it more accurately reflects the organization’s direct influence and responsibility for emissions. Therefore, when assessing a joint venture where an organization has the authority to implement operational policies, its emissions are included.

The core principle being tested here is the definition and application of organizational boundaries within ISO 14064-1:2018. Specifically, the standard outlines two primary methods for establishing these boundaries: the equity share approach and the control approach. The equity share approach attributes GHG emissions based on the proportion of ownership or financial interest in an entity. For instance, if an organization holds a 40% equity share in a joint venture, it would account for 40% of that joint venture’s emissions. The control approach, conversely, attributes emissions based on the ability to exercise operational control over an entity’s GHG-emitting activities. This control can be financial or operational. When an organization has the ability to implement operating policies, including GHG emission policies, it is considered to have operational control. Therefore, if an organization can direct the GHG-related operational activities of a subsidiary, even without a majority equity stake, its emissions would be included under the control approach. The question requires identifying the method that aligns with the scenario where an organization dictates the operational policies, including those affecting emissions, of another entity, irrespective of its ownership percentage. This directly corresponds to the control approach.

The core principle guiding the selection of organizational boundaries in ISO 14064-1:2018 is the control approach. This approach focuses on whether an organization has the full authority to introduce and implement its operating policies at a particular facility or operation. If an organization has the ability to implement environmental management systems and controls at a facility, it is considered within its organizational boundary, regardless of ownership percentage. For instance, if a company has a majority stake but limited operational control over a joint venture, that joint venture might not be included. Conversely, a wholly owned subsidiary with significant operational autonomy would be included. The question probes the understanding of this control criterion versus other potential boundary-setting methods like equity share or financial control, which are not the primary determinants under ISO 14064-1 for organizational boundaries. The correct answer reflects the direct application of the control principle as defined in the standard for determining what falls within an organization’s GHG inventory scope.

The core principle guiding the selection of organizational boundaries in ISO 14064-1:2018, particularly when dealing with joint ventures or entities with shared operational control, is the concept of “operational control.” This standard defines operational control as the ability to implement all relevant health, safety and environmental (HSE) policies and procedures, and to have the primary responsibility for the management of GHG emissions. When an organization has operational control over a joint venture, it means they possess the authority to manage its GHG-emitting activities and implement emission reduction strategies. Therefore, the GHG emissions associated with the joint venture would be included in the reporting organization’s inventory. This is distinct from financial control, which is a separate criterion and not the primary determinant for GHG inventory inclusion under this standard. The scenario presented describes a situation where the reporting organization has the authority to direct the activities of the joint venture, including its operational and environmental management, thus satisfying the operational control criterion for inclusion.

The scenario describes an organization that has identified a significant portion of its Scope 1 emissions originating from fugitive emissions from refrigerants within its owned and controlled air conditioning units. ISO 14064-1:2018, specifically in its guidance on inventory boundary setting and emission factor selection, emphasizes the importance of accurately categorizing and quantifying emissions. Fugitive emissions from refrigerants are typically classified under Scope 1 as they are direct emissions from sources owned or controlled by the organization. The standard requires the use of appropriate emission factors, which for refrigerants are often based on the Global Warming Potential (GWP) of the specific refrigerant and the amount of leakage. When an organization chooses to switch to a refrigerant with a lower GWP, the calculation of emissions for the reporting period would involve using the GWP of the new refrigerant for any emissions occurring after the switch. If the organization maintains records of refrigerant top-ups and replacements, the inventory developer can calculate the mass of the refrigerant released. The total CO2 equivalent emissions for this category would be the sum of the mass of each refrigerant released multiplied by its respective GWP. For example, if 10 kg of R-410A (GWP = 2088) and 5 kg of R-134a (GWP = 1430) were released, the total CO2e would be \((10 \text{ kg} \times 2088) + (5 \text{ kg} \times 1430) = 20880 \text{ kg CO2e} + 7150 \text{ kg CO2e} = 28030 \text{ kg CO2e}\). The core principle is to ensure that the inventory accurately reflects the emissions associated with the operational control of the equipment and the properties of the substances used. Therefore, the most appropriate approach for accounting for this change in refrigerant type within the Scope 1 inventory is to ensure the emission factors (GWPs) used in the calculation accurately reflect the specific refrigerants in use during the reporting period, thereby ensuring the inventory’s integrity and comparability.

The core principle of establishing organizational boundaries for a greenhouse gas (GHG) inventory under ISO 14064-1:2018 involves determining which entities and operations fall within the reporting organization’s control or significant influence. The standard outlines two primary methods for defining these boundaries: the equity share approach and the control approach. The control approach is generally preferred as it aligns more closely with the operational reality and decision-making power of the reporting organization. This means that if an organization has the ability to implement operating policies or direct the activities of another entity, that entity’s emissions are typically included. In the given scenario, the reporting organization, “Aether Dynamics,” has a majority stake in “NovaTech Solutions” and also holds the exclusive right to appoint the majority of NovaTech’s board of directors. This latter point signifies a high degree of operational control, allowing Aether Dynamics to implement its operating policies within NovaTech. Therefore, under the control approach, NovaTech Solutions’ direct and indirect GHG emissions would be included in Aether Dynamics’ inventory. The equity share approach, while an alternative, would only consider the proportion of ownership, which might not fully capture the operational reality of influence and decision-making power. Given the explicit control over directorial appointments, the control approach is the most appropriate and comprehensive method for boundary setting in this instance, leading to the inclusion of NovaTech’s emissions.

The core principle guiding the selection of organizational boundaries for a greenhouse gas (GHG) inventory under ISO 14064-1:2018 is the control approach. This approach dictates that an organization should include GHG emissions and removals from operations over which it has operational control. Operational control is defined as the ability to implement full operational management and control over the GHG-emitting activities. This means having the authority to introduce and implement the organization’s operating policies at the facility. For instance, if an organization leases a facility and has the sole authority to dictate the operational procedures, including energy usage and waste management, it exercises operational control. Conversely, if an organization merely rents space and has no say in the facility’s management or operational policies, it does not have operational control. The standard emphasizes that the control approach is generally preferred over the equity share approach because it more accurately reflects the entity that can influence and manage emissions. The equity share approach, which is based on ownership percentage, is only to be used when operational control cannot be reasonably applied or when it is the only practical method for inclusion, and even then, the rationale for its use must be documented. Therefore, when assessing whether to include emissions from a jointly operated logistics hub, the critical determinant is the extent of operational management and policy implementation authority the organization possesses over that hub’s activities, not its ownership stake.

The core principle guiding the selection of organizational boundaries for a greenhouse gas (GHG) inventory under ISO 14064-1:2018 is the control approach. This approach dictates that an organization should include GHG emissions and removals from operations over which it has operational control. Operational control is defined as the ability to implement all or a significant degree of the operational policies and procedures for an activity. This is distinct from financial control, which focuses on the ability to direct the financial and operating policies of an entity. Therefore, when assessing whether to include emissions from a jointly owned facility where the organization has the authority to implement operational policies, the presence of this authority is the decisive factor. If the organization can dictate the operational procedures, including those related to energy use, process emissions, and waste management, then it exercises operational control and must include the associated emissions. Conversely, if its influence is limited to financial contributions or a minority stake without operational decision-making power, those emissions would not typically be included under the control approach. The standard emphasizes that the organization should select the approach (control or equity share) that provides the most relevant and comprehensive inventory, but the control approach is generally preferred for its clarity in defining the organizational boundary.