Organizational controlEmissions from facilities and vehicles leased by Sertony Ltd Pty (owned assets) are categorized as Scope 1, 2 or 3. This classification depends on the source of emissions, and the approach Sertony Ltd Pty takes to establish its organizational boundary, and which type of ownership arrangement is in place. To date, Sertony has approximately $15 billion AUD of assets under its management. The company’s organizational boundary emissions classified as Scope 1 or 2 are; gas, electricity and diesel, while those outside the company’s organizational boundary are classified under Scope 3 to include travelling expenses.
If Sertony Ltd Pty is using the financial control approach or equity share method to determine its organizational boundary, then owned and leased assets fall within its organizational boundary are considered in financial accounting as wholly owned assets and are inputted categorically on the balance sheet. If the company is employing the operational control approach to determine its organizational boundary, all the leased assets would be considered within a company’s organizational boundary only with the existence of operating lease. Considerations of operating leases are defined for their absence on finance or capital leases terms.
Emissions calculationsScope 1 – Are direct emissions from owned sources or a company controlled, for instance diesel fuel and gas used by the company or employee vehicles. Scope 2 – Entails electricity emissions the company generated from coal fired power stations, and used to power computers, lights, and other appliancesScope 3 – Are other indirect emissions not from direct emission sources and owned by the company, for instance, emanating from supply chain, and business travel on commercial global airlines. Emissions levelsGas emissions=36490GJDiesel emissions=11180kLElectricity consumed=50,009,236kwhScope 1 emissionsAre diesel and gas emissions = 47670 klScope 2 emissionsElectricity consumed=50,009,236kwhScope 3 emissionsAre transport-related activitiesTaxi=$980,000Car allowances= $234,000Air flights=23,456,780 kmRisks associated with scope calculation methodsThere is usually a possibility of double counting emissions owing to mistaken placement in either scope 1, 2 and 3.
The Green House Gases Protocol Corporate Standard was designed to rid off double counting of emissions over a range of companies within scope 1 and 2. For instance, the scope 1 emissions of Sertony Ltd Pty, which could be a generator of electricity, can be mistakenly counted as the scope 2 emissions of company X which is an end-user of electricity.
Sertony Ltd Pty’s scope 1 emissions will not be counted as scope 1 emissions by firm Y, being a partner organization of Sertony Ltd Pty. This happens as long as Sertony Ltd Pty and firm Y regularly employ similar equity share approach or control when combining emissions. Again, scope 2 definition of does not permit double counting of emissions in scope 2, meaning that two separate companies do not mutually count scope 2 emissions from the procurement of the similar electricity.
Averting double counting in scope 2 emissions creates usefulness in accounting levels for Green House Gas trading programs engaged in electricity end users regulation. When employed in outside initiatives such as Green House gas trading, the complexity of the scope 1 and 2 definitions joined with the regular use of either the equity share approach or control for establishing organizational boundaries permits only a single company to demonstrate ownership of scope 1 or scope 2 emissions. Realistically, Sertony Ltd Pty approach Scope 3 in very diverse ways by selecting out a few elements of Scope 3 to comprise their inventory like employee commuting and corporate travel.
Few companies go to the harrows of conducting a comprehensive inventory analysis of Scope 3. Reasons range from challenging and expensive analytically rigorous Scope 3 analysis to undesirable generated results a company may wish not to see.