3.4 Avoiding Double Counting Within a Consolidated GHG Emission Inventory
In a manner similar to the elimination of intercompany transactions in financial
accounting, any intercompany GHG emissions would be eliminated in consolidated GHG
emission reporting. Accordingly, when a company consolidates its GHG emissions, it
would exclude from its Scope 2 and Scope 3 reporting any GHG emissions that a
facility, business unit, or entity within its organizational boundary reported in
Scope 1. This applies regardless of the consolidation approach used.
Example 3-5
Parent P has two wholly owned subsidiaries (Entity B and
Entity C) and applies the operational control approach to
report consolidated GHG emissions. Each subsidiary
calculates its own GHG emissions and prepares a GHG emission
report. Parent P uses the GHG emission report of B and that
of C to prepare a consolidated GHG emission report.
Entity B manufactures widgets, which are intermediate
products, and sells them to both external customers and C.
Entity C uses widgets purchased from B, together with
resources that C developed, as inputs into final products
that it sells to external customers.
GHG emissions related to the activities and products of B and
C are separately reported by B and C as follows:
- Entity B:
- Scope 1 emissions, Scope 2 emissions, or both related to the operation of owned facilities used to manufacture the widgets.
- Scope 3 emissions related to (1) the widgets
that B sold to C and (2) the widgets that B sold
to external customers:
- Category 10 (processing of sold products).
- Category 11 (use of sold products).
- Category 12 (end-of-life treatment of sold products).
- Entity C:
- Scope 1 emissions, Scope 2 emissions, or both related to the processing of final products consisting of (1) widgets purchased from B and (2) resources that C developed.
- Scope 3 emissions:
- Category 1 (purchased goods and services) emissions related to the widgets purchased from B.
- Category 11 (use of sold products) and Category 12 (end-of-life treatment of sold products) emissions related to C’s final products sold to external customers (which consist of widgets purchased from B and resources that C developed).
When P prepares its consolidated GHG emission report, it must
ensure that the same GHG emissions are not reported more
than once within its organizational boundary. Accordingly, P
would not include in its consolidated report:
- Entity B’s Scope 3, Category 10 (processing of sold products), emissions related to the widgets sold to C (since these GHG emissions are included in C’s reporting of Scope 1 emissions, Scope 2 emissions, or both).
- Entity B’s Scope 3, Category 11 (use of sold products), emissions related to the widgets sold to C (those related to the widgets sold to external customers are not eliminated). The Category 11 emissions related to the widgets sold to C are included as a portion of the Category 11 emissions related to the final products sold by C and are reported in the period in which they are generated by C.
- Entity B’s Scope 3, Category 12 (end-of-life treatment of sold products), emissions related to the widgets sold to C (those related to the widgets sold to external customers are not eliminated). The Category 12 emissions related to the widgets sold to C are included as a portion of the Category 12 emissions related to the final products sold by C and are reported in the period in which they are generated by C.
- Entity C’s Scope 3, Category 1 (purchased goods and services), emissions related to the widgets purchased from B (since these GHG emissions are included in B’s reporting of Scope 1 emissions, Scope 2 emissions, or both).
- The table below summarizes the GHG emissions presented in the separate reports of B and C and the consolidated report of P.
|
Scope
|
Activities and Products Associated With GHG
Emissions Reported by Entity B
|
Activities and Products Associated With GHG
Emissions Reported by Entity C
|
Activities and Products Associated With
Consolidated GHG Emissions Reported by Parent
P
|
|---|---|---|---|
|
Scope 1, Scope 2, or both
|
Entity B’s manufacturing of widgets
|
Entity C’s processing of final products
consisting of (1) widgets purchased from B and (2)
resources that C developed
|
Manufacturing widgets and processing them and
other resources into final products
|
|
Scope 3:
| |||
|
Category 1 (purchased goods and services)
|
—
|
Widgets purchased from B
|
—
|
|
Category 10 (processing of sold products)
|
Widgets sold to C and external customers
|
—
|
Widgets sold to external customers
|
|
Category 11 (use of final products)
|
Widgets sold to C and external customers
|
Final products sold to external customers
(which consist of widgets purchased from B and
resources that C developed)
|
Widgets and final products sold to external
customers
|
|
Category 12 (end-of-life treatment of sold
products)
|
Widgets sold to C and external customers
|
Final products sold to external customers
(which consist of widgets purchased from B and
resources that C developed)
|
Widgets and final products sold to external
customers
|