Glossary›Emissions accounting and measurement›Operational control approach
Glossary term
Cluster D · D8
Tier 2
Operational control approach
Definition
Under the operational control approach an organisation accounts for 100 per cent of the emissions from operations over which it has the authority to introduce and implement operating policies. Partly owned operations it controls are included in full; operations it does not control are excluded entirely, regardless of ownership share. It is the most common approach in Australia.
· Appendix B paragraph B27, GHG Protocol Corporate Standard chapter 3, NGER Act sections 11 and 11A ·
In force
On this page
In practice
Operational control dominates Australian practice for a reason that is historical rather than conceptual: the NGER Scheme is built on operational control, so any entity with an NGER reporting history already has the determinations, the facility list and the scorecards. Building a second inventory on a different basis means doing that work twice and reconciling two populations forever.
The defining feature is that it is binary and ignores ownership. A facility you operate is in at 100 per cent whether you own 100 per cent of it or 15 per cent. A facility you do not operate is out at zero even if you own 49 per cent of it. There is no proportional treatment anywhere in the approach.
That produces the characteristic operational control outcomes, which surprise financial controllers because they are not how the accounts behave.
Situation
Treatment under operational control
Leased sites you run
Fully in. A warehouse on a lease where you direct the operations sits entirely in Scope 1 and Scope 2, despite appearing in the accounts as a right-of-use asset rather than owned property.
Non-operated joint ventures
Fully out of Scope 1 and 2. A 40 per cent stake in a joint venture run by your partner contributes nothing. It does not disappear: it lands in Scope 3 Category 15 instead.
Minority operated positions
Fully in. A project company you operate on a 15 per cent stake contributes 100 per cent of its emissions.
The question that decides each case is who has authority over operating policy, and in Australia there is a well-developed answer to it. NGER Act section 11 establishes operational control, and section 11A deals with the case where more than one corporation could introduce and implement the operating, health and safety, and environmental policies for a facility: the corporation with the greatest authority over both operating and environmental policies is taken to have operational control. The Clean Energy Regulator publishes operational control scorecards for recording those determinations. Those scorecards are useful evidence for an AASB S2 inventory even for an entity with no NGER obligation, because they force the determination to be made on documented criteria rather than assumption.
The judgement that is genuinely hard, and where files are thinnest, is the outsourced or managed operation. A site run day to day by a third-party contractor under a management agreement, a facility operated by a landlord, a fleet under a full-service lease. Each needs the agreement read and the determination recorded. “The contractor runs it so it is theirs” is not a determination; the question is who sets the operating policies the contractor executes.
What the assurer does with it
The assurer tests two things: that the approach was actually applied, and that each determination is supported.
Application testing is a consistency scan. They look for proportional numbers in an operational control inventory, which should not exist. A joint venture appearing at 40 per cent under an operational control basis is a direct contradiction between the stated approach and the model, and it is one of the easiest findings in the engagement to make.
Determination testing is document-based. For each material controlled-but-not-wholly-owned operation, and for each significant excluded operation, they ask for the joint venture agreement, shareholders agreement, management agreement or lease, and they test the operational control conclusion against what the document says about authority over operating policy. Where the entity has an NGER history they will ask whether the AASB S2 boundary matches the NGER operational control determinations, and any difference needs an explanation.
They accept determinations supported by the governing agreements, recorded per entity or facility, and applied without proportional treatment anywhere. They reject a proportional figure in an operational control inventory, an exclusion of an operation the entity demonstrably manages, an operational control determination that contradicts the entity’s own NGER filings, and a determination recorded only as a conclusion with no reference to the agreement it rests on.
Commonly confused with
Financial control, which is the other control approach and produces a different population: the two are often used interchangeably in conversation and they are not the same test. Also confused with legal ownership, which is irrelevant to this approach in both directions.
Sources
1
2
Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004 revised edition)
GHG Protocol
3
4
National Greenhouse and Energy Reporting Act 2007 (Cth), sections 11 and 11A
Federal Register of Legislation
Review status
Review required
Last reviewed
15 September 2026
Editorial pass, unsigned
Reviewer required
Carbon accounting specialist and registered company auditor
Next scheduled review
1 July 2027
Part of
Cluster D, Emissions accounting and measurement
49 terms from the head term carbon accounting down to individual Scope 3 categories and the mechanics of factors, boundaries and data quality. The largest cluster in the glossary.
Related terms
The parent choice this approach is one of three answers to
The other control approach, and where the two diverge
The proportional alternative that brings non-controlled operations into Scope 1 and 2
Related questions
What is our organisational boundary and who decides it?
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Your organisational boundary is the set of entities and facilities whose emissions you report, and the basis on which you include them. Management decides it, the board or audit committee approves it, and it should reconcile to the consolidated entity in your financial report. Operational control is the common Australian starting point, and the friction sits in joint ventures, leased sites, franchises and recent acquisitions.
We report under NGER. Does that automatically capture us?
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It can. If you are a corporation registered under the NGER Act and your Scope 1 and Scope 2 emissions are at or above the 50,000 tonne CO2-e publication threshold, you are in Group 1. Every other registered NGER corporation sits in Group 2, regardless of size.
Do our subsidiaries have to report separately or does the parent cover them?
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Each entity is tested on its own. A subsidiary that must lodge its own financial report under Chapter 2M and meets a section 292A test prepares its own sustainability report, even where the parent reports as well. Being consolidated into the parent’s report does not by itself remove the obligation.
Other terms in this cluster
Operational control approach