GHG Accounting Equity Approach
Definition
Under the equity share approach, a company accounts for GHG Emissions from operations according to its share of equity in the operation. [1]
The equity share reflects economic interest, which is the extent of rights a company has to the risks and rewards flowing from an operation. Typically, the share of economic risks and rewards in an operation is aligned with the company’s percentage ownership of that operation, and equity share will normally be the same as the ownership percentage. Where this is not the case, the economic substance of the relationship the company has with the operation always overrides the legal ownership form to ensure that equity share reflects the percentage of economic interest.
The principle of economic substance taking precedent over legal form is consistent with international financial reporting standards. The staff preparing the inventory may therefore need to consult with the company’s accounting or legal staff to ensure that the appropriate equity share percentage is applied for each joint operation.
See Also
References
- ↑ The Greenhouse Gas Protocol, A corporate accounting and reporting standard, Revised Edition 2008
