When it comes to measuring and managing your carbon emissions, one of the most important things you can do is create a clear and thoughtful organizational structure. Why? Because the way you define your company’s boundaries and set up your reporting will shape everything—from how you collect data to how you prioritize and track decarbonization efforts.
Why does organizational structure matter?
Your organizational structure serves as the backbone of your carbon measurement efforts. It’s more than just a box-ticking exercise—it’s a critical tool for ensuring compliance and empowering your team to take effective climate action. Here’s why it matters:
1. Compliance and reporting
The GHG Protocol requires companies to clearly define which parts of their operations are included in the emissions inventory—and which are not. This definition must align with the chosen consolidation approach (such as operational or financial control). Getting this right ensures your reporting meets regulatory and stakeholder expectations.
2. Supporting internal decision-making
A thoughtfully designed organizational structure is equally important for your internal efforts. It allows you to:
Assign Accountability: Ensure the right teams are responsible for tracking and managing emissions in their areas.
Spot Trends and Opportunities: Analyse emissions data by business unit, facility, or region to identify hotspots or efficiency opportunities.
Set and Achieve Targets: Establish baselines and KPIs at different levels of the organization, creating clarity around goals and progress.
Drive Decarbonization: Link emissions data directly to decision-making, enabling informed actions and strategies for reducing emissions.
While your compliance boundaries must follow strict rules, how you organize your internal structure can be more flexible. You have the freedom to group and structure your business units in a way that best supports your operational goals and sustainability ambitions.
Choosing the right approach: operational, financial, or equity?
One of the first decisions you’ll face is how to define your organizational boundaries. According to the GHG Protocol, there are three main approaches: operational control, financial control, and equity share.
Operational control
This approach includes emissions from operations where your company has day-to-day control over how things run. It’s the most common choice because it aligns with how companies make decisions and drive change. For example, if you manage a chain of retail stores, you’d include emissions from all stores you operate, even if you don’t own them outright.
Financial control
Under the financial control approach, your company includes emissions from operations where it has the authority to direct financial and operating policies to gain economic benefits, typically indicated by owning more than 50% of the financial stake. This approach aligns with consolidated financial statements and is ideal for companies that manage decision-making based on ownership structures, such as holding companies overseeing multiple subsidiaries.
Equity share
The equity approach accounts for emissions based on your share of ownership in an operation. For example, if you own 30% of a joint venture, you’d include 30% of its emissions. This is less commonly used outside industries like finance or energy.
For most organizations, operational control is the simplest and most intuitive choice. It aligns well with decision-making processes and is the easiest to implement when it comes to driving decarbonization efforts. In fact, the GHG Protocol recommends it as a default for most companies unless there’s a compelling reason to choose otherwise.
For more details on consolidation approach, please refer to the guideline from GHG Protocol.
Where should you start?
If this all feels a bit abstract, don’t worry—you don’t need to start from scratch. A great first step is to look at your existing organizational charts, such as those in your financial reports. These charts often provide a strong foundation for defining your boundaries.
However, financial org charts might not fully align with practical carbon measurement needs. For example, emissions typically come from physical facilities, so it makes sense to separate emissions from a factory and a warehouse. But for offices where multiple departments, like Marketing and Finance, share the same space, there’s no need to break them down further in your org chart.
Here’s a practical tip: Focus on facilities where emissions are generated. Consider what data is available and how you plan to analyze it. For instance, a grocery retailer might organize their carbon measurement by stores, warehouses, and offices, while a manufacturing company could prioritize factories and logistics hubs. Starting with this approach ensures your org chart is both practical and aligned with your carbon measurement goals.
How detailed should your structure be?
The level of detail in your organizational structure is another key consideration. More granularity gives you better visibility and control but can make data collection more time-consuming and complex. The right level of detail depends on your goals and the data you have access to.
For instance, if you want to track emissions reduction programs at a facility level, you’ll need a granular structure that reflects individual sites. But if you’re just starting out and your data is limited, it’s okay to keep things simple. You can always refine your structure as your carbon measurement efforts mature.
Here’s an example: Let’s say your company operates in three countries with 50 facilities in total. You might start by grouping emissions at the country level to get a high-level picture, then gradually break it down to individual facilities as you gather more data.
Final thoughts
Designing an organizational structure for carbon measurement isn’t just about compliance—it’s about creating the foundation for meaningful climate action. Start with your existing org chart, align with physical facilities, and choose a structure that reflects how you manage your business. Whether you’re a retailer, a manufacturer, or a service provider, the goal is the same: to empower your team with the clarity and tools they need to measure, manage, and reduce emissions.
Taking the time to get this right now will save you headaches later—and set you up for success on your sustainability journey.