Free resources
Free GHG Emissions Scope Classification Guide for AASB S2/ASRS compliance
Misha Cajic
May 6, 2025
/
4
min read
As companies across Australia move toward mandatory climate disclosures, getting greenhouse gas (GHG) emissions classification right has never been more critical. To support accounting and sustainability teams through this transition, we have developed a free resource: the GHG Emissions Scope Classification Guide. This guide is designed to help organisations ensure full compliance with the AASB S2 climate-related disclosure requirements, streamlining the emissions reporting process while strengthening audit readiness.
Correctly classifying emissions into Scope 1, Scope 2, and Scope 3 categories isn’t just a technical detail. It's foundational to credible and compliant climate disclosures. Misclassification can lead to significant reporting errors, risking regulatory penalties, damaged stakeholder trust, and additional audit burdens. Our guide delivers practical, clear-cut instructions so teams can tackle Scope classification confidently, aligning internal reporting practices with the latest Australian regulations.
The foundation of accurate classification lies in understanding the three emission scopes:
Scope 1 covers direct emissions from sources owned or controlled by the reporting entity. Think company vehicles or emissions from onsite combustion.
Scope 2 includes indirect emissions from the consumption of purchased energy — primarily electricity, heating, cooling, or steam generated offsite.
Scope 3 captures all other indirect emissions throughout a company's value chain, both upstream and downstream. These can range from purchased goods to business travel to customer use of sold products.
The guide features a practical flowchart that simplifies the decision-making process. Accounting and sustainability teams can quickly determine where an activity fits by answering a few targeted questions about operational control, ownership, and the nature of the emission source. Whether the source is internal combustion, purchased electricity, or a third-party logistics provider, the flowchart provides a clear, logical path to classification.
Scope 3 emissions often pose the greatest challenge, given their complexity and breadth. Our guide dives deep into the 15 Scope 3 categories, providing descriptions and relatable examples for each. Whether it's emissions from purchased goods and services (Category 1) or investments (Category 15), we make it easier for organizations to capture their complete emissions footprint without getting lost in technical jargon.
Each category is matched with real-world examples, such as capital equipment purchases, air travel, employee commuting, or emissions from the use and disposal of sold products. This contextual clarity helps organizations map their unique value chains against Scope 3 reporting requirements more accurately and comprehensively.
Mistakes in emissions classification can compromise the quality and credibility of climate disclosures. Our guide outlines several of the most frequent errors to watch out for:
Misreporting transmission and distribution losses under Scope 1 instead of Scope 3 (Category 3) is a common misstep that can skew emissions totals. Another typical error is double counting — mistakenly recording emissions from shared assets in both Scope 1 and Scope 3.
The guide also flags incorrect treatment of upstream leased assets — often misclassified under Scope 1 when they belong in Scope 3 (Category 8). Organizations operating in investment-heavy industries are cautioned not to overlook Category 15, which captures financed emissions.
Moreover, failing to update emissions boundaries as business operations evolve, using outdated emission factors, or focusing solely on downstream Scope 3 emissions while ignoring upstream impacts can all undermine reporting efforts. Avarni’s resource not only highlights these pitfalls but also offers actionable advice to stay compliant and audit-ready.
The regulatory landscape is shifting fast, and organizations must adapt quickly to meet AASB S2 standards. Avarni’s GHG Emissions Scope Classification Guide equips teams with the knowledge and structure they need to deliver transparent, defensible, and regulation-ready climate disclosures. By leveraging this tool, businesses can avoid costly errors, strengthen stakeholder confidence, and stay ahead of Australia’s evolving sustainability expectations.
The GHG emissions scope classification guide is completely free to download and use. We’ve made it as intuitive and actionable as possible — so you can focus less on deciphering standards and more on making sure your evidence is rock solid.
