In the pursuit of sustainability, accurately assessing carbon footprints has become paramount for organisations seeking to reduce their environmental impact. The two primary methodologies employed for carbon footprint calculations are the use of emission factors and the spend-based approach. Both methodologies offer distinct advantages and disadvantages. In this blog, we’ll explore the strengths and weaknesses of each approach and argue why emission factors often produce the most representative reports.
Emission Factors: The Gold Standard
Strengths
- Granularity: Emission factors provide a detailed breakdown of emissions from various activities within an organisation, offering insights into specific areas where emissions reductions can be targeted.
- Standardisation: Widely accepted and standardised emission factors enable comparability across industries and organisations, facilitating benchmarking and goal setting for emissions reduction.
- Accuracy: When based on relevant data and updated regularly, emission factors offer a high level of accuracy in estimating carbon footprints, especially for direct emissions from activities like energy consumption and transportation.
Weaknesses
- Data Dependency: Reliable and accurate data on activities and corresponding emission factors are crucial for precise calculations. However, obtaining such data can be challenging, particularly for smaller organisations or those with complex operations.
- Data variability across time: A well-known limitation of emission factors is their time-sensitivity. Periodic updates are essential to ensure alignment with the latest data. Despite this, it’s worth noting that emission factors are updated annually to mitigate this issue.
Spend-Based Approach: A Holistic View
Strengths
- Comprehensive Perspective: The spend-based approach considers emissions associated with the procurement of goods and services, offering insights into upstream emissions in the supply chain. This holistic view enables organisations to identify emissions hotspots and make informed decisions to reduce their carbon footprint.
- Simplicity: Compared to emission factor-based calculations, the spend-based approach may require less detailed data, making it more accessible to organisations with limited resources or data availability.
- Supply Chain Visibility: By analysing expenditure, organisations gain visibility into the environmental impact of their supply chain activities, empowering them to engage with suppliers to drive sustainability improvements.
Weaknesses
- Complexity of Estimation: Assigning accurate carbon intensity values to expenditure categories can be challenging and may require extensive research or reliance on third-party data sources. Inaccurate estimation can lead to skewed results and misinformed decision-making.
- Scope Boundaries: Determining which expenditures to include in the analysis can be subjective and may vary between organisations, potentially leading to inconsistencies in reporting and comparison.
- Lack of Granularity: The spend-based approach may lack the granularity needed to identify specific emission sources and implement targeted mitigation strategies effectively.
The Case for Emission Factors
While both emission factor-based and spend-based approaches offer valuable insights into an organisation’s carbon footprint, emission factors often provide the most representative and accurate reports. Despite their dependence on data availability and potential scope limitations, emission factors offer a granular, standardised, and widely accepted methodology for estimating carbon footprints. By leveraging emission factors alongside efforts to improve data collection and transparency, organisations can generate comprehensive and actionable insights to drive meaningful emissions reductions and contribute to a more sustainable future.