The spend-based method is an expenditure-based method used to calculate carbon emissions. This method collects data on the economic value of energy and resources consumed by companies in production or service processes. It estimates emissions from direct and indirect operations throughout production and service. T
he spend-based method works best if the most accurate data you have is financial purchasing orders or similar data. Expenditure-based carbon accounting takes the economic value of goods or services purchased. It multiplies it by the relevant emission factor (the amount of emissions produced per unit or the monetary value of the goods) to calculate a rough estimate of emissions.
Activity data needed:
• Amount spent on purchased goods, sources or services by product type, using market values (e.g., dollars)
• Where applicable, inflation data is used to convert market values between the year of the emissions factors and the year of the activity data.
Emission factors needed:
• Emission factors determined by the emission source per unit of economic value (e.g., kg CO2e/$)
Data collection guidance
Data sources for activity data include:
• Internal data systems (e.g., financial accounting systems, enterprise resource planning (ERP) systems))
• Purchasing records
Data sources for emission factors include:
• Environmentally-extended input-output databases
• Industry associations
How are we converting the spend data into carbon equivalents?
We match the spending data with our extensive industry average emission factors database to calculate the estimated carbon dioxide equivalent of dollars spent on purchased goods or services. Then, we apply the following formula:
CO2e emissions for sources that cause purchased emission sources =∑ (value of purchased sources (e.g. $) × emission factor of purchased sources per unit of economic value (e.g. kg CO2e/$))
What industry standards and databases are we using to turn financial data into CO2e?