Spend-based Method

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 and estimates emissions from direct and indirect processes throughout production and service. The spend-based method works best if the most accurate data you have is financial purchasing order or similar data. Expenditure-based carbon accounting takes the economic value of goods or services purchased and 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.

Required data

Activity data needed:

• Amount spent on purchased goods, sources or services, by product type, using market values (e.g., dollars)

• Where applicable, inflation data to convert market values between the year of the emissions factors and the year of the activity data.

Emission factors needed:

• Emission factors determined in accordance with 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))

• Invoices

• Purchasing records

Data sources for emission factors include:

• Environmentally-extended input-output databases

• Industry associations


How we are converting the spend data into carbon equivalents?

We match the spend data with our extensive database of industry average emission factors 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?

(coming soon)