Why Activity-based Carbon Calculations are King
Have you ever asked your carbon accountant or carbon counting solution whether they are using spend or activity-based calculations?
You should! Because the way your carbon consultant (or online tool) calculates your carbon emissions is really important for identifying effective reduction strategies.
Spend-based calculations work out an estimate of the carbon emitted based on how much a company spends on a particular type of item or service.
Activity-based calculations are based on actual data related to the product or service bought or used (such as amount of fuel used, kms travelled, mode of transport, component parts etc).
How do spend-based carbon calculations work?
You input your company’s annual spend on a particular category of product / service. For example if you spent £10,000 on flights the spend-based calculation would look like this:
“£10,000 x [estimated carbon footprint of spending £1 on flights] = 12,290 kgs CO2e”
Spend-based carbon accounting could be described as the lazy approach because the calculations take very little work. They therefore result in an inaccurate estimation.
Spend based results only tell you to spend less to reduce emissions (and we can tell you that for free!)
Unfortunately, many firms who calculate carbon footprints are still using this spend-based methodology. Not us though and for good reason. The only time we would use this approach is when no other viable option exists.
How do activity-based calculations work?
Activity-based carbon calculations estimate the emissions related to the actual activity (not just the financial cost of it).
The actual emissions from your flights can vary enormously because it is how far you fly, in which class and on what type of plane that matters, not how much you paid for a seat.
This approach requires data such as travel information such as starting point, destination, mode of transport, class of travel.
This table shows the difference in emissions between a spend-based and activity-based calculation for 10 economy seats on a London to Sydney return flight (cost: £10,860).
| Spend-based | Activity-based |
|---|---|
| 14,110 kgs CO2e | 50,340 kgs CO2e |
The activity-based estimate is 3.5 times higher. This is much more accurate because it takes into account the distance travelled, the type of plane, number of seats, and likely occupancy.
The spend-based approach can dramatically underestimate emissions so if a company is using this methodology for carbon credit purchases, they could be ‘compensating’ for a much smaller proportion of their actual emissions than they realise.
With the activity-based approach we can take different carriers, seat class and routes into account. This is where the reduction insights lie. Choosing a lower carbon airline and/or a more direct route could result in up to a 10% reduction in emissions.
Pros and cons of spend vs activity-based calculations
| Spend-based | Activity-based |
|---|---|
| ✅ easy and quick, financial data only | ❌ hard to calculate, primary data needed |
| ❌ innaccurate (often underestimates) | ✅ much more accurate |
| ❌ no reduction opportunity insights | ✅ reduction opportunities apparent |
Don’t forget, the whole point of calculating a company’s carbon footprint is to:
Set an accurate baseline
Identify emissions reduction opportunities
Monitor progress
On this basis, the only credible option is to use activity-based calculations for Scope 1, 2 and 3 emissions.
Which methodology does ecollective use for different activities?
Wherever possible (in the vast majority of cases) we use an activity-based approach, working with company data to provide a detailed view of where your emissions lie. Using this approach we can pinpoint genuine, company-specific, meaningful reduction opportunities.
If you’re working with a spend-based approach and want to switch to activity-based, get in touch. We have a lot of experience and can make the process as smooth as possible whilst providing you with reduction strategies that will shrink your company’s carbon footprint.
