Methodology
Spend-based or physical factors what changes in your footprint.
A spend-based factor multiplies the amount of a purchase by a sector average of kgCO2e per euro, so the footprint rises with the price. A physical factor starts from what the product is: material, weight, process (including its energy) and transport. That is why the physical one is better to decide about products.
They are two ways of turning activity data into emissions. The difference is not technical but about what is measured: the money you pay or the product you buy.
What is the difference between the two?
| Spend-based factor | Physical factor | |
|---|---|---|
| Starts from | The amount of the purchase | Material, weight, process (including its energy) and transport |
| Typical unit | kgCO2e per euro | kgCO2e per kilo, per kWh or per tonne-kilometre |
| Data needed | Invoices or purchase lines | Technical documentation of the product |
| If the price goes up | The footprint goes up | The footprint does not change |
| If the supplier improves its process | It is not noticed, or penalised if the price rises | It shows in the result |
| Reasonable use | First approximation and prioritisation | Deciding about products, suppliers and design |
Why does spend distort?
Because price depends on many things that are not emissions: brand, margin, exchange rate, inflation or volume. With a spend-based factor, two identical products with different prices have different footprints, and a supplier that invests in decarbonising looks dirtier because it charges more. In a pilot with an egg, the spend-based method inflated the footprint nine times compared with the physical calculation. It is one case, not a general rule. For example, with an approximate factor of 0.642 kgCO2e per euro for “General furniture and related manufactures”, a two-hundred-euro chair would have ten times more emissions than a twenty-euro chair even if they were identical.
Every footprint is an estimate. The difference is not whether you estimate, but whether you estimate from the amount paid or from the product’s materials, processes and transport. We develop this in methodology.
What are the advantages of the physical factor?
- It is independent of price.
- It reflects improvements in material, process or energy.
- It lets you compare alternatives in design or suppliers.
- It can be explained and checked node by node.
What does Xain do?
Xain calculates with physical factors from technical documentation, with traceability down to each node. Its methodology follows ISO 14067 and is verified by LRQA. For Scope 3 of purchases, see how it is applied.
Frequently asked questions
What companies usually ask before getting started.
When is it reasonable to use the spend-based method?
As a first approximation, when you only have invoices and need an idea of the order of magnitude or to prioritise which purchase categories to review.
Is it true that the spend-based method distorts that much?
It depends on the case. In a pilot with an egg, the spend-based method inflated the footprint nine times compared with the physical calculation. That is the figure of one case, not a general rule.
Keep reading
Scope 3 for purchases
Measure purchased-goods Scope 3 (Categories 1 and 2) with physical factors. Xain Insight needs only the ERP spreadsheet: less than 10 minutes.
Spend-based factor
A spend-based, or economic, factor estimates emissions by multiplying the amount of a purchase by a sector-average kgCO2e per euro.
Physical factor
A physical, or activity-based, factor expresses emissions per physical unit: kgCO2e per kilo of material, per kWh of energy or per tonne-kilometre of transport.
Calculating Category 1
Guide to calculating Scope 3 Category 1, purchased goods and services: the four GHG Protocol methods, the steps and when each one fits best.
Tell us what you want to measure
One product, a catalogue or your purchases. We reply with the next steps.
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