This webinar explored how spend-based emission factors help you get started on Scope 3 emissions.
Brian Johnston from Cogo shared how they use spend-based emission factors to support businesses in understanding their emissions through banking apps and personal tools.
Jeff Vickers, our Technical Director, explained how we developed spend-based emission factors for New Zealand, what they cover and how they’re regularly updated.
Together, they showed how spend-based emission factors provide a practical starting point for measuring emissions, especially when detailed data is lacking. They also discussed how combining them with other methods can improve accuracy over time.
A robust Q&A followed, addressing challenges, misconceptions and examples where spend-based emission factors can be used.
Watch the webinar replay, or scroll down for a summary and extra Q&A's
Brian’s takeaways:
A good starting point: Spend-based data is a great first step when measuring emissions, especially if detailed data isn’t available. It’s particularly helpful for reaching small businesses in supply chains, where getting specific data can be tricky.
Updated regularly: Cogo updates their emission factors every six months. In New Zealand, Cogo draws on thinkstep-anz’s annual updates and then adjusts for inflation in between. This helps keep the numbers current.
Banks need a push: If you want to see your carbon impact in your banking app, let your bank know. Customer demand can help banks decide to offer these features.
Jeff explained:
What they are: Spend-based emission factors show how much carbon is linked to each dollar spent in an industry. They cover emissions from making a product but not from using it, disposing of it, or employee-related travel.
Why use them: They’re easy to apply when detailed data isn’t available.
How we created them: We combined local and international data to give a fuller picture, which is important for small economies like New Zealand that import many goods.
Learn more about our spend-based emission factors.
You can download our emission factors and use them within your organisation free of charge. However, if you plan to integrate them into a carbon or sustainability software tool, a commercial licence is required. The free version includes data for 2018 and 2021, while the commercial version is updated annually.
The latest available data covers 2022, with the 2023 update set for release on 1 August. The commercial version also offers more detailed breakdowns, including greenhouse gas types, emission scopes, and whether emissions occurred in New Zealand or were imported.
Extra Q&A's
Brian and Jeff didn’t have time to answer all the audience’s questions during the webinar, so we’ve captured the outstanding ones below, along with their answers:
Q: If we need global product/service estimates for carbon emissions, where would you recommend we look for this and is there a way to get this for free?
A: We can support you in helping to choose the most appropriate data sources. There are free options available, though sometimes they may be out of date. We support our clients in choosing the most appropriate databases.
Q: You use AR4 in the publicly available data. Is this updated to AR5 (aligned with MfE factors) in the commercial version? Or will it be updated this year for all?
A: Yes, it is updated to AR5. The reason it is AR4 in the publicly available version is because the 2021 NZ carbon input data was AR4, whilst the 2022 data was released as AR5.
Explainer: AR4 means the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), published in 2007. AR5 means the Fifth Assessment Report of the IPCC, published in 2014. AR6 means the Sixth Assessment Report of the IPCC, published in 2021. Each Assessment Report can have slightly different characterisation factors for calculating carbon footprints. The reason older characterisation factors are still in use is that there is typically a time lag between the publication of new characterisation factors by the IPCC and their adoption for reporting by nation states under the United Nations Framework Convention on Climate Change.
Q: Are the thinkstep-anz spend-based emission factors different to the spend-based emission factors published by CDP?
A: Yes, they are different. The thinkstep-anz emission factors use a country-specific model.
Q: What’s the difference between embodied carbon and carbon emissions of a product or material?
A: The total carbon footprint of a product or service includes embodied carbon, plus use-stage carbon and end of life carbon. Spend-based emission factors cover embodied carbon.
Q: Could AI use in businesses be creating a much larger carbon emissions spend that is really occurring right now?
A: Because there is a time-lag in the development of spend-based emission factors, it is too early to see the effect of AI as it is such a rapidly developing technology.
Q: If a project-specific cradle-to-gate spend-based emission factor has been estimated using historic data collected for that type of project, would it be better to use those than IO-method derived factors in Scope 3 reporting?
A: Project-specific data should generally be preferred as opposed to industry-average data, but it depends on the age, quality and completeness of the data.
Q: GL Accounts can be quite generic, at a high level whereas emission factors are more detailed, how do you recommend this be handled?
A: GL Accounts vary considerably across businesses. We would recommend mapping down to the level that allows insights without going into too much granularity. The benefit of mapping to GL Accounts is that it allows for easier annual footprinting. It also allows the annual update for the emission factors to be done easily.
Q: I'm in local government. We have a lot of purchased services. Are there good examples of spend-based service EF? In some cases it will be difficult for us to collect material data such as fuel.
A: Purchased services are an ideal use-case for spend-based emission factors, due to the wide range of factors available. Our Emissions Factors for New Zealand contain a wide range of services, from freight to insurance, printing to leasing, and telecommunications to legal advice.
Q: How would you recommend organisation track trends in scope 3 emissions while working on a hybrid approach where methods and % of actuals in scope 3 reporting are changing year on year?
A: Where there is a significant change in the way the inventory is compiled year to year, we would recommend recalculating the baseline year to ensure a fair comparison. In our experience, there aren't many companies that are at this point yet.