A company's greenhouse gas balance can be calculated using the spend-based or activity-based method.
There are two basic methods used in greenhouse gas accounting: the spend-based method and the activity-based method. There is also a hybrid approach, which is a mixture of both methods.
The spend-based method:
In the spend-based method, the monetary value of the purchased product or service is multiplied by a spend-based emission factor. This spend-based emission factor makes it possible to calculate the amount of emissions generated per financial unit of a particular activity.
The activity-based method:
In the activity-based method, actual consumption values are collected from the company's value chain. The type of data collected by the company depends on its specific activities, but usually includes things like energy or fuel consumption, production volumes or transportation routes. This consumption data is then multiplied by an activity-based emission factor.
As a general rule, the activity-based method better reflects the company's actual emissions than the spend-based method.
The hybrid method:
The hybrid method is a combination of the spend-based and the activity-based method. Essentially, it involves using all available activity-based data to calculate the company's emissions. Missing activity-based data is then supplemented by spend-based data.