Questions to ask your
carbon accountant
How to make sure your carbon footprint is sound
We talk about carbon accounting being in the ‘Wild West’ because of a lack of standards across the industry and incompatibility between different accounting methods. But we've also seen some real cowboy practices that we want everyone to be aware of. Anyone can spot them by asking some simple questions to whoever you're thinking of hiring to be your carbon accountant or calculate your carbon footprint.
Here are five simple questions to ask your carbon accountant, and the answers you’re looking for:
1. What are spend-based emissions factors?
A spend-based emissions factor is a number that gives you the amount of greenhouse gas emissions per £ spent. Each industry sector has an emissions factor, so if you spend £100 on advertising and £50 on paper, you multiply your spend by the emissions factors for those two sectors to get your total emissions for each. They should include direct emissions (Scope 1), indirect emissions from electricity generation (Scope 2) and emissions from the full supply chain (Scope 3).
Our guide below explains the difference between spend-based emissions and life cycle analysis, and shows you what is inlcuded in Scopes 1, 2 and 3.
2. Which years do you have data for and which of those have underlying data?
There is always a lag in new data being published. The most recent UK data currently available is for 2021. Your carbon accountant should be able to tell you how they have adjusted for inflation for all subsequent years after the last raw data year. They should also be able to show you different emission factors for each year in their model; factors should never be identical for subsequent years.
3. Where do you get your data from?
Worryingly, we’ve seen instances where companies use the ONS ‘Atmospheric emissions: greenhouse gas emissions intensity by industry’ dataset. This was never intended for carbon accounting.
This dataset gives direct emissions (Scope 1 only) per unit of gross value added for different UK industries. It’s designed to show which industries give a ‘good bang for their buck’ in terms of their direct emissions relative to their contribution to the economy.
The good news is that we’ve discussed this with the ONS, who are keen to update the text that accompanies this dataset to clarify what the data shows and lessen confusion.
SWC MRIO
Our SWC MRIO (Multi-Regional Input-Output model) compiles data from worldwide sources, mainly the OECD. The full model covers 103 different industries across 75 countries, with data for 2018-2024 (latest data year is 2020, with subsequent years inflation-adjusted).
We have a free version which covers the UK only, for 2022. We also have two licenced versions: one covers the top 6 countries by GDP, and the other covers all 75 countries.
Defra
Defra’s data is designed to reflect the UK’s consumption emissions as a nation, it hasn’t been developed to reliably show emissions for individual organisation supply chains.
Defra’s model is UK based, and uses the UK as the sole country of demand for goods. This means that all emissions factors are based on UK averages, and don’t account for the specific country of origin of goods in your supply chain.
If you run a clothes store, and import a large number of clothing items from another country, for example t-shirts made in Vietnam, you won’t see any Vietnam-specific emissions factors. Instead, your emissions factors will be representative of all t-shirts bought in the UK, both those made here and all those imported.
If you change your supplier to one in another country where that supplier or their country are actively reducing their emissions, you won’t see that change reflected in your carbon footprinting.
If you use the SWC MRIO, you can use one of 75 different countries of supply, in this case Vietnam, to get more realistic emissions factors that reflect Vietnam’s supply chains. This means that you will be able to see changes in those emissions if you change supplier to one in another country.
4. Can I see your methodology?
Your carbon accountant should be able to show you the methodology behind their model and how they use it, in an understandable way. Even if you're not an expert in emission factors and carbon footprints, there are some key parts that should make sense.
You should be able to see where the data is from, how the model works, how subsequent years have been adjusted for inflation, and any improvements that have been made to the underlying data.
We publish our methodology, which includes an overview of how the model works, where we source our data, how the final emission factors are calculated and the improvements we've made in the latest version. Our improvements cover maritime emissions, emissions from oil and gas leaks, fluorinated gases, and radiative forcing factors for aviation. We give an overview of why we've made these adjustments to make the emissions more reliable.
Here's our methodology, along with our guide to supply chain emissions reporting (these are process guidelines and can be used with any model), our guide to hybridising LCAs and emission factors, and comparison and validation of our SWC MRIO emission factors against other models.
5. Do you use Product Life Cycle Analysis (P-LCAs) and how do ensure they are system-complete?
P-LCAs are far more specific than using spend-based data with an input-output model. But they don’t capture the full emissions of the whole supply chain. The missing part is called a truncation error, and it varies in amount between different products, different industries and different countries.
Truncation errors are inevitable because P-LCAs look at each tier of the supply chain manually, so there’s only so many layers than can be included. Many of the smaller emissions from the furthest tiers of the supply chain are omitted, but together these can form a large portion of all the emissions that should be included.
The graph below shows the difference between emissions calculated with spend-based data using an MRIO and a typical P-LCA in a number of common industry sectors. Some of these differences are due to the increased specificity of the P-LCA, but a significant proportion is due to truncation errors.
For P-LCAs to be system-complete, which makes them more reliable and makes them compatible with spend-based emission factors, they need to be hybridised with input-output data, which then eliminates the truncation error.
For reliable hybridisation, you need three things:
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An MRIO model that can break down the emissions factors into components for every supplier in every tier.
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A consistent methodology to identify where the truncation errors are for each P-LCA.
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A hybridisation methodology that makes sure that your system boundary for the P-LCA and for the additional MRIO data, results in all emissions being counted but not double-counted.
If you are just using P-LCAs you will be underestimating your total supply chain emissions.
If you are just using spend-based, you won’t be able to see the emission reduction actions of your suppliers in your reporting.
If you are using a mix of P-LCAs and spend-based, but without hybridisation, you are comparing apples and elephants, because your system boundaries are not both system-complete.
Using hybridised emissions factors gives you the system-completeness of spend-based accounting for your more specific LCAs.
We want higher standards to help lower emissions
We want to empower clients to know that the carbon accounting services they are paying for are fit for purpose. Any carbon accountant should be able to show you their data and methodology and answer your questions in an understandable way.
If you're not measuring your emissions in a robust and meaningful way, you won't be able to identify and target the areas where it's possible to make reductions. And if your suppliers make reductions, you won't see that reflected in your Scope 3 supply chain emissions.
We know that carbon accounting is just a tool. But when used correctly it can be a tool to help bring down your emissions and to push others in your supply chain to reduce their emissions too. That's why we're pushing for higher standards across the whole carbon accounting industry.