Category 1 of your scope 3 emissions, are Purchased Goods and Services. This category includes all upstream (i.e. cradle to gate) emissions from the production of products purchased or acquired by the reporting company in that reporting year. Products includes both goods (tangible products) and services (intangible products).
What is meant by “cradle to gate”? Cradle to gate is a partial life cycle assessment of a product from resource extraction (cradle) to the factory gate (i.e. before it reaches the consumer). Anything beyond this within upstream emissions, will fall into a separate scope 3 category.
In simple terms, this category accounts for the emissions generated during the production of every product the reporting company purchases or acquires. Highlighting how comprehensive and involved this category is.
The difficulties companies have when accounting and reporting on this category is data access and data accuracy. There are four different calculation methodologies a company can use for this category, and this will essentially be determined by what data your company has access to.
What are the different calculation methodologies?
These calculation methodologies are from the GHG Protocol. The four different calculation methodologies for this category, are determined by what data you have access to. The calculation methodology you use, will also highlight to you how reliable and accurate your data is. Here we will go into each calculation methodology, and the data required for each calculation.
Supplier-specific method
This methodology is the most accurate methodology and collects product level cradle to gate greenhouse gas data from goods or services suppliers. It is the most accurate because it relates to the specific good or service purchased by the reporting company.
Data required?
- Quantities or units of goods or services purchased.
- Request supplier-specific cradle to gate data directly from the supplier.
Hybrid method
This method uses a combination of supplier-specific data (where it is available) along with secondary data to fill any gaps. This method involves:
- Collecting allocated scope 1 and 2 data directly from suppliers.
- Calculating upstream emissions of goods and services from suppliers’ activity data on the amount of materials, fuel and electricity used, distances transported, ad waste generated from the production of goods and services, and then applying appropriate emissions factors.
- Using secondary data to calculate upstream emissions wherever supplier-specific data is not available.
Data required?
- Allocated scope 1 and scope 2 data (including emissions from electricity and fuel use, as well as fugitive emissions).
- Mass or volume of material inputs (e.g. bill of materials), mass or volume of fuel inputs, and distance from the origin of the raw materials input to the supplier. Do not include transport emissions from the supplier to the reporting company.
- Quantities of waste output.
Average-data method
This method estimates emissions for goods and services by collecting data on the mass (e.g. kilograms or other relevant units. The mass then gets multiplied by the relevant secondary data.
Data required?
- Mass or number of units of purchased goods or services for that year or given timeframe.
Spend-based method
This method estimates emissions for goods and services purchased by collecting data on the economic value of the purchased goods and services, and then multiplying it by secondary data.
Data required?
- Amount spent on purchased goods or services, by product type, using market values (e.g. £pounds)
- Where applicable, inflation data to convert market values between the year of the EEIO emissions factors and the year of the activity data.
What are the main issues with this category?
The main obstacle for this category is poor data quality and availability across the supply chain. A lot of suppliers, lack good quality, primary data. Or lack the resource to calculate and share it effectively and accurately. This is why it is important to have a good relationship with your supply chain, and work with them to get begin collecting and calculating better data.
Most companies when they initially undertake their greenhouse gas baseline, or inventory, use either the spend-based method or average-data method because of the obstacles outlined. This is not uncommon, and shouldn’t be seen as a negative.
This is the start of your journey, and by understanding what data you have access to, and where your issues are gives you a benchmark for improvement and areas to focus on.
How can we help you?
As a company, we understand these difficulties around data accuracy and access to the appropriate data. We can work with you to determine your most appropriate calculation methodology for your supply chain, and set up the process in collecting this data on your behalf through APIs. You can then allocate an accuracy rating to your supplier data, and create a roadmap in what you need to do to improve your data accuracy.
If you would like to learn more, or get some more information, submit an enquiry using our online form.