What is the difference between Spend-Based and Activity-Based carbon calculation?

When measuring carbon emissions, there are two possible approaches to calculating emissions: spend-based and activity-based measurement.

What is spend-based calculation?

A spend-based calculation estimates emissions based on how much money was spent on a particular good or service.

For example, if £12,000 is spent on event catering and the relevant carbon factor is 0.80 kgCO₂e per £ spent, the calculated footprint would be:

£12,000 × 0.80 kgCO₂e = 9,600 kgCO₂e

This approach is relatively easy to apply because financial information is generally readily available. However, it crucially provides less information about the actual activities that generated the emissions.

What is activity-based calculation?

An activity-based calculation uses data about the actual activity associated with an event.

Depending on the emission source, this might include:

• Kilograms of materials used
• Kilometres travelled
• Kilowatt-hours of energy consumed
• Litres of fuel used
• Number and type of meals served
• Kilograms of waste produced

The relevant activity is then multiplied by an appropriate carbon emission factor.

Continuing the example above; rather than using total catering spend, an event could record the number and type of meals served. If an event served 200 chicken meals, 200 beef meals and 100 vegetarian meals, then applying the relevant emissions factors would result in a footprint of 1,800 kgCO₂e, compared with 9,600 kgCO₂e using the spend-based approach.

This illustrates why activity-based data can provide a more representative and actionable picture of an event's emissions.

Why does TRACE favour activity-based data for event measurement?

The purpose of event carbon measurement is not simply to produce an emissions figure. It is also to understand where those emissions come from and what can be done to reduce them.

Activity-based measurement provides a much more detailed view of the activities taking place at an individual event. This makes it possible to identify the largest sources of emissions and understand how changes to event decisions affect the footprint.

Activity-based calculation also shows why those emissions occur. This means an organiser can identify specific reduction opportunities, such as reusing hired steel or reducing supplier travel.

What risks might using a spend-based methodology pose to the accuracy of your data?

Spend-based calculations can be useful for establishing an estimate, but they can sometimes obscure the impact of real-world decisions. This presents a substantial risk when the following facts are observed;

Financial cost does not always align with carbon emissions generated

For example, in the event that a plant-based catering option has a higher financial cost than a meat alternative, then a spend-based calculation could show an increase in emissions even though the actual carbon impact of the catering has decreased.

Discounted supplier rates may inaccurately show a reduction in carbon

If a supplier reduces its price by 10% without changing how the service is delivered, a spend-based calculation could show a 10% reduction in emissions, despite there being no measurable change in the underlying activity.

There is little consistency between what different suppliers charge

Many factors may influence what different suppliers charges for the same service, including the location of the event, availability of ingredients and materials, and quality of goods provided. This may mean that the spend-based estimate will fluctuate year-on-year or from supplier to supplier, even if the goods and services provided are similar or the same, making it difficult to pinpoint exactly what is causing reductions or increases in the footprint calculation.

You know the footprint but not what to change

A spend-based calculation can provide an emissions figure without showing exactly which activities are responsible for those emissions.

Activity-based data provides a more detailed breakdown, allowing you to identify the highest-emitting areas of a specific event and understand which decisions are driving those emissions.

This makes activity-based data much more useful when the objective is to identify and deliver carbon reductions, rather than simply estimate a footprint.

How does TRACE use the two approaches?

TRACE uses activity-based measurement for Event Measurement wherever appropriate data and carbon factors are available.

This is because event measurement needs to provide data that is not only useful for calculating a footprint, but also actionable, helping organisers understand the sources of their emissions and identify opportunities to reduce them.

For this reason, spend-based measurement is not currently included within the Event Measurement side of the platform.

Purchased Goods & Services

TRACE does allow spend-based measurement for Purchased Goods & Services (PG&S).

Purchased Goods & Services can cover a very broad range of business expenditure, and in many cases detailed activity data is not readily available. Spend-based calculation therefore provides an important way of representing these emissions where a suitable activity-based dataset is not available.

While this approach does not provide the same quality of actionable data as activity-based measurement, it is important when considering Business Operations reporting, where the aim is to represent the organisation's overall annual carbon footprint.

TRACE will move to an activity-based methodology for Purchased Goods & Services when an appropriate and verifiable carbon factor database becomes available.

In summary

Spend-based measurement uses financial expenditure to estimate emissions. It is easier to use and can be valuable where detailed activity data is unavailable, but it provides less insight into the activities actually generating emissions.

Activity-based measurement uses physical data about what actually happened — such as energy consumed, materials used, distance travelled or meals served. It requires more data collection but provides a more detailed and actionable understanding of an event's carbon footprint.

For TRACE:

• Activity-based data is preferred for Event Measurement because it provides more accurate and actionable insights.
• Spend-based data is available for Purchased Goods & Services where it provides a practical way to represent emissions in Business Operations reporting.
• TRACE will move towards activity-based PG&S measurement when an appropriate and verifiable carbon factor database becomes available.

The goal is not simply to produce a carbon number. Good carbon measurement should help you understand what is driving your emissions and, importantly, what you can do to reduce them.