Activity-based method: Definition
Activity data specifies the quantity of a particular product or material a company has purchased, enabling more precise emissions estimates than spend-based data. This method employs emission factors obtained from scientific studies.
For Sustainability Managers
Understanding Activity-based method is essential for accurately tracking and reducing your organisation's carbon footprint.
For CFOs
Activity-based method has growing financial implications as climate regulation tightens and investors demand transparency.
For Sustainability Reporting
Accurate measurement of Activity-based method is required for credible climate reports across all major frameworks.
Related Terms
Hybrid method
The hybrid methodology combines both spend-based and activity-based methods for carbon accounting, recommended by the Greenhouse Gas Protocol to enhance accuracy.
Spend-based method
The approach of quantifying GHG emissions through spending relies on taking the monetary value of a purchased product or service and multiplying it by an emission factor, representing the emissions generated per unit of currency spent. This process yields an approximation of the emissions generated.However, it's important to note that spend-based methods base their emission factors on industry-average levels of greenhouse gas emissions. Consequently, these calculations might lack precision and specificity. For instance, if you were to purchase a chair, a spend-based approach would merely consider it as a furniture acquisition, without accounting for whether the chair was constructed from iron or wood. In contrast, activity data tends to offer greater reliability in emissions estimation.
Life cycle assessment (LCA)
Life cycle assessment (LCA) assesses the environmental impact of a product or service throughout its entire life cycle, from raw material extraction to final disposal.
SMEs
Small and medium-sized enterprises (SMEs) constitute a category of businesses defined by staff count and annual turnover, with these criteria varying globally.