How and why to measure your company's purchases, understanding the methodology.

How are purchases calculated? How do we measure them and what do we consider? What do we achieve with this? In this article we cover all the nitty gritty aspects of our methodology.

How are purchases calculated?

At Dcycle, CO2eq contributions for category 1 of scope 3, related to the purchase of products and services for the internal operation of the company (including raw material transportation, professional services, subscriptions, and tangible and intangible goods in general), are calculated using the methodology defined by the GHG (Greenhouse Gas) protocol. Calculating these contributions is crucial because, in general, this is the focus of scope 3 emissions for companies. To perform this operation, we use databases endorsed by prestigious entities such as the European Environment Agency. With this, we have information that collects Emission Factors for over 200 products and services from 44 countries, spanning from 1995 to 2022.

How do we measure them, and what do we take into account?

To calculate CO2eq, we follow the guidelines of the GHG protocol, which establishes that the purchases category should be calculated using a cradle-to-gate life cycle analysis (LCA) on what is being purchased. The cradle-to-gate life cycle analysis evaluates the environmental impact of a product from its initial manufacturing phase to the moment it leaves the factory gate. This LCA can be done in two different ways: supplier-specific or spend-based, with the latter being used in Dcycle. This methodology uses emission factors based on the monetary value of the goods or services acquired by an organization to calculate the carbon footprint.

The calculation begins by providing some key data, such as the product or service sector, the name of the product or service, the purchase date, the net amount spent after taxes (using matrices configured with "purchase price" in the calculation model. The purchase price is equivalent to the basic price of the product plus any country-specific associated fees; in other words, the purchase price represents the actual price paid by the buyer), the currency of the unit (currently only euros are accepted), the country of purchase, and the frequency of purchase.

With these input data, it is necessary to identify the emission factor associated with each acquired good, representing the amount of CO2 equivalent emissions (in kilograms), and multiply it by the spent monetary unit (in euros) on a specific product or service. The model considers variables such as multi-regional aspects and recycling, so information about the country of origin of the acquired good and its recyclability is crucial when calculating the environmental footprint.

What do we achieve with this?

With this information, we perform a search in the database of emission factors to find the appropriate Emission Factor (M) for the specific product, purchase date, and country. This step ensures that we consider the specific environmental impact of the purchased product or service in the given country and at the given time.

Once we have the Emission Factor (M), we multiply it by the amount of money spent (quantity) on the product or service. This multiplication gives us the CO2eq, which represents the environmental impact of that purchase, measured in kilograms of equivalent CO2 emissions.

What is the result?

The process ensures that we take into account the unique environmental impact of each purchased product or service, allowing you to obtain valuable information about the environmental footprint of your organization's procurement activities. The calculation is highly accurate and, at the same time, addresses a common issue in calculating these emissions, which is double accounting. At Dcycle, we deduct emissions associated with utilities, business travel, and shipped and received goods before the calculation. This way, we ensure delivering the real values of scope 3 emissions to our clients. Furthermore, having the process automated and directly connected to databases backed by the European Environment Agency reduces calculation time by almost 90%.

We use solid and reliable datasets to search for the emission factor, enabling us to accurately evaluate the environmental impact without revealing any confidential information. Data security for each organization is a fundamental priority and is treated with the utmost care and privacy.

What benefits do we obtain?

The methodology used by Dcycle to calculate the carbon footprint of products and services purchased for the operation of companies is designed to provide the most accurate CO2eq emissions calculation, considering up-to-date emission factors aligned with the standards set by the European Environment Agency. We take into account these factors along with the price paid at the time of purchase, always safeguarding our clients' data and ensuring the confidentiality of their suppliers. This is a key differentiating factor since we are the only sustainability sector company in Spain using the most precise and updated databases for carbon footprint calculations. This enables our clients to measure, efficiently manage, and reduce their carbon footprint, contributing to the well-being of the planet and strengthening their position as sustainability leaders in their respective markets, reducing the time spent calculating the carbon footprint for this category by up to 90%.

Want to try Dcycle for free? You can do so here