Understanding the Scope 3 calculation hierarchy
The GHG Protocol defines a hierarchy of calculation approaches for Scope 3 emissions, ranging from spend-based estimates at the bottom to supplier-specific data at the top. Spend-based calculations use procurement data and economic emission factors (e.g., kgCO₂e per £ spent) to estimate emissions across your value chain. While this approach provides broad coverage quickly, it's the least accurate method and can't capture the real-world differences between suppliers producing the same product with vastly different carbon intensities.
When spend-based is good enough
Spend-based screening is an excellent starting point. It allows you to calculate a baseline across all 15 Scope 3 categories in weeks rather than months, identify your material categories (typically purchased goods, capital goods, and upstream transport account for 80%+ of Scope 3), and prioritise where to invest in better data. For many organisations, spend-based estimates are sufficient for initial SECR voluntary disclosures and internal target-setting. The key is to be transparent about the methodology and its limitations.
Moving to activity-based calculations
Activity-based calculations use physical quantities — kg of material purchased, km of freight transport, kWh of energy consumed — paired with process-specific emission factors. This approach is more accurate because it reflects actual consumption rather than financial proxies. The transition typically starts with your top 10–20 procurement categories by spend, requesting quantity data from your procurement team or directly from suppliers. Each category you convert from spend-based to activity-based improves your footprint accuracy by 20–40%.
Building a hybrid approach
The most pragmatic strategy is a hybrid: use spend-based estimates for your long tail of low-materiality categories, and invest in activity-based data for your high-impact categories. Create a multi-year data improvement plan that progressively shifts categories up the calculation hierarchy. This approach satisfies reporting requirements today while building the data infrastructure needed for supplier engagement, science-based targets, and reduction tracking over time.