Summary

Ecologi Zero ® uses a methodology based on The Greenhouse Gas (GHG) Protocol and the Science Based Target initiative (SBTi) net-zero standard.

Follow this link to discover our high level overview describing how Ecologi Zero calculates your carbon footprint, or, keep reading to discover the detail behind our methodology.

These frameworks are world leading, internationally adopted standards and form the basis of everything we do. This allows Ecologi Zero to utilise cutting edge scientific guidance to produce footprints consistent with global carbon accounting standards.

Ecologi have worked with preeminent carbon accountants and climate scientists to produce a methodology which combines two widely used approaches to carbon accounting; combining spend based data and activity data. By combining the top-down spend-based approach with the bottom-up, activity-based data, Ecologi Zero is able to leverage the benefits of both methods.


Using spend-based data matched to environmentally-extended multi-regional input-output (EE MRIO) models (providing average industry emissions per unit of currency spent), Ecologi Zero can calculate Scope 3 emissions for which the availability of activity data is limited and would otherwise be unaccounted for. This provides a more complete overview of business emissions and an insight into emissions hotspots across the entire value chain.

However, top-down spend-based approach has limitations. As such, activity data is also used to improve the accuracy of emissions calculations for the mandatory Scope 1 and 2 emissions categories for which activity data is available, overriding the use of spend-based data.


Spend-based method

Estimates emissions for goods and services by multiplying the economic value of goods and services purchased and the relevant EEIO emission factors (e.g., average emissions per monetary value of goods) for the relevant industry.

Where applicable, inflation and exchange rate data are applied to align the year/units of financial spend data to that of the EE MRIO emissions factors.

Spend-based Calculation formula

∑ (value of purchased good or service (£) × emission factor of purchased good or service per unit of economic value (kg CO2 e/£)) = kg CO2e


Activity-based method

Estimates emissions for goods and services by multiplying the level of activity (km travelled, kWh of electricity and use of natural gas kWh) by an emissions factor (a coefficient that indicates the GHG emissions produced by consuming/producing a unit of a given activity). Emissions factors are multiplied by the Global Warming Potential (GWP) of the respective gas to display all emissions in a standardised unit of kgCO2e.

An activity-based method has been adopted to calculate the Scope 1 emissions from company-owned vehicles (km) and use of natural gas for heating systems (kWh), as well as Scope 2 emissions from purchased electricity (kWh). Which are mandatory to report under the GHG Protocol.

To avoid double-counting these emissions from imported financial transactions, Ecologi Zero has an inbuilt function that automatically excludes electricity and gas supply payments and enables the user to ignore transactions corresponding to fuel purchased for company vehicles and electricity bills for which activity data is provided.

Activity-based Calculation formula

∑ (units of activity data × emission factor of emitting activity (kg CO2 per kWh/kg/litre)) = kg CO2e


Datasets

Spend-based Data

Spend-based data is mapped against the Small World Consulting (SWC) environmentally-extended multi-region input-output (EE MRIO) database, which includes emissions coefficients for all the GHGs required to be reported under the GHG Protocol and spans 65 countries and 105 sectors. Once extracted, coefficients for each of the greenhouse gases are multiplied by their respective Global Warming Potential to display all emissions in a standardised kgCO2e per € figure (Smith et al., 2021).

EE MRIO models map the embodied environmental impacts of downstream consumption and economic activity, providing an estimate of GHG emissions embodied within different sectors and products. The unit of EE MRIO models is typically a quantity of GHGs emitted per unit of currency in a particular industry sector. As such, SWC EE MRIO data enables Ecologi Zero to screen emissions sources whilst minimising the burden on the user for data collection through the use of financial accounts.

EE MRIO models have some limitations that need to be acknowledged and mitigated where possible. EE MRIO data is generated for given periods and currencies; as such, deflators and currency exchange rates need to be applied to convert the data for the relevant period and currency for the financial data (Tarne et al., 2018; Thiel et al., 2020). EXIOBASE3 currency units are in Euros €; as such, an exchange rate for the reference year in which the transaction took place is applied to convert to pounds sterling £.

The SWC EE MRIO model utilises industry averages and therefore assumes homogeneity of products and services within industries, unable to distinguish between products/services of different monetary value within a single sector. This presents difficulties in tracking the efficacy of reduction efforts, such as swapping to a more environmentally-friendly alternative.

Activity-based Data

To overcome some of the limitations of a spend-based method and EE MRIO data, Ecologi Zero uses a hybrid approach for calculations across Scopes. Activity data is mapped to the most recent 2022 emission factors and life cycle assessment (LCA) data provided by the UK Government Department of Business, Energy and Industrial Strategy (Thistlethwaite et al., 2022). Further information regarding how the dataset is collated can be found here.

Life-cycle data has a greater level of specificity than spend-based data and is, therefore, a more accurate way to calculate emissions. However, this often comes at the trade-off of accessibility, with a greater burden of data collection posing a barrier to applying an activity-based methodology broadly across the value chain.


Emissions Inventory

The following section outlines the emissions tracked within Ecologi Zero and the relevant calculation methodology for each.

Follow this link to find out more information on the different Scopes of emissions within the GHG Protocol.

Scope 1

Ecologi Zero will enable companies to account for their Scope 1 emissions from the combustion of fuels in owned/controlled company vehicles or stationary combustion of fuels in furnaces, machinery or boilers. Emissions from company-owned or operated vehicles are calculated using the distance travelled activity mapped to DEFRA emissions factors.

Emissions from stationary combustion currently only include natural gas for central heating systems; these emissions are calculated based on the user's activity data (kWh).

Scope 2

Scope 2 emissions account for purchased electricity, including purchased electricity for electric vehicles (charged off-site). Emissions from EVs charged predominantly onsite are excluded to avoid double-counting, as these will be accounted for within the site-specific activity data (kWh).

Scope 2 emissions are calculated using activity data in kWh provided by the user from utility bills or meter readings, assuming a location-based approach. If the user indicates that they use renewable energy, a market-based approach will be adopted to reflect the actual emissions of electricity generation. Calculations are based on a 15% deviation in emissions factors observed in Exiobase between renewable and non-renewable energy-mix figures.

Scope 3

Ecologi Zero uses a spend-based methodology to screen value chain emissions that would otherwise be unaccounted for. At present, only the emissions for the following Scope 3 categories are included in the inventory:

  • Purchased Goods & Services (spend-based)

  • Capital Goods (spend-based)

  • Upstream transportation and distribution (spend-based)

  • Business Travel (cars (activity-data)/ buses, taxis, trains, hotels (spend-based))


Limitations

The GHG Protocol standards and recommendations underpin the methodology and calculations used within Ecologi Zero. The tool is still under development, and as such, Ecologi are working hard to address the following limitations:

  • Ecologi Zero does not currently account for Scope 1 emissions from refrigerants or emissions from the production or processing of chemicals. It is, therefore, not feasible for some businesses to compile a full Scope 1 and 2 emissions inventory and be GHG Protocol compliant.

  • Plug-in hybrid vehicles have emissions associated with both the combustion of fossil fuels and the generation of purchased electricity, which should be accounted for within Scopes 1 and 2, respectively. Ecologi Zero calculates the total emissions from both emissions sources; however, these are not apportioned across the Scopes, with all emissions from plug-in hybrid vehicles allocated within Scope 1.

  • Under the GHG Protocol Corporate Standard, companies are only required to report their Scope 1 and Scope 2 emissions. As a result, only proactive companies collect, analyse, report and disclose their Scope 3 carbon emissions, leaving significant opportunities for carbon reductions unrealised. Whilst a spend-based approach enables Ecologi Zero to screen broadly across value chain emissions, the Scope 3 categories included within the tool are limited. These will be expanded in due course to include categories such as employee commuting (including emissions from remote working) and indirect-fuel emissions based on existing activity data.

  • To develop a cross-sector tool appropriate for a broad range of businesses, a number of assumptions have been made. Ecologi Zero assumes the operational control approach meaning the tool accounts for emissions from owned or leased assets for which the organisation controls operational activity. However, an alternative financial control or equity share approach may be more suitable for specific industries, such as real estate, venture capital or group companies/subsidiaries/affiliates/franchises, to account for emissions in facilities for which they do not have operational control but own or retain the majority risk/reward of ownership.

  • At present, Ecologi Zero is primarily focused on servicing UK SMEs. As such, it is only possible to download financial transitions from Xero from a single account and does not consolidate across multiple accounts, nations, subsidiaries or affiliates. This will not be a prohibiting factor for most UK SMEs. However, it would constrain those operating multiple accounting software systems as emissions from multiple business units must be consolidated under the operational control approach to comply with the GHG Protocol.

Ecologi Zero remains in the beta development phase, and the team continues to work hard to expand the tool's capabilities and overcome the limitations outlined above.

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