Spend-based vs. Activity-based carbon accounting: Which delivers more business value?

Spend-based and activity-based carbon accounting are two distinct approaches for estimating greenhouse gas (GHG) emissions. The key difference lies in the type of input data: spend-based methods use financial expenditure, while activity-based methods use physical activity data (such as kWh, km, or kg). The choice of method can significantly affect the accuracy and reliability of emissions estimates, especially for scope 3 categories, such as purchased services.

What are spend-based and activity-based emissions calculations?

Spend-based calculations estimate emissions by multiplying the amount of money spent on a good or service by an emission factor expressed per unit of currency (e.g., kg CO₂e/€). These emission factors are typically derived from environmentally extended input-output (EEIO) models such as EXIOBASE.

Activity-based calculations use actual physical data (e.g., litres of fuel, kWh of electricity, kilometres travelled) and multiply these by emission factors specific to the activity (e.g., kg CO₂e/kWh). This approach is generally more precise, as it reflects the real-world quantities consumed or used.

How the spend-based method works (and when to use it)

Spend-based carbon accounting is straightforward: organisations pull data from financial systems and apply emissions factors based on economic input-output models. It is most useful for:

• Early-stage carbon accounting
• Covering broad, complex supply chains

This method is fast, cost-effective, and requires minimal data collection. It is accepted under the GHG Protocol and useful when supplier-specific or activity data is unavailable. However, it lacks precision, is vulnerable to price fluctuations, and can obscure the real drivers of emissions.

How the activity-based method works (and why it’s more accurate)

The activity-based approach uses measurable operational data, such as actual fuel use, energy consumption, or freight distances, to calculate emissions. Each activity is matched to an emissions factor specific to the unit of measure. This method provides more accurate, granular insights and is especially powerful for:

• Setting targets
• Tracking progress
• Planning reductions

Although more time- and resource-intensive, activity-based data supports better decision-making and aligns more closely with reporting frameworks that value transparency and verifiability.

Pros and cons of spend-based vs activity-based data

Spend-based data is fast, low-cost, and accepted under the GHG Protocol for scope 3 reporting. It covers the full value chain but lacks precision, can’t track product-level differences, and is too reactive for effective emissions reduction planning. Activity-based data, while more complex and costly to implement, offers high accuracy, supports science-based targets, enables reduction planning, and provides full control over real emissions. It's preferred for credible climate strategies but can be harder to scale across entire supply chains.

In short, if your goal is to move from reporting to real emissions reduction, you’ll need activity-based data.

Impact on scope 3 reporting

Scope 3 emissions (indirect emissions in the value chain) are notoriously difficult to measure. Spend-based methods provide a practical starting point but often over- or underestimate emissions. Activity-based methods give a truer picture, enabling more credible disclosures to stakeholders, especially for high-impact categories like purchased goods, transport, and business travel.

Activity-based data for emissions reduction planning

Reducing emissions requires knowing where they come from. Activity-based data links emissions directly to specific actions (e.g., miles travelled, energy consumed), making it easier to:

• Identify high-impact operations
• Target interventions
• Monitor changes over time

Spend-based data may suggest cutting costs but won’t reveal whether those savings actually reduce emissions. Activity data allows businesses to make meaningful operational changes, not just budgetary ones.

GHG protocol guidance

The GHG Protocol supports both methods. Its scope 3 Standard outlines four data types: spend-based, average-data, supplier-specific, and hybrid. Companies are encouraged to improve data quality over time by moving from spend-based to activity-based or supplier-specific data for material categories. Transparency and consistency are key.

Case study: Purchased services

Many companies use the spend-based approach for carbon accounting of purchased services due to a lack of activity-based data. This example compares both methods for a company in the professional services industry.

We analysed the top service suppliers in the scope 3 category “purchased services” and compared the activity-based data result with the spend-based data result.

What this means for your business

The difference is striking: the spend-based method overestimates emissions by almost 37%. Relying solely on spend-based data means you risk over- or underestimating your real emissions.

Why does this happen?

Spend-based emission factors are based on sector averages, not your company’s actual operations. In contrast, activity-based data reflects the true emissions tied to your specific services and suppliers.

Business impact

Compliance risks: Under- or overestimating emissions can impact regulatory alignment.

Missed opportunities: Under- or overestimating emissions reduces the ability to identify key reduction areas.

Reputation: Inaccurate data erodes credibility with stakeholders and reduces actionable insights for driving change.

Direct business benefits of activity-based data

By using actual quantities, materials, or process-level inputs instead of industry spend averages, companies gain a clearer picture of their footprint and create real business value using activity-based data.

Smarter procurement and emissions visibility

Activity-level data shows exactly which materials, products, or suppliers carry the highest emissions. This enables better procurement decisions, optimised sourcing, and targeted supplier engagement, leading to lower emissions and often lower long-term costs.

Actionable carbon reduction strategies

With detailed, real-world inputs, you can identify which processes or activities are driving emissions and design precise interventions. Whether it’s switching materials, refining operations, or improving supplier practices, activity-based data gives you the evidence to act.

Better reporting and stakeholder trust

Granular, verifiable data strengthens your reporting to international frameworks and ensures compliance with emerging regulations. It also builds credibility with customers, investors, and regulators, demonstrating that your climate action is grounded in real numbers.

Supports circularity and product innovation

Knowing the material makeup and origin of inputs helps inform circular economy strategies, from recycling and reuse to product redesign. This makes activity-based data a key enabler for long-term sustainability and innovation goals.

Why companies trust ClimatePartner for carbon data

If you want numbers you can trust, and that drive real business value, activity-based data is essential. Spend-based is a fallback, not a strategy.

At ClimatePartner, our solution is simple: we always aim for the most accurate results by using your real activity data, like actual energy use, travel distances, or quantities of goods purchased.

A key reason for this accuracy is our Emission Factor Database (EFDB). The EFDB is the foundation of our carbon calculations, containing scientifically backed emission factors that quantify the greenhouse gas emissions for specific activities, processes, or products.

We prioritise quality, accessibility, and comprehensiveness in our database, ensuring that carbon footprints are calculated using the most reliable and up-to-date data available. This approach supports transparency and credibility in your reporting and underpins the trust our clients place in us.

But we know that detailed data isn’t always available for every part of your business. That’s why we also offer spend-based calculations, using your financial data and industry averages to fill in the gaps. This means you can get started right away, even if you don’t have all the details yet.

As you work with us, we’ll help you move from estimates to exact numbers, so your reporting gets stronger, your reduction strategies get sharper, and your climate action becomes truly credible.

With ClimatePartner, you get a flexible, future-proof approach to carbon accounting that grows with your business.