Monetary or activity-based approach?
To compute a company's Greenhouse Gas (GHG) emissions, Greenly uses a two-step approach: an initial estimation using a monetary approach, followed by an activity-based approach that fine-tunes significant emission sources whenever reliable activity data is available. Expenses are first estimated using the monetary approach; when more precise activity data becomes available, significant emission sources are then refined using the activity-based approach. For significant emission sources, the activity-based approach should always be preferred.
Monetary approach
Greenly computes the carbon footprint of each expense by analysing, categorising, and then multiplying the amount associated with a transaction by a monetary emission factor. The result is an estimation of the carbon footprint (kgCO2e) associated with the expense.
Which monetary emission factor should be chosen?
By analysing and categorising transactions using our algorithm, Greenly can identify the most relevant emission factor to estimate the GHG emissions linked to an expense. These monetary emission factors can be derived from three main types of methodology:
For a product: when it's possible to estimate the quantity purchased using the price paid by the company — for example, the purchase of raw materials, transport, or the electricity consumption of a building. In this case, GHG emissions are computed using an activity-based emission factor (kgCO2e per L/gallon, km/miles, kg/lbs, etc.) and an estimation of the physical flow (based on the amount of the transaction).
For a service: when the company providing the service computes and reports its GHG emissions — for example, insurance contracts, software licences, or bank fees. In this case, the amount of the transaction is multiplied by the ratio of the company's total emissions divided by its turnover.
By market sector: when the two methods above are not possible due to a lack of data. In this case, a monetary emission factor for a set of products (goods or services) is computed using environmental data (GHG emissions generated) and economic data (expenditure and income) for a given market sector.
Activity-based approach
To refine some estimations of GHG emissions, it is necessary to carry out activity-based studies. In this case, physical data (L/gallon, km/miles, kg/lbs, etc.) are multiplied by activity-based emission factors.
These emission factors can be:
Published by public bodies and agencies (e.g. EPA, UK Government, French Environment Agency, IPCC)
Provided by Life Cycle Assessment (LCA) databases (e.g. Ecoinvent)
Found in LCA studies and research papers
Published by companies
And others
Example: A 7.5 t lorry transports 1, 500 kg of goods over a distance of 100 km. The corresponding GHG emissions are computed as follows:
GHG emissions = 0.378 kgCO2e/t.km* (EF of the lorry) × 1.5 t × 100 km = 56.7 kgCO2e*
Avoid double counting: When carrying out activity-based studies, be careful not to count the same GHG emissions several times. For example, if a freight expense has already been estimated using the monetary approach, and the same freight activity is later calculated using distance and weight data, only one of the two results should be kept in the final footprint.