A Supplier Emission Factor (SEF) is a monetary ratio that can be used in the expense module. It is linked to a specific company and is computed by dividing the company's GHG emissions by its revenue (kgCO2e / currency).
How are SEFs computed?
To compute a supplier emission factor, we collect information disclosed by the company. It can come from a report published by the company (e.g. sustainability report, consolidated report), a public disclosure platform (e.g. CDP), or a survey or GHG report carried out by Greenly.
SEF = (Scope 1 + Scope 2 location-based + Scope 3 upstream) / Revenue
If the required information is not available, there may be some flexibility:
Scope 2 market-based GHG emissions can be used.
Total Scope 3 GHG emissions can be used (i.e. upstream + downstream).
Partial Scope 3 GHG emissions may be used, provided that significant categories for the sector are included, with a minimum of Category 1 – Purchased Goods and Services for all sectors.
Revenue may be estimated or extrapolated.
When should a SEF be used?
A SEF is only created for companies in certain sectors, primarily the service and tech sectors. The key principle is to create a SEF only for the calculation of GHG emissions:
when an activity-based study is not feasible;
when it increases calculation accuracy compared to a generic average monetary emission factor;
when the company has a single core activity and not diversified businesses.
The SEF is also systematically compared to a benchmark value to ensure consistency (the average of SEFs for a given sector).
Minimum requirements
Mandatory data:
company name,
Greenly industry,
sustainability or GHG inventory report,
inventory year, Scope 1 (tCO2e), Scope 2 (tCO2e), Scope 3 total (tCO2e), financial report (disregard if it is the same report as the GHG inventory),
revenue (millions),
currency, revenue year (should be the same as the GHG inventory).
Highly recommended data:Scope 2 location-based (tCO2e),
Scope 2 market-based (tCO2e),
Scope 3 upstream (tCO2e).
Recommended data:company short description,
company identifier (e.g. NACE, ISIC, NAICS code),
company website,
Scope 3 breakdown per category — including purchased goods and services,
capital goods,
fuel- and energy-related activities not included in Scope 1 or 2,
upstream transportation and distribution,
waste generated in operations,
business travel,
employee commuting,
upstream leased assets,
downstream transportation and distribution,
processing of sold products,
use of sold products, end-of-life treatment of sold products,
downstream leased assets, franchises, and investments (all in tCO2e).
Done by Greenly: Greenly category name, report audit check, SEF calculation, benchmark quality check, validation, and justification if not validated.
Quality checks
A confidence index and an accuracy gain ratio are computed and provided for each SEF, through the following steps.
Step 1 — Validate Scope 1, 2, 3 GHG emissions calculation
Who undertook the study? Is a justification document provided? Who computed the GHG emissions (e.g. carbon accounting software, consulting firm, internal computations)? Is the report audited or validated by a third party? Were the results published on a public website (e.g. company website, CDP)?
Are all Scopes included? Is Scope 2 location-based or market-based? Are all Scope 3 categories included?
What emission factors were used? Are the sources reliable?
What is the percentage of spend-based versus activity-based data?
Step 2 — Validate turnover
Is it provided by the company or computed via a sector average (turnover per employee)?
Is it the same year as the GHG inventory?
Step 3 — Validate MEF: benchmark comparison
Select an industry. If the company does not have a single core activity but diversified businesses, the SEF should not be created.
Compare the SEF to the benchmark value of companies in the same sector.
The SEF must fall within the interval [Benchmark / (1 + 100%); Benchmark × (1 + 100%)].
Step 4 — Validate MEF: average MEF comparison
Compare the SEF with the closest generic average MEF provided by Exiobase, USEEIO or Base Empreinte.
The SEF must fall within the interval [Average MEF / (1 + 300%); Average MEF × (1 + 300%)].
Step 5 — Create the SEF
If the SEF passes the benchmark checks, create it and compute the confidence index.
If it is not validated, justify why the SEF was not created.
Examples
Example 1 — Digital and software sector
Company X shared its 2024 GHG report, produced with a carbon accounting platform. The following details were provided: Scope 1 = 1.78 tCO2e; Scope 2 location-based = 0.93 tCO2e; Scope 2 market-based = 0 tCO2e; Scope 3 upstream = 881 tCO2e; Scope 3 downstream = excluded; Scope 3 total = 881 tCO2e. The 2024 revenue was €9, 250, 273.
The SEF is computed: SEF = 0.096 kgCO2e/€. For that sector, the benchmark value is 0.062 kgCO2e/€. The SEF for company X falls within the confidence interval and is therefore created. The confidence score is high because all 8 upstream Scope 3 GHG Protocol categories were provided, the report was produced by a well-known carbon accounting software company, and the revenue is sourced from company X's financial statements. The uncertainty is also computed and equals 30%.
Example 2 — Audit and consulting sector
Company Y shared its 2024 GHG report, produced by a consulting company and audited by an independent third party. The following details were provided: Scope 1 = 36, 959 tCO2e; Scope 2 location-based = 18, 958 tCO2e; Scope 2 market-based = 0 tCO2e; Scope 3 upstream = 553, 806 tCO2e; Scope 3 downstream = excluded; Scope 3 total = 553, 806 tCO2e. The 2024 revenue was $64, 900, 000, 000.
The SEF is computed: SEF = 0.0094 kgCO2e/$. For that sector, the benchmark value is 0.031 kgCO2e/€. The SEF for company Y does not fall within the confidence interval and is therefore not created. The justification: Scope 3 emissions only included Category 1 – Purchased Goods and Services.