Category 1: Purchased goods and services
This category includes all upstream ‘cradle-to-gate’ emissions from the production of products purchased or acquired by a reporting company. Products include both goods (tangible products) and services (intangible products).
Cradle-to-gate emissions include all emissions that occur in the life cycle of a purchased product, from the extraction of raw materials (the ‘cradle’) upto the point where the product leaves the factory gate, ready for distribution. The assessment ends at the “gate”, before the product is transported to retailers or consumers.
The cradle-to-gate phase includes:
Harvesting or extracting natural resources.
Refining and processing raw materials into usable forms (material processing).
Transforming processed materials into the final product (manufacturing).
Preparing the product for distribution (packaging).
NB! It doesn’t include the product’s use, transportation, or disposal.
Emissions in this category are different from the emissions from the use of products once they reach the reporting company. These emissions are accounted for in scope 1 and/or scope 2.
There are four methods for calculating emissions in this category.
Supplier-specific method. This method involves using product-level cradle-to-gate GHG inventory data obtained from suppliers.
Hybrid method. This method uses a combination of supplier-specific activity data (if available) and secondary data to fill in the gaps. The method involves:
collecting allocated scope 1 and scope 2 emissions data directly from suppliers,
calculating upstream emissions of goods and services from suppliers’ activity data on the amount of materials, fuel, electricity used, distance transported, and waste generated from the production of goods and services and applying appropriate emission factors, or
using secondary data to calculate upstream emissions wherever supplier specific data is not available.
Average-data method. This method estimates emissions for goods and services by collecting data on the mass or relevant units of goods and services purchased and multiplying by the relevant secondary (e.g., industry average) emission factors (e.g., average emissions per unit of good or service).
Spend-based method. This method estimates emissions for goods and services by collecting data on the economic value of goods and services purchased and multiplying it by relevant secondary (e.g., industry average) emissions factors (e.g., average emissions per monetary value of goods).
The first two methods (supplier-specific and hybrid) require the reporting company to collect data from suppliers, whereas the other two methods (average-data and spend-based) use secondary data (i.e. industry average data).
The info graphic below shows the different data types used in the different calculation methods.
To determine which method to use for calculating emissions in this category, companies can use the decision tree below.
Method 1: Supplier-specific
This method involves using product-level cradle-to-gate GHG inventory data obtained from suppliers. Using supplier-specific product-level data avoids the need for allocation.
The activity data needed includes data on quantities or units of goods or services purchased. The reporting company should use supplier specific cradle-to-gate emission factors for the purchased goods or services i.e if the supplier has conducted a reliable cradle-to-gate GHG inventory.
To obtain this data, companies should send questionnaires to supplier requesting for the following information:
Product life cycle GHG emissions data.
A description of the methodologies used to quantify emissions and a description of data sources used, including emission factors and GWP values.
Whether the data has been assured or verified, and if so, the type of assurance achieved.
The percentage of the product inventory calculated using primary data, as well as any other relevant information
The formula below can be applied to calculate emissions using this method.
The image below shows how the formula above can be applied.
Method 2: Hybrid
The hybrid method uses a combination of supplier-specific activity data (if available) and secondary data to fill in the gaps. This method involves:
- collecting allocated scope 1 and scope 2 emissions data directly from suppliers;
- calculating upstream emissions of goods and services from suppliers’ activity data on the amount of materials, fuel, electricity used, distance transported, and waste generated from the production of goods and services and applying appropriate emission factors; or
- using secondary data to calculate upstream emissions wherever supplier specific data is not available.
For each supplier, reporting companies should collect as much of the following activity data relating to the good or service as is available. If the data is unavailable for certain activities, secondary data can be used to fill the gaps.
Allocated scope 1 and scope 2 data.
Mass or volume of material inputs (e.g. bill of materials), mass or volume of fuel inputs used, and distance from the origin of the raw material inputs to the supplier.
Quantities of waste output and other emissions.
Mass or number of units of purchased goods or services (e.g., kgs).
Amount spent on purchased goods or services, by product type, using market values (e.g., dollars)
If it’s not feasible for the company to collect data from all the suppliers, the company may use extrapolation and sampling techniques. If a supplier cannot provide data on some or all of the items in the list above, the reporting company may combine the available supplier-specific data with secondary data for other activities.
The reporting company will need to combine the primary data collected from the supplier with secondary data, to fill in the gaps. For example, if a company collects only scope 1, scope 2 and waste data from the supplier, all other upstream emissions need to be estimated using secondary data.
This data can be sourced from:
Internal data systems (e.g., bill of materials, freight distance of incoming raw materials)
Public GHG inventory reports accessible through GHG reporting programs.
Depending on what activity data has been collected from the supplier, companies may need to collect:
Cradle-to-gate emission factors for materials used by tier 1 suppliers to produce purchased goods. These emission factors can either be supplier specific emission factors provided by the supplier, or industry average emission factors sourced from a secondary database.
Lifecycle emission factors for fuel used by incoming transport of input materials to tier 1 suppliers.
Emission factors for waste output by tier 1 suppliers to produce purchased goods.
Other applicable emissions factors
The secondary emission factors required depend on what data is available for the purchased good. Companies may need to collect either:
Cradle-to-gate emission factors of the purchased goods or service per unit of mass or unit of product (e.g., kg CO2e/kg).
Cradle-to-gate emission factors of the purchased goods or services per unit of economic value (e.g., kg CO2e/$)
The company can obtain emission factors from:
Third party databases listed on the GHG protocol website.
Company- or supplier- developed emission factors, only if the supplier has conducted a reliable cradle-to-gate product GHG inventory or internal LCA report.
Industry associations
Government agencies
If the supplier is not able to provide specific information about its goods and services sold to the company, it may be necessary to allocate the emissions. For example, to calculate the sum of the waste outputs by the tier 1 supplier that relate to the purchased goods, a company can allocate a proportion of the total waste from the supplier’s operations to the purchased product.
The hybrid method can be applied as shown below.
When collecting all the data necessary to calculate cradle-to-gate emission factors from supplier-specific activity data is not practical, the reporting company can combine supplier-specific and average data.
The formula below presents a case where only scope 1, scope 2 and waste data are obtained from the supplier and the rest are obtained from secondary data. (either processed data or EEIO data1).
This formula can be applied as shown below.
Method 3: Average-data
In the third method, the company collects data on the mass or other relevant units of purchased goods or services and multiplies them by relevant secondary (e.g., industry average) cradle-to-gate emission factors. Secondary factors may be found in process-based life cycle inventory databases.
The activity data needed here is the mass or number of units of purchased goods or services for a given year (e.g., kg, hours spent). These data can be sourced from internal data systems (e.g., bill of materials) or purchasing records.
The emissions required are cradle-to-gate emission factors of the purchased goods or services per unit of mass or unit of product (e.g., kg CO2e/kg or CO2e/hour spent). These emission factors can be obtained from process life cycle databases and industry associations.
The formula for calculating emissions using this method is as follows:
Method 4: Spend-based
If the supplier-specific method, hybrid method, and average data method are not feasible, e.g. due to data limitations, companies should apply the average spend-based method by collecting data on the economic value of purchased goods and services and multiplying them by the relevant EEIO emission factors.
To do this, they need data on amounts spent on purchased goods or services, by product type, using market values (e.g., dollars). This data can be obtained from internal data systems (e.g., ERP systems), bill of materials and purchasing records. They also need cradle-to-gate emission factors of the purchased goods or services per unit of economic value (e.g., kg CO2e/$). This data can be sourced from EEIO databases or industry associations.
Where applicable, inflation rates should be applied in order to convert market values between the year of the EEIO estimation factors and the year of the activity data.
The spend-based method can be applied as shown below.
Footnotes
EEIO models estimate energy use and/or GHG emissions resulting from the production and upstream supply chain activities of different sectors and products within the economy. The resulting EEIO emission factors can be used to estimate GHG emissions for a given industry or product category. They are derived by allocating national GHG emissions to groups of finished products based on economic flows between industry sectors. These models vary in the number of sectors and products included and how often they are updated.↩︎