Spend-Based vs Activity-Based Emissions: What’s the Difference?

As businesses ramp up their sustainability reporting, many are facing a fundamental question: How do you actually calculate your emissions?

From corporate sustainability reports to product-level carbon footprints, your choice of methodology can drastically impact the results and their credibility. Two of the most common approaches are:

• Spend-based emissions calculations, and
• Activity-based emissions calculations

Understanding the difference is essential, especially as regulations like the Corporate Sustainability Reporting Directive (CSRD) and green claims laws demand more accurate, traceable, and verifiable carbon data.

What’s the Difference Between Spend-based and Activity-based Emissions?

The Limits of Spend-Based Emissions

Spend-based models are useful for high-level screening or where data is missing, but they have key limitations:

• Broad averages: Based on economic sector averages, not specific supplier or process data
• Price distortions: Inflation, procurement volume, or regional pricing can skew results
• Low traceability: Hard to verify or audit, especially under stricter reporting laws

As scrutiny grows around green claims and Scope 3 data, spend-based reporting is increasingly seen as a starting point, not a credible end result.

The Case for Activity-Based Emissions

Activity-based accounting reflects what you actually buy, use, or produce and how it performs in reality. It allows companies to:

• ✅ Use real quantities and product specifications
• ✅ Source supplier-specific or region-specific emissions factors
• ✅ Support science-based targets and Scope 3 disclosures
• ✅ Build trust with investors, customers, and regulators

For example, instead of reporting emissions based on €500,000 spent on ship components, you can report based on 5,000 kg of steel + 300 kg of insulation + 120 meters of piping, each with specific emission factors.

Why It Matters in Maritime and Product Carbon Footprints

In sectors like shipping and manufacturing, where materials, fuels, and components drive most emissions, spend-based data doesn’t cut it anymore.

For:

• OEMs & suppliers → Activity-based models support tender accuracy and customer ESG demands
• Shipowners & operators → Helps quantify emissions per vessel, or retrofit
• Scope 3 reporting → Enables downstream customers to use your data in their LCA or CSRD reports

How ReFlow Helps Companies Move from Spend to Activity-Based Emissions

ReFlow's platform is built around activity-based carbon modeling to ensure your data is accurate, traceable, and compliant with leading sustainability frameworks.

We help clients:

• Match physical activities to verified emissions factors
• Model cradle-to-grave emissions using ISO 14067 and 14040/44
• Export data ready for CSRD, EU Taxonomy, or customer Scope 3 reporting

Whether you're a shipbuilder, product manufacturer, or supplier, ReFlow helps you move beyond assumptions and toward accountability.

Frequently Asked Questions (FAQ)

What is a spend-based emissions factor?

An estimate of emissions per unit of financial spend (e.g. 0.6 kg CO₂e per €1 spent on metal components).

When should I use spend-based emissions?

It’s a helpful screening tool when no quantity or supplier data is available but not suitable for regulated disclosures or external green claims.

What is activity-based emissions data?

A method using real quantities (like kg, liters, or hours of operation) to calculate emissions using specific, traceable emissions factors.

Which is more accepted for compliance?

Activity-based data is preferred or required for most sustainability frameworks, including GHG Protocol, CSRD, and Science-Based Targets.

Can I combine both approaches?

Yes, many companies start with spend-based data and gradually replace it with activity-based inputs as better data becomes available. ReFlow helps manage that transition.