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Extending climate disclosures to circular economy metrics
FootprintLab's pitch to the Australian Circular Economy Forum on bringing circular economy metrics into the same workflows businesses already use for carbon accounting.
Written by
Janet Salem
FootprintLab has been a supporter of Circular Australia from the start and enjoy being a part of the Circular Economy Task Force for Finance and Investment. This is the pitch we were invited to deliver at the Australian Circular Economy Forum today.
Transcript
I'm Janet from FootprintLab. We provide academic data about the hidden impacts of everything everywhere.
Australia's circular economy framework uses a variety of metrics to measure our circularity, test scenarios and set policy targets.
That's great for the national level, but wouldn't it be great to see where your sector, your business or your investment portfolio stands with the same metrics?
Good news, that is possible today. At FootprintLab, we already provide carbon footprint data about every sector in every country. But did you know that we also have hundreds of material use metrics for every sector in every country.
Let's see an example:
Imagine if you had to source all the materials needed for the entire supply chain behind the goods and services produced in our economy. How much would you need to extract from the one person agriculture, forestry, fisheries and mining in your backyard?
If you live in Australia, it's over 260 kg – represented here by about 300 large potatoes.
We supply this type of data in formats that fit the same workflows businesses already have for carbon accounting, whether they are banks, carbon calculators, or asset managers.
This means that anyone already familiar with carbon accounting, can easily extend that to a circular economy – measuring and managing the amount of materials extracted from the environment along their supply chains.
Behind our material footprint data, we also have hundreds of disaggregations.
Integrating this data into your business data is also great for anticipating exposure to supply chain risk that are typical of our linear economy.
For example, a hot topic is coming shortfalls of critical metals needed for tech. With our data, you can easily see the nickel footprint of your investments to know where the hotspots are. You can also assess the proportion of your material footprint that is non-renewable, or even find out our supply chain wide expenditure on materials that are not raw materials - like plastics.
If you want to learn more, let's talk!
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Frequently asked questions
What is an Emission Factor?
An Emission Factor is a multiplier that converts a unit of economic activity into an environmental impact. Each Emission Factor is specific to a business activity, country, year and the impact being measured. For example, if the business activity is 100 USD of printing services in Singapore in 2025, the corresponding Emission Factor is 0.633 kg CO2e per USD. To determine the Scope 3 emissions of that business activity, simply multiply 100 USD by 0.633 kg CO2e per USD to get 63.3 kg CO2e.
Should I use activity-based or spend-based data?
The GHG Protocol refers to a Data Quality 'Hierarchy':
Supplier specific activity-based data.
Generic activity-based data
Spend-based emission factors.
Where possible - especially for Scope 1 and 2 calculations - activity-based emission factors should be used. However, there are other considerations:
Activity-based emission factors are not widely available for all products and services. Both the 'data burden' and cost of data collection is therefore high, particularly for supplier-specific data.
Activity-based emission factors depend on the availability of activity business data, e.g. knowing the number of hotel-nights or kg of paper used, which may not be readily available to sustainability accounting teams. This is particularly the case for services, such as plumbing or accounting services, where the activity unit is difficult to determine.
Activity-based emission factors may have higher data pedigree when it comes to product fit, but suffer in other data pedigree dimensions. For example, you may find activity-based emission factors from a different country, or that are more than 5 years old.
A good approach is to use spend-based factors as a foundation, and focus efforts to obtain activity-based emission factors for the business activities with a higher estimated carbon footprint (ie, improve data hierarchy and data pedigree where materiality is highest).
What are the 5 quality dimensions for Emission Factors?
The GHG Protocol refers to five dimensions of 'Data Pedigree':
geographic match between the Emission Factor and the business activity.
temporal match between the Emission Factor and the business activity. As a rule of thumb, there should be less than 3 years between the primary data year of the Emission Factor, and the business activity.
completeness. This refers to how much of the supply chain is included in the calculations and is often a key trade-off between bottom up methods and top down methods.
technical fit between the product, sector or service the Emission Factor covers.
methodology quality, including whether the primary data and calculation methods are documented.
For each Emission Factor used, it's a good idea to document the 5 dimensions behind it for smoother audits.