Activity-based and spend-based carbon accounting
An organisation's greenhouse gas emissions are calculated using two methods: spend-based and activity-based carbon accounting.
Spend-based methods take the financial value of purchased goods or services and multiplies it by an emissions factor (the amount of emissions produced per financial unit), resulting in an estimate of the emissions produced.
Activity-based methods use emissions factors to calculate an activity's emissions output. These methods rely on data to determine how many units of a product or material an organisation has used (such as litres of fuel or kilograms of textiles), which then results in emissions. They can also measure how much of an activity, like driving a vehicle, has contributed to emissions.
Spend-based methods' emission factors are built on industry average emissions levels. They are great for getting a quick snapshot of an organisation's emission hotspots but they can obscure key information about specific purchases, and can be unreliable when prices fluctuate. Using industry averages also means that organisations are only in direct comparison with other organisations in the same industry.
Hybrid methodologies use spend-based and activity-based data, combining the higher accuracy of activity-based estimates with more readily available spend-based data.
Despite this, there is no universally-accepted method of carbon accounting, and different methodologies will give wildly different results.
Carbon dioxide
Carbon dioxide (CO2) is the most common greenhouse gas emitted by human activities. Other GHG gases like methane (CH4) & nitrous oxide (N2O) also contribute to global warming. The combined effect of these gases is known as 'Carbon Dioxide Equivalent' (CO2e) and is the unit we use on our platform to measure an organisation's impact.
Carbon accounting
Carbon accounting is the process of measuring the amount of greenhouse gases (GHGs) produced directly and indirectly from an organisation's activities.
An organisation's estimated carbon emissions calculated from carbon accounting are broken down into three categories, or 'scopes', to simplify the process.
Scope 1 – emissions generated directly by the organisation and its activities. For example, fuel use or office space gas usage.
Scope 2 – emissions an organisation indirectly causes when the energy it purchases and uses is produced. For example, purchased heat, energy and steam.
Scope 3 – any other emissions that don't fall under scope 1 or 2, including business travel, employee commuting, leased assets and investments. There are 15 categories in total, which are segmented into upstream & downstream emissions. For example, purchasing goods into a business is considered 'upstream', whereas sending those same goods out to a customer is considered 'downstream'.
Carbon metric
There is currently no industry standard, unified carbon metric that enables direct comparison of CO2e emissions for every business. Carbon accountants use a range of different methodologies, making the results unreliable and widely variable between different carbon accountants.
Mycelium normalises (see normalisation) the emissions reported by an organisation to provide a common, standardised method for measuring carbon emissions, providing a single point of truth for company emissions.
Direct comparison
Carbon data is only useful when you can compare any organisation against any other, regardless of sector. Without direct comparison, every footprint sits in its own little silo.
Current methods of carbon accounting rely strongly on industry averages, which means that organisations can only be compared to other organisations in the same industry.
This can present a misleading image of an organisation's sustainability. For example, an oil company may have lower carbon emissions in comparison to another oil company, giving it the appearance of operating sustainably within that sector because the average industry emissions are very high. However, when compared to an organisation in another, non-polluting sector, the oil company's emissions will be far higher.
By enabling direct comparison of any company, we're ensuring that highly polluting companies can't hide behind industry averages. Our carbon data gives a clear, accurate picture of an organisation's emissions, regardless of their industry.
Interoperability
Interoperability of carbon data is key to building a reliable and transparent carbon accounting system. Carbon accountants use various methodologies to measure carbon emissions, making available data unreliable and inconsistent, with siloed platforms producing wildly different company results. This creates huge problems for organisations looking to legitimately understand their carbon emissions, and for those looking to understand an organisation's sustainability.
By developing a unified Mycelium Score to validate emissions reporting across all platforms, Mycelium is ensuring the interoperability of carbon data across the entire carbon accounting ecosystem, creating one reliable source of truth.
Mycelium score
The Mycelium Score is out of 10. Up to 6.5 points reflect carbon intensity vs sector peers (emissions normalised against revenue), scaled by how transparent the reporting is. The band above 6.5 is earned through verified data quality on a claimed profile: declaring every reporting category yourself (up to 2.0), preparation by a carbon accountant (2.0) and independently audited figures (2.0), capped at 10.
(6.5) Be the lowest carbon intensity
The easiest way for an organisation to achieve a high Mycelium score is by reporting the lowest carbon dioxide equivalent emissions within their industrial sector. This will enable them to achieve up to 6.5 on the Mycelium scoring scale.
Any emissions left unreported will be estimated by us based on yearly revenue and industrial classification. This carries a penalty, for more information, see normalisation.
Claim the listing
It's important that organisations claim their listings to confirm the emissions profile we have for them is accurate. Claiming does not add points on its own, but it unlocks submitting your own verified disclosure, which is how the declaration and verification points below are earned.
(x the transparency score) Be fully transparent
We calculate a transparency score for each listing based on the percentage of emissions that have been reported by an organisation, weighted by the categories that matter most in its industry. The carbon intensity points above are multiplied by the transparency score, so incomplete reporting scales the whole base score down.
(2.0) Declare every emissions figure
Each of the 18 GHG Protocol reporting cells (Scope 1, both Scope 2 methods and the 15 Scope 3 categories) that an organisation enters itself adds to the score, up to 2.0 for a complete disclosure. A disclosed zero counts, confirming a category has no emissions is meaningful data.
(2.0) Use a third party to calculate emissions
We place the most trust in emissions data that has been calculated by an independent third party, such as a carbon accountant. By using a third party, organisations can gain an additional 2.0 on the Mycelium scoring scale.
(2.0) Have the numbers independently audited
Reported emissions that have been audited to a recognised assurance standard, with a named assurance provider and a stated assurance level, earn a further 2.0 on the Mycelium scoring scale. This stacks with the third-party preparation signal above.
Carbon accountants can also report an organisation's emissions profile directly to us on the organisation's behalf, which counts as the listing being claimed.
Normalisation
Any emissions left unreported will be estimated by us based on yearly revenue and industrial classification. We call this process normalisation, and it enables us to fill in the gaps for emissions that haven't been reported.
Normalisation data is pulled from Carbon Disclosure Project and MSCI datasets to create 24 industrial classifications that allow us to make emissions estimations in unreported GHG Protocol scope categories. We use these categories to funnel the Mycelium score across 15 industrial sectors. We normalise by sector because all industries emit very differently.
Normalisation is important because unless all emissions categories have been disclosed (including categories confirmed as zero where there are no emissions), we're unable to make valid comparisons between organisations based on sustainability.
Normalisation carries a penalty, making it unlikely that an organisation can achieve the lowest emissions intensity in its sector. To avoid this penalty, it's important that organisations fully report their emissions data across all categories.
Scope 1, 2, 3
See carbon accounting.
t CO2e / £
Tonnes of carbon dioxide equivalent – see Carbon Dioxide.
Transparency score
The transparency score we award shows how transparent an organisation has been about the information they have provided to Mycelium. It's calculated based on the percentage of emissions an organisation has reported to us. The more information the company provides, the higher the transparency score will be.
When calculating our transparency scores, not all emissions categories carry equal weighting, and are weighted differently based on emissions averages for an organisation's specific industry.
For example, up to 98% of a financial services company's entire emissions are likely to occur within the investment category, making this category heavily weighted when calculating its transparency score:
By reporting 17 out of 18 emissions categories except investments (where most of their emissions will be), the company will receive a very low transparency score.
By contrast, if they report only 3 out of 18 emissions categories, but have reported the most crucial and highly emitting ones, including investments, they will receive a much higher transparency score.
For a deeper dive into our methodology, check out our white paper on Mycelium's carbon benchmarking & scoring.
