Position Green spend-based methodology overview

Introduction

This article outlines Position Green's spend-based methodology for greenhouse gas emission inventories. The methodology has been developed in collaboration with SINTEF, Norway's leading research institution, combining academic rigor with practical application to deliver high-quality carbon accounting results.

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Position Green methodology at a glance

Position Green uses a Tiered Hybrid Life-Cycle Inventory (Tiered Hybrid LCI) framework, combining spend-based and activity-based approaches. The spend-based methodology provides complete Scope 3 coverage, while activity data adds precision where available, balancing completeness with granularity.

Built on decades of SINTEF research in Environmentally Extended Input-Output (EEMRIO) modeling, the system transforms financial transactions into emission estimates by linking spend data with emission factors from global databases. The methodology captures upstream supply chain effects through multiple tiers, ensuring comprehensive coverage and revealing emission hotspots to guide decarbonization strategies.

Why measuring Scope 3 emissions matters

Complete Scope 3 measurement is critical for three reasons:

1. Scope 3 typically represents over 90% of corporate emissions (CDP, 2023), making it essential for global decarbonization and business resilience.
2. Selective disclosures can misrepresent true impact, creating compliance risks as complete reporting becomes standard.
3. Material emissions often hide in unexpected places. Only comprehensive analysis surfaces these hotspots for strategic action.

Beyond completeness, Position Green delivers operational advantages. Automated processing reduces months-long manual work to days, removes classification costs, and ensures a consistent, scalable methodology accessible to companies of all sizes worldwide.

Methodology foundation

Position Green's methodology uses Input-Output modeling principles developed in collaboration with SINTEF. The approach integrates:

• Global economic relationship data covering 67 countries plus Rest of World (ROW) region, ensuring worldwide completeness
• Environmental extensions from leading databases, including Eurostat Air Emissions Accounts
• Advanced economic modeling to capture supply chain effects through multiple tiers
• Country-specific and sector-specific emission factors reflecting real differences in production technology and energy sources

How the methodology works

The methodology follows a systematic workflow that transforms financial transactions into comprehensive emission estimates.

Data foundation

Position Green integrates multiple international databases that provide global coverage of economic relationships and environmental impacts, including OECD Inter-Country Input-Output tables, Eurostat Air Emissions Accounts, and additional environmental data sources. These foundations are continuously updated as new official statistics become available.

Company data integration

Position Green ingests financial data through:

• APIs to major Nordic and European ERP and accounting systems for automated data extraction
• SAF-T file exports for structured historical data
• CSV or Excel uploads for legacy systems

Transaction data is normalized into a unified schema with complete auditability. The modular architecture enables rapid expansion into new markets while maintaining methodology consistency.

Price adjustment and normalization

Before matching transactions with emission factors, monetary values undergo normalization, including VAT reconstruction, currency conversion using transaction-date exchange rates, inflation adjustment, and price component separation. This ensures accurate alignment with emission factor databases.

Supplier classification

Supplier information is transformed into standardized industrial classifications through advanced machine learning combined with expert review. High-confidence matches are automatically applied. Low-confidence cases undergo validation by carbon accounting specialists using company registries and industry knowledge.

Emission calculation

With classified and normalized transaction data, the calculation engine performs emission computation through integration of demand components, application of supply chain modeling to capture multi-tier effects, and calculation using appropriate emission factors for each country-sector combination.

Results and reporting

Results are organized according to the GHG Protocol, providing comprehensive carbon footprints showing Scope 1, Scope 2, and complete Scope 3 Categories 1-15. Companies receive breakdowns by supplier, sector, geographic region, and supply chain tier, with identified emission hotspots enabling prioritized decarbonization efforts. All results include full audit trails supporting third-party verification.

Why this approach delivers superior results

• Completeness: Comprehensive transaction coverage with multi-tier supply chain capture, ensuring no significant emissions are omitted
• Accuracy: Sophisticated price decomposition prevents systematic biases by correctly allocating spending across production, trade, and transport components
• Granularity: Country-specific and sector-specific emission intensities reflect real production differences rather than global averages
• Consistency: Standardized methodology ensures comparability across companies, time periods, and spending categories
• Scalability: Automated classification and calculation handle thousands of transactions efficiently, making comprehensive carbon accounting accessible to all company sizes

Future improvements and roadmap

Position Green continues developing methodology enhancements through research partnerships with institutions like SINTEF and business partnerships for product integrations. The roadmap includes:

• Enhanced downstream emission modeling for comprehensive value chain coverage
• Product-level carbon accounting through enhanced transaction data processing
• Expanded environmental impact indicators beyond greenhouse gases
• Network effect capabilities enabling supply chain emission tracking

Conclusion

Through collaboration with SINTEF and continuous innovation, Position Green's methodology transforms carbon accounting from a compliance burden into a strategic business asset. This scientifically grounded approach enables companies to measure, manage, and reduce their environmental impact with confidence and precision. It delivers regulatory compliance and actionable insights that drive meaningful decarbonization across entire value chains.