Interview: Why Spie’s accounting overhaul is key to meeting its new Scope 3 targets

Spie’s move away from spend-based emissions

Spie introduced its first quantitative Scope 3 decarbonisation goals last year. 

The Paris-listed firm, best known for installing heating and cooling systems, wants to reduce the carbon intensity of its value chain by 55% by 2030.   

Until now, Spie’s efforts centred on convincing its suppliers to commit to emissions cuts, and it’s now secured such commitments from 3,300 businesses – representing more than two thirds of its Scope 3 footprint. 

 “So we’ve built this community of like-minded suppliers,” says the company’s sustainability director, Isabelle Lambert. 

“But we’ve realised in the process that we don’t have the right tools and internal methodologies to encourage our operational teams to actually steer our Scope 3 emissions downward.”

One of the biggest stumbling blocks is the fact that Spie, like many of its peers, calculates its value-chain emissions using a spend-based methodology. 

Spend-based accounting is a way of working out a company’s Scope 3 footprint by multiplying the amount of money it spends on a particular type of product or service by the emissions associated with that product or service.   

It’s a fast and dirty (and cheap) way of calculating emissions, because it uses off-the-shelf estimates that mitigate the need for data collection or heavy analysis. 

But the high-level approach makes it a blunt instrument when it comes to driving decarbonisation: it’s based on a lot of assumptions, for starters, and the numbers can be distorted by economic factors like inflation. 

It also creates perverse incentives when it comes to green procurement.  

Lambert describes being given the choice between two different cables – one pricier than the other because it’s made from recycled materials and has a lower carbon footprint.  

“Under the current spend-based method, we’d have to book more emissions if we bought the greener option, because we’d be spending more money on it,” she points out.

Ideally, she says, every product would come with a Life Cycle Assessment that would enable her team to pin down a precise carbon footprint, but that’s only available for about 14% of what Spie buys.   

So instead it will develop a standardised calculation method and a system to source product-level information for its 250 biggest suppliers, responsible for half its Scope 3 emissions. 

“Next year, we plan to address all the other significant areas,” Lambert explains. 

Around a quarter of the firm’s Scope 3 emissions will remain covered by the spend-based approach, because they’ve been deemed too complex or immaterial to warrant the new calculations.  

Spie certainly isn’t the only company trying to shift to activity-based methods, and momentum will continue to build now that the GHG Protocol has said it wants entities to be clearer about what data is based on spend and what’s calculated using more specific methods. 

This is likely to bring greater scrutiny on companies that don’t move with the times. 

“There’s always going to be a need for margins of error, so we’ll refrain from premature claims that we’re changing the world by choosing Product A over Product B,” says Lambert.

“But it’s certainly a much better way to incentivise everyone to move emissions downwards.”