Accurate carbon reporting is essential to the construction industry’s path to net zero.
Yet many firms still depend on spend-based carbon calculations – a Macro approach that relies on broad assumptions and high-level estimates. While this may support strategic oversight, it lacks the granularity needed to track real progress. As a result, spend-based reporting can distort the true picture of an organisation’s emissions, undermining sustainability strategies and slowing progress towards meaningful carbon reductions.
The problem with spend-based carbon reporting in construction
Spend-based reporting estimates carbon emissions using the cost of materials rather than actual quantities or verified embodied carbon factors. While convenient, this method relies on broad assumptions that can obscure the true carbon impact of a project, leading to inaccurate reporting and missed opportunities for reduction.
1. Higher spend can equal higher reported carbon
If a contractor opts for a lower-carbon material that is more expensive, a spend-based model may increase the reported carbon emissions instead of decreasing them. This creates a counterproductive incentive where sustainability-conscious decisions appear detrimental on paper.
2. Carbon attribution is inconsistent
Spend-based approaches use DEFRA carbon factors, which are derived from a company’s Standard Industrial Classification (SIC) code declared at Companies House. However, companies can register under multiple SIC codes, even when selling similar products. As a result, two suppliers offering the same material may have significantly different carbon factors applied. This inconsistency undermines confidence in carbon reporting systems and makes it difficult to compare emissions data accurately across the supply chain.
3. It ignores supplier-specific carbon performance
Many suppliers invest heavily in reducing the carbon footprint of their products, adopting low-carbon manufacturing processes and renewable energy sources. But if measured using a generic spend-based factor, their efforts go unrecognised, discouraging progress in sustainable supply chains.
“One challenge with spend-based methodologies was that choosing a lower-carbon but higher-cost product could make it seem like emissions had increased. As we were aligning with science-based targets and needed to show absolute reductions, it became clear this approach didn’t work – it wasn’t as transparent as we needed.”
Katherine Rusack, Head of Responsible Sourcing, Balfour Beatty
Real-world example: steel procurement and carbon miscalculations
During a recent project, a tier-one contractor spent nearly £17.5 million on reinforcing steel. On paper, two suppliers appeared to have similar reported emissions, but when the data was examined in detail, a major discrepancy emerged*:
- Supplier 1 accounted for £12 million of spend, yet their reported emissions were only slightly higher (8.7m kgCO2e) than Supplier 2.
- Supplier 2 accounted for significantly less spend (£5 million) but had nearly the same reported carbon footprint (7.2m kgCO2e).
What caused the issue? Supplier 1 provided detailed embodied carbon factors for each piece of rebar, ensuring accurate calculations. Supplier 2, however, lacked specific data, so their emissions were calculated using a generic spend-based factor. The result? The figures did not reflect the actual carbon impact of the steel being purchased and used, potentially skewing the company’s overall sustainability performance.
*Note: this example is partly impacted by the two companies having different SIC codes attributed for the supply of the same product, highlighting the challenge with inconsistent carbon attribution as discussed earlier.
The way forward: moving beyond spend-based carbon reporting
For carbon reporting to be transparent, reliable, and actionable, the construction industry must transition to data-driven, quantity-based methodologies. Here’s how:
- Use actual material data – Reporting should be based on invoice and product-level data, not just financial records.
- Integrate supply chain carbon data – Suppliers must be engaged to provide accurate Environmental Product Declarations (EPDs) and real-time emissions data.
- Leverage digital solutions – Modern tools, such as CausewayOne Carbon, automate carbon tracking by pulling data directly from invoices and procurement systems, eliminating reliance on spend-based factors.
Bridging the gap between cost-based estimates and real carbon impact
Moving beyond spend-based reporting is just the first step. Without a system that connects material procurement with actual usage on-site, project-level carbon reporting remains riddled with discrepancies. Fragmented data, evolving supply chains, and inconsistent tracking make it difficult to reflect the true carbon footprint of construction projects. To address these challenges, companies need a system that provides real-time, invoice-backed emissions data from procurement to project completion. CausewayOne Carbon bridges this gap by integrating with accounts payable systems, ensuring that carbon reporting is based on real materials, not assumptions.
Are you confident in your company’s carbon data?
If not, it’s time to rethink your approach.
Download our guide on accurate carbon tracking in construction or talk to our experts about how CausewayOne Carbon can transform your reporting.
