Consumer Carbon Calculations: Why Transparency Matters

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In today's world, as individuals become more conscious of their impact on the environment, the need for transparent and reliable information regarding carbon calculations has become a must.

That is why at ecolytiq, we developed our climate engagement platform with full transparency into our carbon calculations- in what we call the "Open Standard framework."  

Let's delve into the methodology behind the Open Standard framework, why it matters, and  how it effectively drives sustainable practices and conscious consumer behavior.

What is the Open Standard framework?

The Open Standard outlines exactly how we calculate the carbon emissions associated with a payment transaction. This is all available publicly for anyone -  from scientists, policy makers to consumers - to review and provide feedback on the calculation methods for future improvement.

Our calculation methodology is based on these key steps below.

Analyze context

Calculating the carbon intensity per transaction requires critical analysis of where the individual is based. Thus, the first step is to identify country level data sources available that will provide a reference to set  base values for analysis. Public emissions accounting frameworks, with its simplicity and modularity, are helpful starting points of reference.

Define carbon intensities for household consumption categories

To provide a carbon intensity factor for different consumption categories, we use a combination of process-based and input-output (IO) approaches.

• The process-oriented approach helps in calculating how much greenhouse gas is produced for each specific activity, like driving a kilometer or using electricity. This information can be turned into a monetary value based on the average price of that activity.

• The input-output analysis looks at how different parts of the economy depend on each other by tracking the flow of goods and services.

By combining these two approaches, we can get a better understanding of how consumption choices affect the environment.

To associate the emissions with individual consumption, we match the emission factors to goods and services categories as defined by the Classification of Individual Consumption by Purpose (COICOP). Subsequently, the data is then matched with transaction information to ultimately determine the carbon footprint of each individual based on their spending. Specifically, utilizing bank transaction codes, like merchant category codes, we can calculate the environmental impact associated with each unit of currency spent in various categories.

Customize for individual preferences through end-user engagement

We capture feedback from the individual on their preferences and lifestyles through refinement questions, which both increases precision of carbon footprint and user trust in the results. ecolytiq offers refinements for preferences that tend to be more consistent over time (e.g., diet preferences, type of car owned) and preferences that might change depending on the circumstances (e.g. type of accommodation used). Capturing preferences allow us to segment the customer and provide a more enriching experience through tailored content based on those preferences.

Ongoing review of estimations/methodology

As new information becomes available, the carbon intensity factors are updated accordingly, at least once a year, to reflect changes in national consumption and trade flow.

You can further dive into the methodology in detail here, published through our sustainability non-profit, the Organisation for Conscious Consumerism.

Why does transparency matter?

As individuals become more conscious of their environmental impact,  so does the amount of information on what is and isn’t “sustainable." However, often times the source and rationale behind those claims can be vague.

Information on how to make more sustainable choices should be transparent not only for credibility but also to drive behavior change at scale.

1. Ensuring Accuracy and Reliability

Transparency in consumer carbon calculations is essential for ensuring the accuracy and reliability of the data provided to individuals looking to make environmentally responsible choices.

By openly sharing the methodology, sources, and factors used in calculating carbon intensity, banks that offer carbon calculation to their customers build trust, credibility, and preference with their customers. This transparency allows consumers to have confidence in the information they receive and enables them to make informed decisions that align with their sustainability values.

2. Promoting Conscious Consumerism

Studies have found that individuals need a quantitative understanding of the emissions associated with everyday behaviors to make efficient sustainable decisions, and a lack of this quantitative understanding can limit the effectiveness of efforts to change consumer habits¹. For example, consumers tend to underestimate the emissions resulting from high-potential behavior change areas like flying and meat consumption².  When consumers have access to clear and understandable carbon intensity data, they are better equipped to evaluate the sustainability of their purchasing decisions. This transparency empowers consumers to choose goods and services with lower carbon footprints, thereby driving demand for environmentally responsible options.

By providing transparent carbon calculations through a framework like the Open Standard, banks enable their customers to make choices that support sustainability goals and contribute to positive environmental outcomes.

3. Driving Environmental Accountability

Transparency in consumer carbon calculations holds all service providers in the value chain accountable for the accuracy and integrity of the data they offer.

By openly sharing information on how carbon intensity factors are calculated and providing visibility into their processes, banks that seek to engage their customers on the climate demonstrate their commitment to environmental responsibility. This transparency not only promotes trust and confidence among consumers but also drives companies to continuously improve their methodologies and data sources.

4. Fostering Collaboration and Innovation

Transparent consumer carbon calculations foster collaboration and innovation by encouraging knowledge sharing and best practices within the industry. When businesses are open about their carbon calculation processes and methodologies, they create opportunities for partnerships, feedback, and collective efforts towards sustainability goals.

We made the deliberate choice to make the Open Standard framework for this very reason.  By embracing transparency in consumer carbon calculations, businesses  contribute to a culture of collaboration, inspire industry-wide innovation, and work together towards a more sustainable future.

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In conclusion, transparency in consumer carbon calculations is essential for empowering conscious consumerism, promoting sustainability, and driving positive environmental impact. By providing clear and reliable information on carbon intensity factors, businesses offering carbon calculation services can build trust, foster collaboration, and inspire individuals to make environmentally responsible choices.

The Open Standard framework is our stance on the role of transparency in shaping consumer behavior and promoting sustainability, highlighting the transformative power of openness and clarity in driving positive change.

Let us prioritize transparency in consumer carbon calculations to create a more sustainable and environmentally conscious society for generations to come.

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Citations

¹ Carbon innumeracy (Grinstein, Kodra, et al., 2018)

² How well do people understand the climate impact of individual actions? (Wynes, Zhao & Donner, 2020)