Why Higher Education must move on from the HESCET methodology
Higher Education organizations risk greenwashing, audit failure and operational inefficiencies by sticking with a spend-based approach to carbon accounting
It’s time for a shift in how higher and further education organizations calculate their carbon emissions. Today, the spend-based carbon accounting methodology is prevalent across the sector, particularly in the case of the UK, where the Higher Education Supply Chain Emissions (HESCET) tool is widely used to address scope 3 emissions. But there are inherent risks from taking this approach in the long-term.
In a recent engagement with a higher education organization, the carbon emissions calculations delivered by Normative were 72% lower than those conducted using the HESCET tool for the same academic year.
72%
lower emissions calculated by Normative than the HESCET tool.
“Initially we were shocked that the emissions estimates differed to such a degree, so we had to dive into the data to understand why this was the case. When we looked deeper and assessed the HESCET methodology, it became clear that the calculations were not made using the latest or best data available. From our work with universities, we understand how important clarity and transparency of methodology is to them – it quickly became clear to us that HESCET couldn’t deliver on this count, whereas we know Normative can.”
Johnny McCreesh, Climate Strategy Team Lead
This article will address:
- The risks of taking this spend-based approach
- And the opportunities of moving away from it
While the spend-based methodology is an important starting point for many organizations on their reporting journeys, and transitioning from spend data entirely is challenging, especially when dealing with the smaller businesses in a supply chain, it is critical not to remain fully reliant on it. It can be a long journey, but this article will demonstrate why it’s essential for higher education organizations to start now.
What are the limitations of HESCET?
Spend-based carbon accounting restricts reduction opportunities
First and foremost, the spend-based approach taken by a tool like HESCET means that organizations using it will only get a very basic estimation of their emissions. Essentially, if you are calculating emissions based on spend, the only way to make reductions is to spend less. While the spend-based methodology plays an important role in getting organizations started with carbon reporting, for any aiming to become a sector leader in reducing emissions, this imposes severe limitations. There are only so many spending cuts any organization can realistically make while remaining competitive with other higher and further education players.
It is also the least accurate approach to calculating carbon emissions, behind activity data, supplier-specific and product-specific data.
Outdated emissions factors are used
Another challenge is how infrequently the tool is updated alongside the very low number of emissions factors that are used. The 300-400 emission factors HESCET uses may be several years old, meaning it cannot offer anywhere near the extensive coverage organizations in the sector need for precise calculations, nor can it stay on track with the latest science.
On top of this, the emission factors are worldwide – what this could mean would be that the tool wouldn’t be able to, for example, differentiate between a machine built in France using renewable energy versus a machine built in China using coal, further limiting the accuracy.
Inflation isn’t accounted for
HESCET also doesn’t make adjustments based on inflation. With current rates of inflation this could lead to discrepancies of 20-30% in carbon emissions calculations, based on the Bank of England rate using the Consumer Price Index (CPI).
Higher education organizations across the EU are focusing on calculating their carbon emissions
While HESCET is specific to the UK market, there is a similar demand across the EU from universities keen to track their emissions. As an example, Aalborg University is part of the development of a National Danish University Cooperation group that aims to create a ‘university-standard for the assessment of organisational GHG footprint accounting’. However, like HESCET, it’s heavily based on the spend-based method.
What are the risks of this spend-based approach to carbon emissions calculation?
The limitations listed above come with significant risks for any higher or further education organizations currently working with a spend-based approach.
Greenwashing
Firstly, the HESCET method is an overly cautious approach to reporting. This makes it hard for organizations to track the real impact of reductions initiatives. If you are working with inflated carbon emissions figures to set targets, you will gain reductions by changing methodology, not by making any practical process changes. This leaves organizations vulnerable to claims of greenwashing, even if it is unintentional. The subsequent reputational damage could negatively impact how willing students are to trust and enroll with the institution in question.
Annual Climate Impact (tCO2e)
There have already been instances in other sectors where authorities are zeroing in on greenwashing. The UK’s Competition and Markets Authority (CMA) directly advised 17 well-known fashion brands to review their ‘green claims’, so it is not something that any organization can afford to take lightly.
Lack of auditability
The limited nature of, and infrequent updates to, emission factors, as well as the lack of adjustment in line with inflation, are big challenges when it comes to delivering sufficiently comprehensive reporting for an auditor. Given these limitations, using the spend-based approach deployed by HESCET could make it challenging to demonstrate how every calculation has been performed and to track the source, questions that will always need to be answered to successfully complete audits.
Inability to identify areas to reduce emissions
Another direct consequence of overestimating emissions is that organizations struggle to prioritize the right areas for reduction initiatives. If you are working with such inflated figures, it is difficult to accurately identify emissions hotspots within your supply chain, for example, and understand which suppliers you need to work with to both reduce emissions and remove inefficiencies or risks to your business. Not only does this make it hard to bring emissions down, it means that organizations don’t have the reliable data they need to introduce operational efficiencies that will positively impact their bottom line.
The benefits of moving away from HESCET’s spend-based carbon accounting
Meet compliance and get audit-ready
By improving the quality of its carbon accounting, a higher or further education organization can make sure it is providing more accurate, auditable emissions calculations. As a result, organizations can report with confidence across all 10 of the Higher Education Statistics Agency (HESA) meta-categories and provide far greater transparency for any audits.
Report with confidence across the 10 HESA meta-categories
Mitigate greenwashing concerns
Organizations can replace industry spend averages with supplier-specific data to avoid the significant over-estimations of emissions that come with cautious spend estimates. Engaging their supply chains to gather this data will put these organizations in a far better position to accurately communicate the impact and extent of their environmental efforts, rather than running the risk of unintentional greenwashing.
Stay competitive while reducing emissions
Rather than being bound by the spend-based carbon accounting methodology where you can only make reductions by cutting expenditure, by collecting activity data, product level PCF/LCA and supplier specific data, organizations in higher and further education can take a much more impactful approach. Not only can they track real reductions progress, they can also use this data to pinpoint realistic approaches to reduction while remaining competitive with other organizations in the sector. For example, rather than cutting the purchase of important lab equipment completely, decision-makers will be able to make a credible business case for switching to a supplier that manufactures glass equipment, producing a lower level of emissions. Cutting carbon emissions shouldn’t be a drain on competitiveness.
Become more attractive to students and grant providers
If students can see, from sources like the QS sustainability rankings, that the higher or further education organization they are considering has a comprehensive approach to managing its environmental impact, outstripping those of their other options, it could play a role in their final decision. The appeal could also extend to those responsible for providing grants to those in the sector.
A study from the European Central Bank, titled “Climate Risk, Bank Lending and Monetary Policy,” showed that firms in the top 25% of carbon emitters are charged interest rates that are, on average, 14 basis points higher than those in the lowest 25%. So, being equipped with comprehensive emissions reporting and having the data at hand to set a clear reductions strategy can have a very material impact on an organization.
When you consider that auditability, getting a competitive edge and greenwashing are at risk from widespread reporting practices in the sector, carbon accounting methodology is a subject that higher education organizations cannot afford to ignore.
How Normative can help your organization move away from HESCET
- Fully auditable and transparent: Normative allows third-party audits as standard, providing 330,000+ emissions factors across 16 databases, updated every 6 months
- Reporting in 10 HESA meta-categories: Normative’s taxonomy is mapped to these meta-categories required under HESA reporting recommendations
- Expert support to improve data quality: Our GHG-Protocol-certified Climate Strategy Advisors will guide you through the shift from using a spend-based methodology, to collecting activity, supplier and product-specific data.
Your next step: learn how to engage your supply chain
If you’re a higher or further education organization looking to move on from the spend-based methodology, how can you get on the path to collecting supplier-specific data? Watch our webinar to get practical guidance from Normative and EcoVadis experts, to outline your next steps.
