An Open Standard Framework for Consumer Carbon Calculations based on payment transactions

The increasing inclination of people towards sustainable consumption to mitigate their impact on global climate change has led to the emergence of financial technology (fintech) solutions designed to help users make informed and meaningful actions. The proper design of such consumer carbon tools requires careful consideration of data and collection methods, means of calculation, eventual usage, and understanding of how the tool influences its users. These should be encoded in corresponding standards that ensure they contribute to the broader purpose – environmental sustainability. This Open Standard for consumer carbon calculations based on payment transactions closes the gap.

1. Purpose of this Standard

The goal is to promote sustainable consumption by linking climate currency to fiat currencies. People’s spending behavior reflects their lifestyle. The Open Standard for consumer carbon calculations based on payment transactions provides a standardized approach for estimating carbon intensity factors (CO2e/monetary unit) for specific household consumption expenditure categories.

This standard aims to help users achieve the following:

• Estimate carbon intensity factors for different consumption categories that can be replicated, tested and improved upon.
• Ensure consumption information enables climate action.
• Publicly reporting carbon intensity factors and methods and meeting stakeholders demands transparency.

The objectives of the Standard are:

• To put the end-user and transparency at the centre of the processes.
• Define a standardized method for calculating carbon intensity factors for different consumption categories.
• Ensure data is collected and structured in a standardized manner that facilitates its use in drawing valid conclusions (i.e., in creating information) and enables its integration into related products and services.
• Ensure that actions enable desired climate outcomes.
• Discover and elaborate upon the major dimensions required to implement a fintech carbon-to-purchase system to design flexible solutions for all interested parties, enabling broad adoption.
• To help users to provide accurate, consistent, transparent, complete, and relevant information.
• To support consistent and transparent reporting for comparison purposes and continued improvement.
• To create international consistency and transparency in how information is provided to the end-user.
• To establish a quality management system for the community that provides carbon intensity factors based on payment transactions.

2. Primary users

This Standard is primarily for companies, entities, and organizations that want to estimate carbon footprint based on transaction data. National and subnational government entities might also find this standard useful to track changes in carbon intensities for different consumption categories at the household level in their respective countries.

The term “user” refers to the company, entity, or organization implementing the Standard; “end-user” refers to the individual using the application or bank interface, using the information generated when implementing this Standard.

3. Principles

To estimate carbon intensity factors, we apply generally accepted principles to ensure that the reported information represents a faithful, true, and fair account of Greenhouse Gases emissions. These principles are transparency, data integrity, relevance, and localization and are aligned with GHG Protocol (Figure 1).

4. Implementation steps

This Standard is organized according to the steps required when the user provides the end-user with  “carbon calculations based on payment transactions” (TtC). Depending on the objective, users may not need to follow all the steps shown in the figure below. If users have already analyzed the context, the guidance in step 1 may be skipped, but all users shall follow all other steps if aiming for verification based on this Standard.