Should your company start thinking about Scope 4?

As the world intensifies its efforts to combat climate change, there have been stricter carbon emission reporting standards for many companies across the globe. You have likely heard of Scope 1, 2, and 3 emissions, but recently, there has been a new voluntary metric for avoided emissions. Enter Scope 4 emissions – a term gaining prominence in sustainability.

So, what exactly are Scope 4 emissions and how can they help in the global pursuit towards net-zero emissions?

Scope 4 Emissions?

Scope 4 emissions are unique among the traditional emission scopes as they centre on avoided emissions. In simpler terms, these are emissions that do not occur due to a particular action or strategy. While Scopes 1, 2, and 3 focus on the emissions directly or indirectly produced, Scope 4 encompasses emissions that are prevented or mitigated. This innovative category highlights the potential positive impact of conscious decisions, strategies, and policies.

The Significance of Avoided Emissions

Avoided emissions can be defined as the “positive” impact on society when it is compared to another solution with greater emissions. These avoided emissions can provide insight into climate-aligned decision-making and future innovation. They play a crucial role in the broader effort to achieve global net-zero emissions, which is the ultimate goal to stabilise the planet’s rising temperatures.

How to Calculate Avoided Emissions

Calculating avoided emissions involves estimating the difference in greenhouse gas emissions between a certain solution and a reference scenario that would happen without the solution. The reference scenario will depend largely on what alternative scenarios would have been chosen, if not for the solution. The emissions also need to be assessed in the entire life cycle of the solution.

As a result of the flexibility of this reference scenario that is used as a comparison, there is a lack of a standardized way to calculate Scope 4 emissions. While there are several existing frameworks, they are often specific to a company’s industry or country.

Integrating Avoided Emissions into Net-Zero Strategies

While avoided emissions offer promising benefits, they should be integrated strategically into net-zero strategies. It’s important to note that avoided emissions should be accounted for separately from the core emissions generated by business operations and the value chain.

Avoided emissions are a complement to primary emissions reduction efforts, not a replacement. The primary goal remains reducing direct and indirect emissions generated by a company’s activities.

This separation ensures that companies do not solely focus on avoiding emissions at the expense of reducing their own direct and indirect emissions. Avoided emissions should be treated as an additional layer of sustainability efforts that contribute to broader climate goals.

Should Businesses Be Reporting Scope 4 Emissions?

The World Resources Institute does have a framework that covers the measurement of GHG emissions, including avoided emissions. However, most boards and regulatory frameworks do not currently mandate the measurement and reporting of Scope 4 emissions.

However, voluntary adoption of this approach can be advantageous for businesses, as it gives them a clearer understanding of the positive influence of their emissions-related decisions and actions. This information can be used to refine strategies, set targets, and improve overall sustainability efforts.

Businesses do need to be careful and make sure that if they do report avoided emissions, they should not be used to adjust or overshadow Scope 1, 2, and 3 emissions. This could run the risk of greenwashing.

According to the Science-Based Targets Initiative’s net-zero standard, avoided emissions do not count as a reduction of a company’s Scope 1, 2, or 3 emissions and should not be included in net-zero reporting. Scope 4 emissions are best used to inform product or policy design, which can contribute to Net Zero goals, rather than count towards actual emissions reduction targets.

However, we expect standards to change and for Scope 4 emissions to be more closely linked to the wider Scope 1,2 and 3 footprint.

All in all, Scope 4 emissions not only align with global net-zero aspirations, but also encourage innovation and the reshaping of business models. As climate change remains a paramount concern, businesses should think about integrating avoided emissions into net-zero strategies to amplify their efforts to combat the climate crisis.