Scope 4: The new kid in the emissions bloc

What are Scope 4 emissions?

Scope 4 emissions, also known as ‘avoided emissions’ are defined as the reductions in greenhouse gas emissions that occur outside of a product's life cycle or value chain but as a direct result of using that product/service. Scope 4 emissions are a means to report on emissions avoided through more 'efficient goods and services replacing less efficient alternatives'.

Scope 1, 2, and 3 emissions are already being produced and require action from the company to develop new ideas to reduce them, whereas scope 4 emissions are emissions that aren’t being created in the first place.?

-Scope 4 emissions should not be used to offset or adjust scope 1, 2, and 3 emissions in an organization’s GHG Inventory since they’re calculated separately from those categories.

Examples of products contributing to Scope 4 emissions:

1. iPhone featuring an enhanced battery design, significantly extending the time between charges for users. This contributes to a long-term reduction in electricity consumption and emissions.
2. A car manufacturer showcasing the integration of fuel-efficient tires in its new models. This innovation is expected to gradually decrease the emissions generated, as drivers will need to refuel their cars less frequently over time.
3. Emissions generated by individuals working from home are generally lower, given to the practise of virtual meetings and a reduction in business trips. This remote work setup results in a decreased environmental impact compared to traditional commuting and office-based operations.

Forward-thinking companies across various sectors have begun to recognise the importance of Scope 4 emissions in their environmental reporting.?

Examples of such institutions include:

Aveva having committed to developing a baseline and target for customer-saved and avoided emissions by 2025 and Investment firms such as Schroders incorporating avoided emissions into their investment analyses.?

Methods to Calculate:?

Two distinct methodologies, 'consequential' and 'attributional', offer different lenses through which these emissions can be assessed.

Consequential approach:

• Involves assessing the system-wide change in emissions resulting from a specific decision or action.?
• Considers not only the direct effects of a product's use but also its secondary impacts and potential unintended consequences.?
• For instance, if a company introduces a new, more energy-efficient appliance, this approach would evaluate the overall emissions reduction in the entire system, such as the energy grid, resulting from the applicance adoption.
• This method requires an analysis of the product’s environmental impact within a broader context, considering various factors like market dynamics, consumer behaviour, and potential shifts in industry practices.

Attributional approach:

• Focuses on the absolute emissions and removals associated with a product, compared to a reference or baseline product.?
• More straightforward and is often used due to its practicality, especially when there are constraints related to information availability or time.?
• For example, in the case of an electric vehicle, the attributional approach would compare the emissions produced during its lifecycle (manufacturing, usage, and disposal) with those of a traditional gasoline-powered vehicle.?
• The difference in emissions between the two products represents the Scope 4 emissions, or emissions avoided due to using the electric vehicle over the conventional alternative.

The consequential approach offers a more comprehensive understanding of a product’s environmental impact, but it can be complex and data-intensive. The attributional approach, while more limited in scope, provides a more straightforward and readily quantifiable assessment of avoided emissions.?

Ultimately, the choice between these methods depends on the company's objectives, the nature of its products, and the availability of data and resources.?

Why quantify scope 4 emissions?

• Comprehensive Environmental Insight: Provides a thorough overview of a company's environmental impact, encompassing both positive and negative effects of its products and services.
• Catalyst for Innovation: Stimulates innovation in the design of products and services, driving research dedicated to sustainability and ultimately contributing to decreased environmental footprints.
• Reputation Enrichment: Showcases a company's dedication to comprehensive environmental stewardship, elevating its corporate reputation through a commitment to sustainable practices.
• Informed Decision-Making: Facilitates a deeper understanding of the broader consequences of business activities, guiding decisions on investments for more responsible business practices.
• Strategic Partnerships: Assists in selecting suppliers and collaborators aligned with sustainability objectives, thereby enhancing the overall environmental impact and fostering strategic alliances.

What are the challenges encountered?

• Measurement Difficulties: For example, cloud data storage providers may assert emission reductions when transitioning customers from on-premises to cloud-based solutions. However, this relies on assumptions, such as the customer not upgrading on-premises storage or adopting renewable energy. It may overlook increased cloud usage due to lower costs and faster processing speeds.
• Uncertainty around Attributing Avoidance: For example, secondhand clothing sellers may presume avoiding new garment purchases by selling used clothes. Yet, consumers might still buy more secondhand items, leading to increased overall consumption. Although secondhand clothes have a longer life cycle, they may not last as long as new ones.
• High Upfront Costs: Developing more efficient products involves significant upfront costs for research, development, and testing. Gaining internal support from stakeholders becomes challenging if these efforts are anticipated to result in higher short-term emissions.
• Lack of Standardization: Despite various guidelines for avoided emissions, there is no universally accepted standard for calculation. This lack of standardization complicates measurement, reporting, result comparability, and data quality assessment.
• Greenwashing Potential: These measurement challenges may lead to inaccurate data and the overestimation of a company’s environmental impact. Despite positive intentions, companies might make false claims due to flawed or incomplete data, damaging trust with stakeholders.

Concluding Remarks:

In essence, although the idea of Scope 4 emissions has the potential to strengthen corporate environmental strategies, achieving its complete integration into standard reporting and widespread adoption across industries is a process expected to take several years. This timeframe is crucial for establishing the necessary standards, methodologies, and corporate familiarity with reporting practices that go beyond the current scope of emissions accounting.

References:

1. https://greenly.earth/en-us/blog/company-guide/what-are-scope-4-emissions
2. https://plana.earth/glossary/scope-4-emissions
3. https://www.persefoni.com/learn/scope-4-emissions
4. https://www.weforum.org/agenda/2022/09/scope-4-emissions-climate-greenhouse-business/
5. https://carboncredits.com/what-is-scope-4-emissions-a-critical-aspect-of-carbon-accounting/