What Are Scope 4 Emissions? A Critical Aspect of Carbon Accounting

When it comes to carbon accounting, you’re likely familiar with Scope 1, 2, and 3 emissions, the traditional categories used to measure a company's carbon footprint. But now, there’s a new addition to the mix—Scope 4 emissions, or avoided emissions. This concept is still in its early stages but plays a crucial role in understanding and reducing the overall environmental impact of companies and industries.

What Are Scope 4 Emissions?

Scope 4 emissions refer to the greenhouse gas (GHG) emissions avoided by using a particular product or service outside the company's direct operations or value chain. Unlike Scopes 1, 2, and 3, which focus on the emissions companies are responsible for directly or indirectly, Scope 4 looks at how certain products or services help prevent emissions elsewhere.

For example, an energy-efficient appliance that reduces the energy required for its operation, or telecommuting tools that minimize the need for travel, contribute to avoided emissions. These are emissions that do not occur because of the product’s efficiency or its potential to replace more carbon-intensive alternatives.

Comparing Scope 1, 2, 3, and 4 Emissions

Here’s a breakdown of how Scope 4 differs from other emissions categories:

• Scope 1: Direct emissions from company-owned operations, such as fuel combustion or industrial processes.
• Scope 2: Indirect emissions from purchased energy, like electricity or heat used by the company.
• Scope 3: Indirect emissions within the value chain, including Supply chain, product use, and business travel.
• Scope 4: Avoided emissions resulting from products or services that reduce emissions outside of a company’s direct control.

Types of Scope 4 Emissions

Scope 4 emissions generally fall into two categories:

1. Product replaces a more emission-intensive product: For example, teleconferencing services that reduce the emissions from commuting to an office.
2. Product enables emissions reductions elsewhere: For example, an energy-efficient machine that consumes less electricity and reduces carbon emissions in the process.

Why Should Companies Report Scope 4 Emissions?

For companies that want to take their sustainability efforts to the next level, reporting Scope 4 emissions is crucial. Avoided emissions can showcase a company’s broader environmental impact, aligning with its long-term sustainability goals. In fact, research by the Carbon Disclosure Project (CDP) shows that 75% of surveyed companies already offer products or services that help reduce emissions.

Although Scope 4 emissions reporting is voluntary and not yet standardized, it offers significant benefits, including:

• Competitive Sustainability Advantage: Companies reporting on avoided emissions can better position themselves as leaders in sustainability.
• Improved Transparency: Reporting helps provide a clearer picture of how a product or service contributes to reducing global carbon footprints.
• Long-Term Financial Benefits: Calculating and demonstrating Scope 4 emissions can lead to valuable insights for investors and stakeholders, supporting climate-related financial disclosures.

Challenges in Measuring Scope 4 Emissions

One of the biggest hurdles in reporting Scope 4 emissions is the lack of widely accepted standards or methodologies. Companies must validate their claims rigorously, often relying on extensive market research, customer data, and product life cycle assessments to measure avoided emissions accurately. Additionally, the following challenges persist:

• Difficulty in Collecting Data: Accurately estimating how customers use and dispose of a product is complex and resource-intensive.
• Quantifying Avoided Emissions: Companies must not only measure but also quantify how much carbon has been avoided, factoring in consumer behaviors and potential market changes.
• Risk of Greenwashing: Without proper validation, overestimating avoided emissions can lead to accusations of greenwashing, damaging a company’s credibility and trust with consumers and investors.

Guidelines for Reporting Scope 4 Emissions

Though no global standard exists yet, companies can turn to existing frameworks for guidance. The World Resources Institute (WRI) offers a useful starting point with its guideline, "Estimating and Reporting the Comparative Emissions Impacts of Products." Additionally, the GHG Protocol’s Policy and Action Standard suggests that companies consider how their products or services will change emissions in the marketplace.

These frameworks provide valuable recommendations for companies aiming to improve the credibility and consistency of their Scope 4 claims.

Why Start With Scope 4?

While Scope 4 emissions are currently voluntary, reporting on avoided emissions will likely become more critical as regulations around climate disclosures tighten. By getting ahead of the curve, companies can not only enhance their sustainability efforts but also gain a competitive edge.

Incorporating Scope 4 emissions into your carbon accounting allows your company to showcase its role in helping reduce global emissions, contributing to climate change mitigation in a meaningful way.

Enexion's Expertise in Navigating Scope 4 Emissions

At Enexion, we specialize in helping businesses navigate complex carbon accounting frameworks, including Scope 4 emissions, to enhance their sustainability impact. Our expert team guides companies through the challenges of measuring avoided emissions by implementing innovative strategies that reduce environmental footprints. By offering tailored solutions and leveraging advanced reporting methodologies, we ensure our clients not only meet but exceed global climate goals. As governments and industries shift towards more stringent emission disclosures, Enexion is at the forefront, empowering businesses to stay ahead in the ever-evolving sustainability landscape.