Although Scope 4 is not yet an officially established category of the Greenhouse Gas Protocol, there are many possible benefits to calculating and reporting Scope 4 emissions.
Many organizations report greenhouse gas (GHG) emissions from their direct and indirect impacts (i.e., Scope 1, 2, and 3 emissions). However, emissions from a company’s impacts don’t always give the full picture of how its products may be contributing in a positive way. This is where Scope 4 comes in.
What is Scope 4?
Scope 4 emissions, or avoided emissions, refer to emissions that are averted through the use of a product or service. There are two approaches to Scope 4: attributional and consequential.
- Attributional approach refers to the difference in total life cycle GHG emissions between the low-carbon products or services and a reference product or service that provides an equivalent function.
- Consequential approach refers to the sum of total, system-wide changes in emissions or removals occurring because of the low-carbon products or services when compared to a baseline (business-as-usual) scenario without the low-carbon product.
Source: WRI’s Estimating and Reporting The Comparative Emissions Impacts Of Products and CDP Climate Change 2022 Guidance
Why Should You Consider Reporting Scope 4?
Avoided emissions can be included in a company’s GHG inventory to create a more holistic view of an organization’s footprint. Although Scope 4 is not yet an officially established category of the Greenhouse Gas Protocol, there are many possible benefits to calculating and reporting Scope 4 emissions.
Especially when Scope 1, 2, and 3 emissions measure direct and indirect impacts that are difficult to hide behind, calculating and reporting avoided emissions is a way to show how an organization is contributing toward the fight against climate change. This is especially helpful for companies that may experience increases in emissions due to the development of new products, but where those same products would reduce the emissions associated with the use of such products in the long term.
Calculating Scope 4 may also provide a competitive advantage as it can enable organizations to compare their products to competitors (e.g., product X is more energy efficient than product Y from another firm) or other less efficient technologies. This information also signals to investors and customers that the company is considering transition risks and working to better understand its impacts and opportunities as the world moves to a low carbon economy.
What Should You be Careful Of?
Scope 4 emissions can be complex to calculate and there is currently no global standard, so companies must develop their own method for calculating these emissions. Organizations that choose which product to compare to their own may be accused of selection bias and exaggerating their claims, leading to the potential for greenwashing. Being transparent about assumptions made for Scope 4 emissions can help combat this issue.
Although the results of a company’s Scope 4 assessment may look more positive, it’s still important for companies to report a complete Scope 1, 2 and 3 GHG inventory to indicate trends in the company’s direct and indirect emissions and develop reduction targets in line with the Paris Agreement.
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