Scope 4 emissions
Scope 4 emissions definition
The term "scope 4" was introduced by the World Resources Institute (WRI) in 2013. Scope 4 emissions – often referred to as avoided emissions – are indirect emissions of a company or product. There are currently no recognised guidelines or standards for scope 4 accounting, and it is likely to be several years before the WRI publishes guidance. Nevertheless, Scope 4 is becoming increasingly relevant in carbon accounting.
The decisive factor for scope 4 is the use of a product or a service by a third party. While companies have a direct influence on their scope 1, scope 2, and scope 3 emissions, Scope 4 emissions focus on greenhouse gas emissions outside the product life cycle and value chain. Examples include products with a smaller carbon footprint than comparable products and services that reduce the footprint of end-users. Together with scope 1, 2, and 3, emissions, they provide a comprehensive overview of a company's environmental impact.
Examples of scope 4 emissions
To calculate the scope 4 emissions of a product, emissions from similar products are compared. Where the emissions of the target product are lower than those of alternatives, the emissions can be counted under scope 4. For example, an energy-efficient washing machine uses less energy than a conventional washing machine. By using the more efficient product, users save energy and reduce greenhouse gas emissions. These emission savings would be reported under the manufacturing company’s scope 4.
Low-temperature detergents, meat substitutes, solar panels, energy-efficient appliances, fuel-saving car tyres, and electric vehicles are other examples of products that can be included in scope 4. Teleconferencing systems that enable mobile working and reduce travel are also counted as avoided emissions. Companies that hold events digitally rather than in person would, in theory, also be able to report scope 4 emissions.
Benefits of scope 4 emissions
By calculating avoided emissions, companies can demonstrate the positive impact of their products and services. This not only brings competitive advantages, but ideally will lead to scope 4 emissions playing a role in product development and strategic decisions.
Communicating avoided emissions is all about transparency and credibility. In their external communications, companies tend to focus more on the positive effects of their actions. It is crucial that communication is transparent and understandable, and that positive impacts are not overstated. The reduction of scope 1, 2, and 3 emissions should always be given higher priority in external communication than scope 4. But if this is taken into account, communicating scope 4 emissions can underline and enhance a company's climate action commitment.
Reporting scope 4 emissions
Scope 1 and 2 emissions must be accounted for in accordance with the Greenhouse Gas (GHG) Protocol. Many companies still face the challenge of correctly reporting scope 1, 2, and especially scope 3 emissions. As Scope 3 emissions make up the largest portion of a company's carbon footprint, reduction and reporting in this area should be prioritised over scope 4 emissions.
As there are currently no standardised accounting guidelines for Scope 4, it will probably be several years before these are measured by default.
