Scope 4 emissions, a relatively new concept in carbon accounting, are gaining attention as companies strive to reduce their carbon footprints and meet climate goals. While most people are familiar with scopes 1, 2, and 3 emissions, which encompass direct, indirect, and other indirect emissions, scope 4 emissions are an additional category that focuses on avoided emissions or carbon pollution that occurs outside of a product’s value chain.
To put it simply, scope 4 emissions refer to the emissions that are saved or avoided by using a more efficient product or service. For example, telecommuting or carpooling to work reduces the carbon footprint associated with commuting, while using energy-efficient equipment or appliances decreases energy consumption and carbon emissions. These emissions can be challenging to measure and report accurately, but they provide valuable insights for companies looking to reduce their environmental impact.
Reporting scope 4 emissions is important for several reasons. Firstly, it allows companies to assess their efforts in reducing emissions and demonstrate their commitment to sustainability. According to a survey by the Carbon Disclosure Project (CDP), 75% of companies offer products and services that help others reduce emissions. However, without data to support these claims, they remain unsubstantiated. Rigorous testing, predictions, and reporting are necessary to validate claims and provide scientific estimations of how consumers use a company’s product.
Failing to account for scope 4 emissions can have serious consequences for a company. Apart from potential fines for non-compliance with regulations, inaccurate reporting of total emissions can damage a company’s reputation. Additionally, as governments increase their focus on regulating climate disclosures, companies that have already incorporated scope 4 emissions reporting will have a competitive advantage.
While there are currently no standardized frameworks for reporting scope 4 emissions, there are guidelines available to assist companies. The World Resources Institute (WRI) provides a sector-specific guidance called “Estimating and Reporting the Comparative Emissions Impacts of Products.” This framework helps companies collect credible data and account for both the negative and positive impacts of their products on emissions.
The WRI’s guideline offers two approaches for scope 4 accounting: comparing a product’s emissions to its previous version and comparing emissions of various products. It also recommends measuring emissions from every stage of a product’s life cycle for accurate representation. Another helpful resource is the GHG Protocol’s Policy and Action Standard, also developed by the WRI, which suggests considering how products will change emissions when reporting.
By utilizing these frameworks and approaches, companies can effectively measure and report their scope 4 emissions, contributing to their industry’s efforts to reduce emissions and mitigate climate change. While it may be challenging, accounting for scope 4 emissions from the outset of product development is crucial for accurate reporting and staying ahead of regulatory requirements.