Scope 4 Emissions: Showcasing Positive Impacts of Companies and Products
Share on LinkedIn1 Oct 2024
Generally emissions reporting covers Scope 1, 2 and 3 emissions, although there is also a fourth Scope which aims to demonstrate the positive impact a company or product has on overall system-wide emissions. This article explores what Scope 4 emissions are and how to best report them.
What Is Scope 4?
Scope 4 refers to avoided emissions, or the system-wide emissions reductions caused by the introduction of a product which allows a function or activity to take place with significantly lower greenhouse gas (GHG) emissions. Reporting and calculating Scope 4 emissions involves comparing the GHG emissions caused by using a product or solution with those that that would have been emitted if the solution did not exist. This is an important step for companies wishing to have a wider impact on climate change mitigation, by going further than just reducing their internal and value chain emissions to also provide solutions for global decarbonisation.
Why Report Scope 4 Emissions?
Scope 4, or avoided emissions, can be used to demonstrate changes in emissions caused by a company outside of their GHG inventory. Certain changes to improve product sustainability can increase scope 3 emissions while creating an overall reduction in emissions, for example increased durability increases the use phase emissions of a product but reduces overall emissions as products are being disposed of and replaced less frequently. This is where Scope 4 is beneficial to show the wider implications of a decision and encourage innovations that lead to wide-scale industrial/manufacturing changes towards low-carbon options - these innovations often being the reason for the most significant emissions reductions.
Knowing their Scope 4 emission can therefore: aid a company when making long term plans to prioritise products contributing most to decarbonisation; enable consumers and investors to further understand the impact of different products; guide research and development; hold companies accountable to their impact on wider society; and ultimately encourage system-wide changes towards decarbonisation.
The types of products that can claim Scope 4 or avoided emissions are:
- Low carbon alternatives e.g. renewable energy or video conferencing
- New products with lower life cycle emissions than the typical product e.g. electric vehicles or plant-based meat alternatives
- Improvements to products which reduce their GHG emissions e.g. building retrofitting.
How Is Scope 4 Governed?
There is not a specific governing body regulating the reporting and calculation methodologies of Scope 4 emissions. This can lead to uncertainty as to what is needed to be claimed; inconsistent methodologies; and potential for companies to report avoided emissions in a way which most positively reflects the company through ‘cherry picking’ certain best-case scenarios. There are, however, a range of criteria and principles generally agreed on for companies to use when reporting as well as provided standards and methodologies from a number of recognised organisations, such as Net Zero Initiative and WBCSD Guidance on Avoided Emissions and Mission Innovation’s The Avoided Emissions Framework.
The most important 'rule' for Scope 4/avoided emissions reporting is that it must be fully separate from Scope 1-3 emissions and not be used to claim reductions in Scope 1-3 emissions. Similarly, emissions reductions included in Scopes 1-3 that do not result in wider societal changes should not be included in avoided emissions. The framework should be fully neutral, acknowledging all positive and negative impacts of a product, including rebound affects, in order to display the net impact of introducing the product.
Assumptions may be used where data is not available, particularly considering the hypothetical nature of many methodologies, however, these must be based on data or studies, conservative (understate benefits), clearly explained in reporting and, where possible, present different scenarios. When reporting, organisations should follow the common principles of relevance, completeness, transparency (detailing data sources and assumptions) and accuracy.
As Scope 4 is classed as additional reporting, complementary to GHG footprinting to be eligible for a claim a company must have a fully communicated climate strategy in relation to their Scope 1-3 emissions, including science-based targets (preferably SBTi certified); the solution must not be directly working with fossil fuels and must be aligned with the most recent climate science; and the decarbonisation impact must be direct and significant.
Without these principles a company reporting Scope 4 or avoided emissions can put themselves at risk for claims of greenwashing, making it important to be careful to provide all relevant information and prioritise and be clear on Scope 1-3 first.
How to Calculate Scope 4
While there is no one methodology consistently used across Scope 4 reporting, there are a selection of recognised frameworks for avoided emissions calculations. These generally follow the principles of calculating the emissions of the product and its uses, and those that would have been emitted without the existence of the product, using either a baseline product or baseline scenario, and calculating the difference between the two emissions scenarios. This can be done by directly comparing with a different similar product (attributional method) or by modelling the system-wide emissions with and without the solution (consequential method).
The consequential method is preferred, although is often impractical due to limited data and resources. Baseline scenarios must be chosen to best reflect what would be the norm without the product being assessed, and include any changes to policy and regulations, current or predicted, that would lead to emissions changes in the system. There will be assumptions in the methodology. Attributional methods assume products to be identical and downplay the role of market-based changes to product usage. Consequential methods require assumptions to overcome scenario uncertainty and limited data.
Example: Plant-based Meat Alternatives
One product which can be used to claim avoided emissions is plant-based meat alternatives as these have lower carbon intensity than standard meat-based products. This is because they have reduced emissions from agriculture, due to not having emissions from manure, feed production and animal product processing, as well as reduced associated deforestation. For an attributional approach comparisons are made between 1kg of plant protein vs 1kg animal protein.
The assumptions for this product include attributing identical nutritional values to both products, requiring the same amount of purchases and leading to no direct rebound effect, and that the choice of reference alternative product would be meat rather than other plant-based proteins. There are also the general assumptions for avoided emissions calculations including system boundary, value chain attribution and the certainty of sales predictions. While there is no known direct rebound effect there could be an indirect rebound where plant-based products generally cost less than their animal counterparts leaving people with more disposable income to spend on other potentially high carbon products.
How NUS Can Help with Scope 4 Emissions
The NUS Energy and Sustainability Services (ESS) team works with global industrial and commercial clients to quantify emissions and develop plans to decarbonise energy usage and business operations. For more information contact us online or find your local NUS office.
More: Energy Market Commentary, Decarbonization, Greenhouse Gas (GHG), Scope 4 Emissions
