Businesses are increasingly interested in estimating and making claims about the greenhouse gas (GHG) emission impacts of their products and services. While they increasingly account for their Scope 1, 2 and 3 emissions, there is now a new concept gaining importance, namely Scope 4 emissions. Scope 4 emissions describe emissions that can be avoided through the use of a particular product or service. But why is it important to address avoided emissions? And how can accounting Scope 4 drive corporate climate action?
Scope 4 – avoided emissions
If a corporation improves the efficiency of its product or service, this reduces the emissions arising through its use. However, these emission savings can be concealed e.g. due to rising popularity and sales of that product or service. One option for bridging this emissions gap is to take the GHG Protocol principles to account for Scope 4 emissions.
Here is an example: An electric toaster manufacturer develops a more efficient toaster. Nevertheless, emissions from the toaster rise, as more customers might be interested in buying it. Even though the corporation has made an innovation and increased efficiency, this essentially results in a higher corporate carbon footprint. This is because the GHG Protocol does not yet address these avoided emissions. That’s where Scope 4 emissions come in place. We might need the accounting of avoided emissions to better address corporate climate action.
Driving corporate climate action
Some companies already account for, report, and set goals around avoided emissions through the use of their products and services. For example, two-thirds of companies reporting to CDP say that the use of their products directly enable GHG emissions to be avoided by a third party. However, a consistent terminology to account for avoided emissions remains to be established.
Customers need to understand the benefit of products that reduce emissions. Furthermore, they need to have the assurance and confidence that avoided emission claims are credible. Only then is it possible to create the necessary market pull for innovative, efficient and low-emission products and services.
The World Resources Institute (WRI) has published a paper about estimating and disclosing both positive and negative impacts of products, goods or services. You can find a summary of WRI’s proposed methodology here.
DFGE support
DFGE can support you in calculating and analyzing your Carbon Footprint including Scope 1, 2, 3 and 4 emissions. Our experts can also help you in understanding the methodology behind disclosing your avoided emissions. Contact us via or via phone: +49 8192 99733 20 to learn more!
