March 4, 2024

Carbon Accounting

Scope 4 Avoided Emissions: Everything You Need to Know 

Scope 4 Avoided Emissions: Everything You Need to Know 

Every business, no matter how big or small, has an environmental impact. By becoming more aware of these impacts and taking steps to reduce them, businesses can make a real difference for the planet. Few businesses take into account scope 4 emissions, though measuring scope 1 and 2 emissions has become standard for many companies. This article will discuss scope 4 emissions, why businesses should include them in their carbon accounting and how to calculate avoided emissions.

Scope 4 emissions explained

The term "Scope 4" was coined by World Resources Institute, which established the GHG Protocol.

Dating back to 2013, the GHG Protocol identified avoided emissions as emission reductions which occur outside of a product's lifecycle or value chain, but as a result of the use of the product.

There are neither mandatory requirements to report Scope 4 emissions, nor universally recognised standards to measure them for carbon accounting purposes. The identification of emission reduction opportunities are also not officially required by climate regulations, but should be part of a comprehensive strategy for reducing emissions.

Scope 4 emissions should not be counted when calculating or compensating scopes 1, 2, and 3 emissions because they are different than those scopes.

scope 4 emissions chart

Emissions outside of the product’s life cycle

The term scope 4 emissions refers to emission reductions that happen outside of a life cycle of the product or value chain, but as a result of the use of that product.

Example: Goods and services that avoid emissions could be low-temperature detergents, fuel-saving tires, energy-efficient ball-bearings, and teleconferencing services.

a female worker taking notes in the warehouse and 2 guys carrying a box

Scope 4 emissions as part of a sustainability strategy

Organisations should be aware of scope 4 emissions and the concept of avoided emissions when developing their sustainability strategies. By understanding scope 4 emissions, organisations can better understand the potential savings from investing in sustainable projects and can make informed decisions about how best to reduce their environmental footprint.

Additionally, scope 4 emissions provide an important measure of the overall impact of an organisation’s activities and help inform the scope 1, scope 2, and scope 3 emissions calculations.

Finally, when businesses report avoided emissions, they create an opportunity to develop emissions scenarios and strategies to act on them.

Why scope 4 emissions matter

Reducing indirect emissions is an important part of reducing a company's overall environmental footprint. The indirect nature of scope 4 emissions means that they can be difficult to measure, as many companies are unaware of their indirect emissions. By understanding scope 4 indirect emissions, companies can develop strategies to reduce them, such as using low-carbon suppliers or switching to renewable energy sources.

Additionally, including scope 4 emissions in internal carbon accounting process allows businesses to wisely choose suppliers who produce less carbon emissions. They can also take advantage of equipment and technological solutions that can help reduce their greenhouse gas emissions.

a lady working in the office

Reporting avoided emissions 

There is a rush to progress in the area of climate change and reverse some of the damage or we don't have a chance of staying under a 1.5C increase compared to pre-industrial levels. The Paris Agreement encourages us to stay well under a 2C increase but if companies want to stay competitive and stakeholders are demanding going further than net zero and becoming carbon negative, then we need to report as many emissions accurately as we can. It is also necessary for value chains to report these emissions to be able to stay competitive in their fields with conscious consumers and investors that ask for ESG reporting data.

Keeping avoided emissions in mind at the design stage of a product

For example, if a company creates a product and optimises it to emit less CO2 during its production then emissions can be reported according to the making of the product from the beginning of the value chain until it reaches the end user, and then the estimated calculated emissions of what would be used during the product's cycle. So the overall reduction has been made at the product design stage by optimising the product. (During the manufacturing and logistics processes the scopes 1 and 2 were counted for and scope 3 if they report the up and downstream emissions if the outside companies in the value chain don't count their scopes 1 and 2s). The avoided emissions are what would have been had the product never been optimised or complimented.

a man cutting a product and a man assembling a product

Some stakeholders are concerned that the emissions from making a new product will be too much. If the pros outweigh the cons and in the long-term the emissions of the product are less damaging than the former, and all scopes were counted for, then it will improve the environment given the manufacturing process is as clean as efficient as it can be.

Recommended reading

If you want to learn more about scope reporting and carbon reductions, check out our free resources:

• Article: What Are Scope 1, 2, and 3 Emissions?
• Article: Scope 3 Emissions: Contributing Factors, Measurement and Reduction
• Article:
30 most common questions about Scope 3 emissions
• Article: What Is a Carbon Offset and Why Do Companies Need It to Achieve Net Zero Carbon Emissions?

The benefits of reporting scope 4 emissions

Reporting avoided emissions is a powerful way for businesses to accurately account for their impact on the environment, helping them meet sustainability and climate goals.

  • Being transparent about emissions and reporting initiatives helps conscious consumers make informed decisions about purchases that are environmentally friendly and have the data to back it up.
  • Over a third of companies that were surveyed in 2017 by the CDP claim they make products that help minimise their carbon footprint.
  • Reporting indirect GHG emissions helps companies to stay competitive in the supply chain, and communicate efforts to investors and consumers by offering products that aren't emitting greenhouse gases into the atmosphere.
  • It helps in determining risk factors with investors and having proper data for ESG reporting.
  • It is beneficial information to know for the future product creation process and transitioning to low carbon or carbon free product lines.
  • Disclosing emissions generated and avoided ensures transparency and goes along with the change of consumer behaviour and their demand for carbon free goods and services.
two smiling male workers in the warehouse

How do you calculate scope 4 avoided emissions?

Although it requires more effort to calculate and analyse avoided emissions because they aren't direct emissions, it is possible to do so.

Calculating avoided emissions can be done in Net0's carbon accounting platform. However, you don't need to know all the intricate details unless you want a greater understanding of each scope emission. Net0 will do the hard work for you by itemising emissions.

The platform automatically calculates the data you provide through utility bills, invoices, and any other activity-based data and enables businesses to analyse their carbon footprint by scopes. The real-time reports also let them compare their avoided emissions data with competitors and track progress over time.

lady with glasses on laughing while she works on a computer in her kitchen

Emission reduction opportunities

There are many ways to create climate positive value by increasing the number of saved and avoided emissions. Some methods include:

1) Switching to energy-efficient appliances and lightbulbs.

2) Conserving energy by turning off lights and electronics when not in use.

3) Recycling and composting instead of throwing away waste.

4) Driving less and taking public transportation or biking when possible.

5) Buying products from sustainable or green companies.

6) Working with green vendors and suppliers who are transparent about how they can help you reduce your own emissions.

In summary

Knowing more about avoided emissions will help your company with transparency and help you make better decisions. Reporting them accurately will improve the environment and your company rapport amongst stakeholders and green talent. Considering all of the facts about scope 4 avoided emissions, you can now take steps to accurately report the emissions within your control.

Book a call with us to see how Net0 can help with carbon accounting and how easy it is to measure, reduce, offset, report, and certify all of your emissions in our easy-to-use platform.

Written by:

Sofia Fominova

As a Co-Founder of Net0, Sofia applies her experience in environmental software to help businesses reduce their carbon footprint and achieve carbon neutrality. She is an accomplished tech entrepreneur recognized for her expertise in B2B software and contributions to the field of Artificial Intelligence.
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