Scope 4

What are Scope 4 emissions?

Scope 4 emissions, also known as"avoided emissions", add a fourth category to the traditional understanding of greenhouse gas emissions. The latest scope was introduced by the World Resources Institute (WRI) in 2013 and refers to the reduction of emissions outside the value chain or life cycle of the product. Scope 4 shows how emissions can be saved through the use of a company's products or services.

How does Scope 4 differ from Scope 1, 2 and 3 emissions?

Scope 1, 2 and 3 refer to a company's direct and indirect emissions: 

• Scope 1includes direct emissions from company-owned or controlled sources.
• Scope 2refers to indirect emissions from purchased electricity, heat or cooling.
• Scope 3includes all other indirect emissions along the value chain, such as those caused by suppliers or business travel.

Compared to the other scopes, Scope 4 refers to emission reductions achieved through the use of products or services by third parties. Scope 4 therefore includes the positive effects on the environment that go beyond the company's own operating boundaries and represent a different category than the other scopes.

Examples of Scope 4 emissions

Scope 4 emissions include, for example, products or services that are advertised as saving energy or reducing emissions. 

An example of Scope 4 is an event that is held online instead of in person. The emissions that are saved as a result fall under Scope 4. The same applies to working from home. Employees who work remotely usually cause fewer emissions than employees who commute to the office or are on business trips. Here, too, the emissions count under Scope 4.

Other examples are

• Solar modules
• Electric vehicles
• Energy-efficient appliances
• Plant-based diet

Is Scope 4 mandatory?

Scope 4 is not yet mandatory. The existing standards for emissions reporting, such as the Greenhouse Gas Protocol, only cover Scope 1, 2 and 3 emissions. Nevertheless, companies can benefit from voluntary reporting, especially if they aim to reduce emissions and optimize their sustainability strategies.

Why are Scope 4 emissions important for companies?

Scope 4 offers companies an innovative perspective for measuring their positive environmental impact. This category is particularly relevant for companies that are leaders in the development of sustainable technologies, products and services. Scope 4 captures how companies contribute to reducing global greenhouse gas emissions beyond their direct and indirect emissions.

What are the advantages of Scope 4 emissions?

Scope 4 helps companies to achieve their environmental and sustainability goals. Scope 4 communication also offers many advantages:

• improves the brand image,
• promotes transparency,
• provides customers with important information for purchasing decisions,
• arouses the interest of investors,

and encourages the development of low-carbon production methods.

Which companies report according to Scope 4?

As there is no standardized guideline for calculating Scope 4, only a few companies are starting to record their Scope 4 emissions. Early adopters could be companies whose products have a direct impact on emissions reduction. For example:

• Manufacturer of electric cars
• Provider for renewable energies
• Impact investment companies
• Manufacturer of innovative technologies

How can companies calculate Scope 4 emissions?

The calculation of Scope 4 emissions is challenging, as these are not produced directly, but represent an estimate of avoided emissions. Compared to Scope 1, Scope 2 and Scope 3, the recording of Scope 4 requires additional effort, as there are currently no standard accounting guidelines. 

According to the World Rescue Institute (WRI), companies should initially focus on Scope 1 to 3 and record these in accordance with the Greenhouse Gas Protocol (GHG). This will give them a basic overview of their own_{CO2 emissions}. In the future, however, Scope 4 is expected to gain in importance and come to the fore.

CO₂ accounting platforms such as Planted's automated software solution help companies to accurately record and understand emissions. Would you like to get to know our solution without obligation? Book a free demo now.