Introduction
As the climate crisis intensifies, organizations are under mounting pressure to measure and manage their greenhouse gas (GHG) emissions with greater accuracy and accountability. The prevailing carbon accounting framework divides emissions into three scope emissions categories: Scope 1, Scope 2, and Scope 3. While this framework provides a comprehensive view of a company’s footprint, it does not fully capture the positive climate impact of innovations that reduce emissions elsewhere. This is where scope 4 emissions, also known as avoided emissions, come into play.
Scope 4 emissions refer to emissions that are prevented or avoided due to the use of a product or service. These emissions occur outside the traditional organizational or value chain boundaries yet are directly enabled by a company’s offerings. With growing emphasis on net-zero commitments, climate-aligned innovation, and green technologies, scope 4 is increasingly gaining traction to measure and communicate climate-positive contributions.
What Are Scope 4 Emissions?
Scope 4 emissions are defined as the GHG emissions avoided due to the use of a low-carbon product, service, or technology. Unlike scopes 1, 2, and 3, which focus on actual emissions, scope 4 reflects the emissions that never occurred, thanks to the adoption of a more efficient or cleaner alternative.
For example:
- Electric vehicles (EVs) help avoid emissions by replacing conventional gasoline-powered cars.
- Smart thermostats and energy-efficient appliances help consumers use less electricity, thereby avoiding emissions from fossil fuel-based power plants.
- Teleconferencing platforms reduce the need for business travel, preventing transportation-related emissions.
- Renewable energy installations like solar panels or wind turbines displace the need for coal or gas-based electricity generation.
What distinguishes scope 4 is that it measures climate benefit rather than climate harm. It is inherently forward-looking and helps companies highlight how their products contribute to the global decarbonization effort beyond their own emissions inventory.
Methodologies for Calculating Scope 4 Emissions
Unlike scope 1, 2, and 3 emissions, which are guided by established frameworks like the GHG Protocol, scope 4 lacks formal standardization. As a result, companies must rely on comparative baseline scenarios to estimate avoided emissions. This typically involves comparing the emissions from a traditional or business-as-usual scenario against the emissions from the product or service being evaluated.
To maintain credibility and prevent overstatement, the following principles should be followed when calculating scope 4:
- Transparency: Clearly disclose assumptions, system boundaries, data sources, and methodologies.
- Conservativeness: Avoid overstating emissions reductions; where uncertainty exists, use conservative estimates.
- Additionality: Demonstrate that the emissions avoided would not have occurred without the use of the product or service.
- No double-counting: Ensure that avoided emissions are not claimed by multiple actors within the value chain.
Though there is no official protocol yet, organizations like the World Resources Institute (WRI) and the GHG Protocol have started exploratory work to evaluate how avoided emissions can be credibly included in carbon accounting.
Benefits of Tracking Scope 4 Emissions
Tracking scope 4 emissions offers several strategic benefits that extend beyond mere reporting:
| Benefits | Explanation |
| Fostering innovation | Highlighting avoided emissions provides strong incentives for developing low-carbon solutions. It can drive investment in R&D, green product design, and climate-aligned business models. |
| Enhancing competitive advantage | Products and services that contribute to emissions reductions can differentiate a company in the marketplace, appealing to climate-conscious consumers, investors, and regulators. |
| Strengthening ESG reporting | Scope 4 adds depth to environmental reporting by showcasing how a company enables decarbonization beyond its operational boundaries. It supports more comprehensive sustainability narratives aligned with evolving stakeholder expectations. |
| Supporting net-zero goals | Companies committed to science-based targets can use scope 4 to demonstrate their contribution to global net-zero efforts, particularly through enabling solutions that benefit customers and society. |
Challenges and Criticisms
Despite its promise, scope 4 faces several practical and ethical challenges that must be carefully navigated:
a. Lack of standardization: Without agreed-upon methodologies, companies may use varying assumptions or baselines, making comparisons difficult and potentially unreliable.
b. Risk of greenwashing: Claims about avoided emissions, if not backed by transparent data and verifiable logic, may be perceived as misleading. This could erode trust and reputational value.
c. Double-counting risks: Multiple entities in the value chain might claim the same avoided emissions. For example, both a manufacturer and a downstream user may claim credit for emissions avoided through a shared product or process.
d. Regulatory ambiguity: Since scope 4 is not yet formally recognized in regulatory frameworks or disclosure standards, its inclusion in official ESG filings may lack acceptance or scrutiny.
Scope 4 in the Policy and Corporate Landscape
While there are no formal mandates, a growing number of companies are voluntarily reporting scope 4 emissions as part of their broader climate strategy. Some organizations integrate it into non-financial disclosures, product life-cycle assessments, or marketing narratives.
The Carbon Disclosure Project (CDP) and the Science Based Targets initiative (SBTi) have begun exploring how avoided emissions can play a role in net-zero commitments. While the SBTi currently does not allow scope 4 to count toward official targets, it acknowledges the value of avoided emissions in enabling the global transition to a low-carbon economy.
As carbon accounting evolves, scope 4 may influence future reporting standards by broadening how companies are evaluated—not only on how they reduce emissions, but also on how they enable others to reduce theirs.
Way Forward
As organizations seek to lead in climate action, scope 4 offers a forward-looking lens that recognizes contributions beyond a company’s immediate footprint. To unlock its full potential, businesses must prioritize transparency, adopt conservative methodologies, and actively engage in shaping future standards.
Looking ahead, the evolution of carbon accounting may introduce additional scopes, such as scope 5, focusing on carbon removals or negative emissions. Together, avoided and removed emissions can offer a more holistic view of a company’s climate impact. By embracing innovation, collaboration, and accountability, companies can position themselves as true enablers of a net-zero and climate-resilient future.
Conclusion
Incorporating scope 4 into a company’s climate strategy requires a clear, consistent approach to measuring and reporting avoided emissions. As the pressure to address climate change grows, businesses that can demonstrate how their products or services contribute to emissions reductions will stand out in a competitive market.
However, scope 4 should complement, not replace, efforts to reduce emissions directly through scope 1, 2, and 3. When applied properly, scope 4 can drive innovation, enhance sustainability efforts, and position companies as leaders in the global push toward a net-zero future.
