Understanding Scope 4 Emissions: The Growing Importance of “Avoided Emissions”

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Understanding Scope 4 Emissions: The Growing Importance of “Avoided Emissions”

11 April 2024 / Report

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Companies may feel that measuring and reporting on carbon emissions for their operations and value chains is enough to deal with. However, an increasing number of companies are seeing the competitive advantages of measuring another aspect of their emissions—Scope 4 emissions. Scope 4 encompasses emissions that are prevented from being released because of the sustainable products and services a company offers.

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As global competition increases, businesses need to explore innovative strategies not only to integrate sustainable practices, but also to effectively highlight them to gain a competitive edge. While the initial focus may have been on mitigating risks, many businesses are viewing sustainability as an opportunity. This change in perspective aligns with the emerging emphasis on Scope 4 emissions, which contrary to Scope 1, 2, and 3 emissions imply a positive environmental impact.

Quantifying Scope 4 emissions remains a challenge considering there is, as yet, no universally adopted methodology. This challenge translates into a greenwashing risk. While this concept allows companies to showcase the positive environmental impact of their offerings, it requires cautious navigation and utmost transparency. To avoid greenwashing, companies should refrain from overstating the environmental benefits of their products and clearly communicate the methodology and uncertainties behind their Scope 4 estimates.

Authors

Catherine Early

Research Fellow, Governance & Sustainability Cente…
The Conference Board

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Anuj Saush

Head, TCB Advisory International
The Conference Board

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Ioannis Siskos

Senior Research Fellow, Governance & Sustainabilit…
The Conference Board

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