Understanding Carbon Offsetting vs Scope 4 Emissions

Modern businesses are feeling the pressure to meet both consumer and societal demands for a clear reduction in their environmental impact. Yet, it's no longer enough for businesses to focus solely on mandatory reporting and legislation. Being a thriving business, within a green consumer market, requires further commitment to voluntary schemes and initiatives that further their commitment to environmental protection and addressing climate change. 

Although every effort to address climate change and environmental harm is vital not just for businesses, but the continuation of our planet; with each initiative, comes a different intended impact. This article explores two significant contributors to this movement: Carbon Offsetting and Scope 4 (Avoided Emissions). By understanding the clear differences between carbon offsetting and Scope 4 reporting, businesses can have a better strategic understanding of their sustainability plans. 

Carbon Offsetting 

Carbon offsetting is an opt-in scheme for businesses to invest in projects, such as tree planting, that aim to balance their CO2e impact. These emissions are already created, and businesses rely on offsetting organisations to quantify and rectify them through carbon credits. While popular in CSR plans, carbon offsetting faces scrutiny due to its reliance on ongoing carbon production. The effectiveness of offset initiatives is debated, with concerns about greenwashing emerging. In a recent investigation by The Guardian, they found that most carbon credits from these schemes do not represent genuine carbon reductions. 

Scope 4 (Avoided Emissions) 

Scope 4 emission reporting, though not officially recognized by the GHG Protocol, is commonly referred to as Avoided emissions. This reporting method is different from the other Scopes as it focuses on showing businesses how to avoid emissions from being made, rather than just reducing them. 

Scope 4 is still in its early stages and requires further standardisation to ensure accurate transparency. It is intended to be a tool that helps businesses and consumers calculate and understand how much they can avoid emissions by adopting new products or services. Find out more about Scope 4 here. 

Where the Confusion Arises

Due to the complexities surrounding business carbon reporting from terminology to overlapping goals, it’s clear to see why many businesses are confusing one initiative's impact with another. This is especially true for carbon offsetting and Scope 4, where their shared goals, broad communication, hard-to-accurately quantify, and lack of standardisation has led many to believe that these fall under the same umbrella of carbon reduction. 

In fact, although these initiatives share a common goal (protection of the planet) their approach, methodology, and impact are very different. 

The Difference Between Carbon Offsetting and Scope 4: 

  1. Definition:

Scope 4: A reporting method calculating how a product/service swap can avoid emissions compared to its predecessor. 
Carbon Offsetting: A compensation method against emissions already made, utilizing projects like tree planting. 

  1. Direct or Indirect Efforts:

Scope 4: Provides data for businesses to directly increase efforts in preventing CO2e from being made.
Carbon Offsetting: Relies on indirect efforts of a third party, such as planting trees, to mitigate a business's CO2e impact. 

  1. Timing:

Scope 4: Immediate effects after the swap, benefiting both the business and the planet. 
Carbon Offsetting: Project timelines, from initial investment to actual offsetting, are more extended.


While a variety of schemes are necessary to minimise environmental impact, a clear understanding of each initiative's intentions is vital for businesses moving confidently forward. Scope 4 provides specific data to help businesses avoid CO2e, whereas Carbon Offsetting aims to balance emissions over time. With the latest EU anti-greenwashing laws discouraging businesses from using Carbon Offsetting to claim carbon neutrality, a nuanced approach is essential for effective environmental initiatives. Businesses must continue with their commitment to environmental practices, however, they should research these schemes to make informed decisions to adopt genuine eco-practices which will contribute to a sustainable future.  

Enhance your Scope 4 knowledge   Download our brochure to learn more about how Avoided Emissions fit into your carbon metrics.