In a world where globalised efforts are needed to address climate change and environmental destruction, the use of internationally accredited standards and policies surrounding CO2e have gained traction.
Many countries across the world are leveraging the GHG Protocols Scope 1 and 2 emissions to set unified metrics about their CO2e production. Creating a shared foundation for measuring CO2e metrics in the international business landscape. Also, the use of Scope 3 emission reporting has gained momentum as businesses recognise the need to account for indirect emissions throughout their value chains.
Yet with the climate crisis still needing further action, the spotlight is moving towards the emergence of a new carbon account method; Scope 4.
Scope 4 emissions are a way for businesses to calculate emissions savings, aiming to quantify how switching to that products/service can avoid the creation of CO2e. As this new form of avoided emissions reporting comes into the mix, businesses should start to understand more about what Scope 4 means, the advantages it can bring and be aware of any challenges associated.
The Benefits of Scope 4 Reporting
With the devastating global effects of rising c02e, our efforts in addressing climate change not only need to be unified but also have a clear purpose. So to roll out new climate change initiatives, there is a need to be clear on its benefits, its impacts, and why individuals and businesses should want to adopt them. Understanding each of these variables behind new CO2e policies/metrics will address various factors within the climate change problem, preventing gaps that greenwashing tactics could exploit.
Considering the growing interest among businesses in adopting Scope 4 emissions, it's crucial to understand the overall benefits of these avoided emissions and their direct business advantages.
Broadening Sustainability Horizons
While Scope 1, 2, and 3 are well-known for measuring direct/indirect impacts, Scope 4 emissions go beyond advising businesses on how to reduce their carbon footprint. They enhance transparency throughout a product's lifecycle, aiming to prevent carbon creation in the first place. Scope 4 compels businesses to proactively look into their supply chain and move towards lower carbon production, helping them reach carbon reduction targets faster. Which then in effect, helps to reduce their Scope 3 emissions.
Empowering Informed Decisions
Think of Scope 4 emissions as utility-switching calculators for customers, providing a figure and incentive to switch to a product/service for its avoided emissions. It quantifies how the product/service swap won't contribute to the CO2e crisis, rather than how they could reduce it. This heightened level of transparency from suppliers to customers can motivate the entire life cycle of a product/service to factor in more environmentally sustainable strategies.
Having quantifiable metrics on the avoided emissions can help each business to achieve its environmental and sustainable goals. Plus using Scope 4 emissions, allows clients and customers to make better-informed investments to reduce their environmental footprint from these CO2e savings. Overall Scope 4 emissions heightening transparency, provides both businesses and customers the tools and knowledge to effectively approach their emission reduction.
Navigating the Information Landscape
In the digital age, while the need for awareness and knowledge has risen, it has also created a saturated landscape of information. Making it challenging for consumers to find relevant information easily. With a growing number active consumers wanting to shop with purpose and understanding the effect of their purchases, having a way to easily highlight a products impact would be great way of catering to consumer’s need for information.
With Scope 4 reporting gaining popularity, it helps clients and consumers navigate to the right information so they can make better-informed decisions about their purchases.
The use of Scope 4 reporting will help stronger relationships between consumers and brands, as they are clearly giving the consumers what they need to make active and informed decisions regarding their own environmental impact. Yet, it won't only help the B2C or B2B relationships.
As scope 4 emissions put a spotlight on the additional value that your products/services have, it can strengthen the interest of potential investors. In this current business climate, and it becoming more competitive to attract the attention of any stakeholders – just following the mandatory Scopes, and Net Zero approaches won't be enough for a business to stand out. Using Scope 4 in your business can give businesses that competitive edge to stand out.
Challenges
As Scope 4 is still in its infancy compared to the other well-defined Scopes, it is important to still talk about its related challenges to raise awareness. Talking about the challenges of Scope 4 should not act as a deterrent to its adoption, but can bring a discussion forward to how we can go ahead and address these issues, so we can better benefit from Scope 4 reporting.
Lack of Recognition
Currently, Scope 4 is not yet recognised by GHG Protocol, however, it is defined by one of GHG Protocols founders, WRI. Due to this Scope 4 is not an officially recognised term – which can connote to it not having as much importance as the other Scopes.
The most common terminology used for Scope 4, and the term the WRI refer to it as is Avoided Emissions. However, it has been called different titles. This is a challenge, as the multiple terms and the lack of recognition it has compared to the other Scopes can make its message weaker and confuse its purpose.
Standardisation
Another feat for Scope 4 emission reporting, is that it is not yet mandatory to report on from the majority of reporting standards committees. Scope 4 reporting is currently voluntary. So for this to enable transparency throughout the product's life cycle, and give all the relevant information to the consumer, a voluntary method cannot enable this (as those with bad Avoided Emissions don’t have to report on them).
This lack of mandatory status could be due to the challenge of accurately tracking the data, collecting the data, and having a single standardisation of measuring Scope 4. As these avoided emissions are not accurately created, they act as an estimation rather than an accurate quantity. Plus, to use this as a comparative swap, the search for accurate data about competitors’ products/services will be a continual process. Otherwise, it leads to comparing to market averages of CO2e emissions, which then can open the door for Greenwashing campaigns, as potential businesses can over-estimate their avoided emissions. This in turn can ruin the efforts of those accurately reporting on Avoided Emissions as consumers may lose trust.
The collection of data overall will be a difficult one when addressing Scope 4 Reporting, From data availability to accuracy – needs to be one standardised method for Scope 4 emissions to truly bring its benefits to the table.
GHG Protocol has developed a neutral framework to report on Avoided Emissions – however, as mentioned previously this framework is not mandatory like the other Scope reporting. This means it's opening the doors for a lot of different methods of reporting, creating lots of different approaches rather than one unified method.
Conclusion: Navigating the Future of Sustainability Reporting
In the continuous pursuit of sustainability and reporting on CO2e, Scope 4 reporting seems like the next natural step to commit more businesses and consumers to achieve their carbon reduction goals.
Businesses should start their journey in tracking their avoided emissions, as it has clear business benefits and works in the pursuit of the global goal of carbon reduction. When Scope 4 has been standardised it can be a powerful tool to empower businesses to look at their product's lifecycle and keep encouraging them to further shift to lower carbon productions and strategies. Not only that, Scope 4 can empower the public through its means of transparency, giving them clear information on that product, encompassing the needs of the ever-growing active consumer.
However for these benefits to be true, rather than a tool of greenwashing, a clear standardisation of Scope 4 needs to happen. From terminology to data collection, there is a strong need for governments and businesses to unify their standards for accurate x, and once that is completed move it to mandatory reporting standards.
Understanding the challenges and benefits of Scope 4 can help businesses and policymakers start to open a dialogue about what’s working, and what needs to change, so we can get the benefits from Scope 4.
